Political power struggles and misguided policy have held back Kenya’s economic development. At this point Kenya has made a commitment to support and improve communication and transportation infrastructure. Kenya is East Africa’s hub for finance, communication and transportation services. For decades government corruption held back external investment and involvement from international financial support from the IMF and World Bank. In the late 1990s, after a decade of slow economic growth, the government established the Kenya Anti-Corruption Authority and took measures to improve government transparency about procurement and payroll.
A Cradle and A Crossroads
Part of the great rift valley is in Kenya and some of the earliest archeological finds of human ancestors were found there. This particular part of East Africa is a crossroads for many ethnic cultures including: English, African, Indian, Chinese and Arab. Industry is broken into ethnic sectors as much as it’s broken into more traditional social and economic sectors. The Africans predominate in agriculture, which employs over 75 percent of the population. However, this is the poorest sector of the economy. There is a substantial presence of subsistence farmers who live close to the land and raise traditional crops along with tea for export. The coffee crop has dwindled in Kenya due to low prices on the international market. Economic opportunity for growth is limited for farmers, unless the government helps.
The problems in Kenya are not unique. The country was liberated from British rule in 1963 and like so many other post-colonial countries the problems of independence have been frustrating and pervasive. Getting the various ethnic groups that are now living there to all bond as a nation and contribute to the national well-being is difficult. Most of these groups see their own well-being as a sub-group within the nation as more important than believing in the national government. And the long history of government corruption doesn’t do much to change circumstances.
The British community and European community that remained in Kenya after independence had the best international financial connections. Now that group has become the center of the Nairobi financial community that serves as the financial center of East Africa and also as the center of the tourism industry in Kenya. The Chinese and Indians who were brought to Kenya in colonial times as slave labor are now communities who remain connected to their home countries. Their identity is as much Asian and South Asian as it is African. But both the Chinese and the Indians built internal markets for goods and services in Kenya to service their own needs.
Kenya’s industrial sector has succeeded as well as any of the East African countries, but has post-colonial fragmentation problems that, thus far, have keep it from truly succeeding as a nation. The infrastructure depends on outside international investment and that is now beginning to support infrastructure improvements, but the improvements are focused on the tourism industry and Urban electrical power supply more than the agricultural sector of the economy. The indigenous African community suffers from an inequitable distribution of investment finance.
As a result of the long post-colonial struggle for national unity, Kenya’s industry is small in scale and tends to be food oriented like, grain milling, beer production and sugarcane crushing. There are also small scale consumer product manufacturers for household goods, motor vehicle parts, farm implements and there is one oil refinery where about half of Kenya’s petroleum products are produced. One of the most debilitating problems for the manufacturing sector is lack of electricity. Manufacturing is hampered by shortages of hydroelectricity, dilapidated transport infrastructure, high energy costs and dumping of cheap imported products that undermine domestic market growth.
On The Fringe Of Islam
In August, 1998 the U.S. Embassy in Nairobi was destroyed by a truck bomb and as a result Western governments issued negative travel advisories for Kenya. Until that incident, tourism was the largest industry in Kenya and had grown every year since independence. People came mostly to stay on the coastal beaches and to go on trips in the two national game reserves. The Embassy attack was linked to local members of the Egyptian Islamic Jihad, and was the event that first brought al-Qaeda, Osama bin Laden and Ayman al-Zawahiri to the attention of the American public.
As a result of this bombing Kenya’s economy shifted, as tea export became the biggest foreign currency earner, displacing tourism. The agricultural sector became the leading national industry for reasons that had nothing to do with government policy or economic growth strategies. After an economic downturn the government and tourist industry organizations focused attention on tourism by establishing tourist security police and launching marketing campaigns in key tourist markets like Germany and England. There has been a concerted effort to reverse negative publicity about Islamic terrorism in Kenya and the larger region. The tourist industry has made a come back and is once again the most profitable industry in Kenya.
The industrial cycle involves life-long support for society. It is usually offered as a combination of institutionalized financial assets, like pensions, insurance, and health care. The way these assets are shaped and delivered differs in every country and their dependability and availability also differs greatly from country to country. In Kenya there is a small civil service tied to the government that gets benefits like pensions and health insurance. The farming community is not included in government benefit programs. The financial sector and the urban business community use savings and insurance programs as part of employment. The institutionalized social support in Kenya is not at all universal and what does exist depends on free-market programs more than government programs. Kenya’s industrial cycle is not well developed.