Typical street scene in Santa Ana, El Salvador. (Photo: iStock)
September 9, 2013
Kenya is one of the success stories of Africa’s economic resurgence.
Resident of Nairobi, Kenya—potentially one of African frontier economies in next generation of emerging markets (photo: Felix Masi/Newscom)
AFRICA’S FRONTIER ECONOMIES
Only three years after the global financial crisis caused a sharp downturn in the Kenyan economy, the country has rebounded and earned a reputation as one of the continent’s frontier economies. Growth this year should be around 5.5 percent, inflation is subdued, the external position has improved, and foreign investment is flowing.
With this strong performance in mind, the Kenyan government and the IMF announced a conference, to be held in Nairobi on September 17-18, to discuss Kenya’s economic success, prospects, and challenges. Called Ready for Take Off, the event will feature government officials, business leaders from Kenya and abroad, representatives of donor governments—particularly emerging market countries—and international institutions, civil society figures, and academics. The keynote address will be delivered by the President of Kenya, Uhuru Kenyatta.
“Kenya’s progress provides a clear example of the strides that many African countries are taking in the area of economic policy,” said Antoinette Sayeh, Director of the IMF’s African Department. “It is one of a group of frontier economies that have the potential to emerge as the next generation of emerging markets. This conference will offer a unique opportunity to explore the policy options that can move Kenya to that next stage of development and to explore themes that are quite relevant to other African countries.”
Youth unemployment
A key element of the conference will be a discussion of the challenges Kenya now faces. Among the most important is addressing infrastructure bottlenecks and implementing the process of devolution. Underlying these issues is the need to achieve inclusive growth so that all Kenyans benefit from their country’s economic performance—an issue exemplified by the challenge of youth employment.
“As Kenya’s take off gathers speed, it is essential that the fruits of success be shared across society so that all Kenyans benefit,” said Domenico Fanizza, the IMF mission chief for Kenya. “The devolution issue is one important piece of that picture, as is an adequate prioritization of the country’s fiscal resources.”
Reform policies
Kenya’s recent economic performance has been driven, in part, by reforms implemented as part of the country’s three-year, $700 million program under the Extended Credit Facility. Under the reform effort, the Kenyan authorities have adopted several policies, including
• decentralizing government institutions in line with the 2010 Constitution;
• implementing more accountable management of public resources that has enabled Kenya to start upgrade its energy and transportation infrastructure;
• encouraging the expansion of mobile and agent banking, thus providing financial services to millions of Kenyans who never before have had access to banking; and
• putting in place sound monetary and fiscal policies that have reduced Kenya’s vulnerabilities by taming inflationary pressures, increasing international reserves, lowering the current account deficit, and improving Kenya’s public and external debt positions.
The conference will address many of these themes, including the harnessing of natural resources, fiscal priorities, monetary policies, the financial sector, infrastructure, and inclusive growth. The role and views of the countries that have come to be known as nontraditional donors—Australia, Brazil, China, India, and Korea—will be explored throughout the event. The conference will be by invitation.
