Although Kenya is the biggest and most advanced economy in east and central Africa, and has an affluent urban minority, it has a Human Development Index (HDI) of 0.519, ranked 145 out of 186 in the world. As of 2005, 17.7% of Kenyans lived on less than $1.25 a day. In 2017, Kenya ranked 92nd in the World Bank ease of doing business rating from 113rd in 2016 (of 190 countries). The important agricultural sector is one of the least developed and largely inefficient, employing 75% of the workforce compared to less than 3% in the food secure developed countries. Kenya is usually classified as a frontier market or occasionally an emerging market, but it is not one of the least developed countries.
The economy has seen much expansion, seen by strong performance in tourism, higher education and telecommunications, post-drought results in agriculture, especially the vital tea sector. Kenya’s economy grew by more than 7% in 2007, and its foreign debt was greatly reduced. But this changed immediately after the disputed presidential election of December 2007, following the chaos which engulfed the country.
East and Central Africa’s biggest economy has posted tremendous growth in the service sector, boosted by rapid expansion in telecommunication and financial activity over the last decade, and now contributes 62% of GDP. 22% of GDP still comes from the unreliable agricultural sector which employs 75% of the labour force (a consistent characteristic of under-developed economies that have not attained food security—an important catalyst of economic growth) A small portion of the population relies on food aid. Industry and manufacturing is the smallest sector, accounting for 16% of GDP. The service, industry and manufacturing sectors only employ 25% of the labour force but contribute 75% of GDP.
Privatization of state corporations like the defunct Kenya Post and Telecommunications Company, which resulted in East Africa’s most profitable company—Safaricom, has led to their revival because of massive private investment.
As of May 2011, economic prospects are positive with 4–5% GDP growth expected, largely because of expansions in tourism, telecommunications, transport, construction and a recovery in agriculture. The World Bank estimated growth of 4.3% in 2012.
In March 1996, the presidents of Kenya, Tanzania, and Uganda re-established the East African Community (EAC). The EAC’s objectives include harmonizing tariffs and customs regimes, free movement of people, and improving regional infrastructures. In March 2004, the three East African countries signed a Customs Union Agreement.
Kenya is East and Central Africa’s hub for financial services. The Nairobi Securities Exchange (NSE) is ranked 4th in Africa in terms of market capitalization. The Kenyan banking system is supervised by the Central Bank of Kenya (CBK). As of late July 2004, the system consisted of 43 commercial banks (down from 48 in 2001), several non-bank financial institutions, including mortgage companies, four savings and loan associations, and several core foreign-exchange bureaus.
