Editing Economy of Kenya (section)

==History==
Between 70 AD and 1500 AD, trade routes — spanning Africa, Asia and Europe — integrated the Kenyan coastal strip into the world economy.<ref>{{cite web|url=https://archive.org/details/cu31924030139236|title=The Periplus of the Erythræan sea; travel and trade in the Indian Ocean|work=New York : Longmans, Green, and Co.|access-date=30 September 2018}}</ref> Foreign merchants would bring their merchandise to the Kenyan coast and leave with African goods.<ref>{{cite web|url=http://www.malindikenya.net/en/articles/words/stories/600-years-ago-the-tales-of-the-first-chinese-in-malindi.html|title=ZANG HE LIVED FOR ONE YEAR IN KENYA IN 1417|work=malindikenya.net|access-date=30 September 2018|archive-date=30 September 2018|archive-url=https://web.archive.org/web/20180930193121/http://www.malindikenya.net/en/articles/words/stories/600-years-ago-the-tales-of-the-first-chinese-in-malindi.html|url-status=live}}</ref>

In 1499 AD, [[Vasco da Gama]], a Portuguese explorer, returned to Europe after discovering [[Portuguese discovery of the sea route to India|the sea route to India]] through South Africa.<ref>{{cite web|url=https://kenyatravelsites.wordpress.com/2011/12/15/the-history-of-the-vasco-da-gama-pillar/|title=The History of the Vasco da Gama Pillar|work=Kenya Travel Sites|access-date=30 September 2018|date=2011-12-15|archive-date=29 April 2017|archive-url=https://web.archive.org/web/20170429000132/https://kenyatravelsites.wordpress.com/2011/12/15/the-history-of-the-vasco-da-gama-pillar/|url-status=live}}</ref> This new route allowed European nations to dominate the trade economy of the East African coast, with the [[Portugal|Portuguese]] entrenching themselves in the 16th and 17th centuries.<ref>{{cite web|url=http://courses.wcupa.edu/jones/his312/lectures/portugal.htm|title=The Portuguese in Africa in the 19th Century|work=Jim Jones|access-date=30 September 2018|archive-date=2 November 2013|archive-url=https://web.archive.org/web/20131102214611/http://courses.wcupa.edu/jones/his312/lectures/portugal.htm|url-status=dead}}</ref> In the 18th century, the Portuguese were replaced in this East African economic corridor by [[Omani Arabs]].<ref>{{cite web|url=https://kenyastudy.wordpress.com/precolonialism/19th-century-omani-rule/|title=19th Century Omani Rule|work=kenyastudy.wordpress.com|access-date=30 September 2018|date=2013-05-13|archive-date=30 September 2018|archive-url=https://web.archive.org/web/20180930154701/https://kenyastudy.wordpress.com/precolonialism/19th-century-omani-rule/|url-status=live}}</ref> Eventually, the British replaced the Omani Arabs. In 1895 they dominated the coastal strip; by 1920, they had followed the interior trade routes all the way to the [[Buganda Kingdom]].<ref>{{cite web|url=http://www.enzimuseum.org/after-the-stone-age/british-east-africa-protectorate|title=British East Africa Protectorate|work=enzimuseum.org|access-date=30 September 2018|archive-date=6 May 2017|archive-url=https://web.archive.org/web/20170506035204/http://www.enzimuseum.org/after-the-stone-age/british-east-africa-protectorate|url-status=live}}</ref> To make this ancient economic trade route more profitable, the British used Indian labourers to build a railway from [[Mombasa]] at the coast to [[Kampala]], the capital of Buganda kingdom, following old trade routes.<ref>{{cite web|url=https://www.theeagora.com/the-lunatic-express-a-photo-essay-on-the-uganda-railway/|title=THE LUNATIC EXPRESS|work=The Agora|access-date=30 September 2018|archive-url=https://web.archive.org/web/20160422095958/http://www.theeagora.com/the-lunatic-express-a-photo-essay-on-the-uganda-railway/|archive-date=22 April 2016}}</ref> Major towns were founded along the railway line, backed by European settler farming communities. The Indian labourers who did not return to [[British India|India]] after railway construction ended were the first to establish shops (dukawallahs) in these towns.<ref>{{cite journal |jstor = 182007|title = Settler Dominance, Agricultural Production and the Second World War in Kenya|journal = The Journal of African History|volume = 21|issue = 4|pages = 497–514|last1 = Spencer|first1 = Ian|year = 1980|doi = 10.1017/S0021853700018715| s2cid=162566026 }}</ref><ref>{{cite web|url=http://www.enzimuseum.org/archives/275|title=Construction of the Kenya-Uganda Railway|work=enzimuseum.org|access-date=30 September 2018|archive-date=11 October 2018|archive-url=https://web.archive.org/web/20181011185510/http://www.enzimuseum.org/archives/275|url-status=live}}</ref>

