{
  "title": "Kenya at the Economic Frontier: Challenges and Opportunities, by Christine Lagarde, Managing Director, International Monetary Fund",
  "publication": "IMF News, January 6, 2014",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/53/sp010614",
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  "summary": "Nairobi",
  "authors": [
    "Christine Lagarde Kenya Private Sector Alliance Forum Nairobi"
  ],
  "publishDate": "2014-01-06",
  "sections": [
    {
      "heading": "Introduction",
      "content": "- Speech delivered at the Kenya Private Sector Alliance Forum, Nairobi, January 6, 2014; \"As prepared for delivery.\"\n- Kenya's recent growth credited to a vibrant service sector, consolidation as a regional hub, and impressive progress in financial inclusion.\n- Growth noted as \"more than 5 percent in 2013.\"\n- IMF partnership highlighted: financial support through the Extended Credit Facility and technical assistance; IMF Executive Board approved successful completion of the program.\n- Emphasis on Kenyan ownership of reforms and need to deepen and broaden achievements to increase resilience and share benefits of growth."
    },
    {
      "heading": "The Global Economic Environment",
      "content": "- Global recovery described as uneven and subdued; dynamics shifting.\n- Advanced-economy developments:\n  - United States: private demand robust; Federal Reserve signaled eventual normalization in financial conditions.\n  - Japan: government steps to stimulate growth.\n  - Europe: slowly emerging from a deep recession with remaining challenges.\n- Emerging market economies slowing after several years as main engine of global growth; this slowdown is of particular concern for Kenya and Africa.\n- Risks identified:\n  - Heightened volatility in financial markets as financial conditions in advanced economies normalize.\n  - Potential spillovers from emerging market economies to Sub-Saharan Africa, especially financially integrated countries such as Kenya."
    },
    {
      "heading": "The Outlook for Sub-Saharan Africa",
      "content": "- Regional performance:\n  - Sub-Saharan Africa remains the second-fastest-growing region in the world—\"5.6 percent on average over the past decade.\"\n  - IMF projections (October): \"5 percent in 2013 and close to 6 percent in 2014.\"\n- Positive contributors to resilience: low inflation, reduced levels of public debt, and adequate reserve levels.\n- Benefits of growth: higher living standards and poverty reduction in many countries.\n- Risks and policy warnings:\n  - Threats from slower demand in emerging market economies.\n  - Unfavorable changes in commodity prices.\n  - Higher financing costs.\n- Policy message: no complacency; Africa must grow faster to address social problems, create jobs for a young and growing population, and accelerate progress toward the Millennium Development Goals.\n- IMF engagement: planned conference on \"Africa Rising\" in partnership with Mozambique to take stock of successes and challenges."
    },
    {
      "heading": "Kenya — The Quest for Middle-Income Status",
      "content": "- Kenya characterized as a \"frontier\" economy with an impressive turnaround due to economic, political, and social changes.\n- Economic policy achievements:\n  - Prudent policies anchoring strong and stable growth.\n  - Fiscal discipline improving external and domestic debt positions.\n  - A more modern framework for monetary policy helped keep inflation expectations in check.\n  - Stronger supervisory powers maintained financial stability amid rapid financial system expansion and opening capital markets.\n- External position: strong enough to tap international financial markets with the planned Eurobond issue.\n- Vulnerabilities and resilience measures:\n  - Increased global integration exposes Kenya to external shocks via trade and financial market volatility.\n  - Recommendations: further bolster foreign reserve position and lower debt burden to enhance resilience.\n- Political developments:\n  - Implementation of the 2010 Constitution and peaceful March 2013 elections.\n  - New checks and balances increasing transparency and accountability in public resource management.\n- Financial inclusion:\n  - Kenya \"boasts the highest share of population with access to financial services in Sub-Saharan Africa (more than 70 percent).\"\n  - Result: previously unbanked millions now have a stake in the economy; younger generation increasingly empowered.\n\n- Key priorities framed as the \"Three C's\":\n  - Completing fiscal devolution\n    - Devolution and fiscal decentralization are important but complex with significant risks.\n    - Successful implementation is crucial to secure access to resources across the country and ensure all regions benefit.\n    - Implementation requirements: spending within available public resources, transparency, and avoidance of duplication between central and local government.\n    - Potential benefits: bolstered social cohesion, increased accountability, improved quality of service delivery, and new private sector opportunities in counties.\n  - Closing infrastructure gaps\n    - Large infrastructure gaps must be tackled to raise growth and create jobs.\n    - Natural resource wealth is an opportunity that must be exploited wisely and transparently.\n    - Kenya is building a fiscal and regulatory regime for natural resource revenues to provide transparency and a stable revenue base.\n    - Fiscal resources should be prioritized and project quality closely scrutinized.\n    - IMF stands ready to provide extensive technical assistance.\n    - Foreign investment should be encouraged for major projects (examples cited: modern railway line from the coastal area to neighboring countries; expansion of geothermal power generation), provided financing remains consistent with a sustainable debt position.\n  - Continuing regional integration\n    - Kenya is a leader in regional integration, the second largest investor in the region, and a strong advocate within the East African Community.\n    - Regional integration opened new markets, supported a middle class, and enabled domestic demand as an engine of growth.\n    - Heads of state of the East African Community agreed on a roadmap toward a monetary union—an opportunity and a major challenge.\n    - Recommendation: draw on experiences from other regions, manage the process carefully, and utilize IMF technical assistance as needed."
    },
    {
      "heading": "Conclusion",
      "content": "- Kenya's transformation attributed to public sector leadership and a vibrant private sector partnership.\n- Education emphasized: universal primary education is impressive, especially for girls; importance of continued access at secondary and university levels stressed.\n- Kenya's path to middle-income status is ongoing; momentum should be built upon.\n- Closing admonition and encouragement: \"Pamoja twasonga mbele\" — \"Together we are moving forward.\"\n\nSource: Kenya at the Economic Frontier: Challenges and Opportunities, by Christine Lagarde, January 6, 2014.\n\n---\n\n\n References\n\n- Kenya and the IMF\n- Technical Assistance -- A Factsheet\n- Speeches\n- Christine Lagarde\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/53/sp010614"
    }
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    "Authors: Christine Lagarde Kenya Private Sector Alliance Forum Nairobi",
    "Published: January 6, 2014",
    "Speech delivered at the Kenya Private Sector Alliance Forum, Nairobi, January 6, 2014; \"As prepared for delivery.\"",
    "Kenya's recent growth credited to a vibrant service sector, consolidation as a regional hub, and impressive progress in financial inclusion.",
    "Growth noted as \"more than 5 percent in 2013.\"",
    "IMF partnership highlighted: financial support through the Extended Credit Facility and technical assistance; IMF Executive Board approved successful completion of the program.",
    "Emphasis on Kenyan ownership of reforms and need to deepen and broaden achievements to increase resilience and share benefits of growth.",
    "Global recovery described as uneven and subdued; dynamics shifting.",
    "Advanced-economy developments:",
    "Emerging market economies slowing after several years as main engine of global growth; this slowdown is of particular concern for Kenya and Africa.",
    "Risks identified:",
    "Regional performance:",
    "Positive contributors to resilience: low inflation, reduced levels of public debt, and adequate reserve levels.",
    "Benefits of growth: higher living standards and poverty reduction in many countries.",
    "Risks and policy warnings:",
    "Policy message: no complacency; Africa must grow faster to address social problems, create jobs for a young and growing population, and accelerate progress toward the Millennium Development Goals.",
    "IMF engagement: planned conference on \"Africa Rising\" in partnership with Mozambique to take stock of successes and challenges.",
    "Kenya characterized as a \"frontier\" economy with an impressive turnaround due to economic, political, and social changes.",
    "Economic policy achievements:",
    "External position: strong enough to tap international financial markets with the planned Eurobond issue.",
    "Vulnerabilities and resilience measures:",
    "Political developments:",
    "Financial inclusion:",
    "Key priorities framed as the \"Three C's\":",
    "Kenya's transformation attributed to public sector leadership and a vibrant private sector partnership.",
    "Education emphasized: universal primary education is impressive, especially for girls; importance of continued access at secondary and university levels stressed.",
    "Kenya's path to middle-income status is ongoing; momentum should be built upon.",
    "Closing admonition and encouragement: \"Pamoja twasonga mbele\" — \"Together we are moving forward.\"",
    "[Kenya and the IMF](http://www.imf.org/external/country/KEN/index.htm)",
    "[Technical Assistance -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-capacity-development)",
    "[Speeches](https://www.imf.org/en/news/searchnews)",
    "[Christine Lagarde](https://www.imf.org/external/np/omd/bios/cl.htm)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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