During the colonial period, the European settler farming community and the Indian dukawallahs established the foundations of the modern formal Kenyan economy.<ref>{{cite web|url=http://learn.e-limu.org/topic/view/?c=48&t=270|title=European settler farming|work=eLimu|access-date=30 September 2018|archive-date=30 September 2018|archive-url=https://web.archive.org/web/20180930154538/http://learn.e-limu.org/topic/view/?c=48&t=270|url-status=live}}</ref> Prominent examples of Asian-Kenyan business owners whose businesses started as dukawallahs include [[Manu Chandaria]] and [[Madatally Manji]].<ref>{{cite journal |last= Himbara |first= David |year= 1993 |title= Myths and Realities of Kenyan Capitalism |jstor= 161345 |journal= Journal of African Political Economy |volume= 31 |issue= 1 |pages= 93–107 }}</ref> While Europeans and Indians enjoyed strong economic growth between 1920 and 1963, Africans were deprived of their land, dehumanised, and forced to work for minimal pay under extremely poor working conditions through a well-established system of racial segregation.<ref>{{cite web|url=https://shareok.org/bitstream/handle/11244/19024/Thesis-1977-C523s.pdf|title=Racial Discrimination In Kenya During the Colonial Period|work=Ruth Catherine Cheruiyot Oklahoma State University, StillWater 1974|access-date=30 September 2018|archive-date=21 March 2023|archive-url=https://web.archive.org/web/20230321003023/https://shareok.org/bitstream/handle/11244/19024/Thesis-1977-C523s.pdf|url-status=live}}</ref>

Kenya gained its independence in 1963. Under President [[Jomo Kenyatta]], the Kenyan government promoted [[africanisation]] of the Kenyan economy,<ref>{{cite web|url=http://siteresources.worldbank.org/INTAFRICA/Resources/257994-1335471959878/Sessional-Paper-No-10-(1965).pdf|title=Sessional-Paper-No-10(1965) African Socialism and its Application to Planning in Kenya|work=Tom Mboya and Mwai Kibaki-Kenya Government 1965|access-date=30 September 2018|archive-date=11 February 2020|archive-url=https://web.archive.org/web/20200211204556/http://siteresources.worldbank.org/INTAFRICA/Resources/257994-1335471959878/Sessional-Paper-No-10-(1965).pdf|url-status=live}}</ref> generating rapid economic growth through public investment, encouragement of [[smallholding|smallholder]] agricultural production, and incentives for private, often foreign, industrial investments. An influential sessional paper authored by [[Tom Mboya]] and [[Mwai Kibaki]] in 1965 stressed the need for Kenya to avoid both the capitalistic economy of the West and the communism of the East.<ref name=":0" /> The paper argued that Kenya should instead concentrate on African socialism, while avoiding linking Kenya's economic fortunes to any country or group of countries.<ref name=":0">{{cite web|url=http://siteresources.worldbank.org/INTAFRICA/Resources/257994-1335471959878/Sessional-Paper-No-10-(1965).pdf|title=Sessional-Paper-No-10 (1965) African Socialism and its Application to Planning in Kenya pg 16, Relationship With Other Countries|work=Kenya Government 1965|access-date=30 September 2018|archive-date=11 February 2020|archive-url=https://web.archive.org/web/20200211204556/http://siteresources.worldbank.org/INTAFRICA/Resources/257994-1335471959878/Sessional-Paper-No-10-(1965).pdf|url-status=live}}</ref> From 1963 to 1973, GDP grew at an annual average rate of 6.6%; during the 1970s, it grew at an average rate of 7.2%. Agricultural production grew by 4.7% annually in the same period, stimulated by redistributing estates, distributing new crop strains, and opening new areas to cultivation. However, the rate of GDP growth declined to 4.2% per year in the 1980s, and 2.2% a year in the 1990s.<ref>{{Cite web|url=http://www.brookings.edu/~/media/research/files/papers/2016/05/16-kenya-country-case-study/kenya-country-case.pdf|title=The African Lions: Kenya country case study|author1=MWANGI S. KIMENYI|author2=FRANCIS M. MWEGA|author3=NJUGUNA S. NDUNG'U|date=May 2016|publisher=The Brookings Institution|access-date=23 May 2016|archive-date=27 May 2016|archive-url=https://web.archive.org/web/20160527210738/http://www.brookings.edu/~/media/research/files/papers/2016/05/16-kenya-country-case-study/kenya-country-case.pdf|url-status=live}}</ref>

Kenya's policy of [[Import substitution industrialization|import substitution]], which started in 1946 with European and Asian enterprises, did not achieve the desired result of transforming Kenya's industrial base. In the late 1970s, rising oil prices began to make Kenya's manufacturing sector noncompetitive.<ref>{{cite journal|url=https://opendocs.ids.ac.uk/opendocs/handle/123456789/754|title=The effects of import-substitution: the case of Kenya's manufacturing sector|journal=Meilink, Henk A. (1982) Nairobi: Institute for Development Studies, University of Nairobi|access-date=30 September 2018|date=June 1982|last1=Meilink|first1=Henk A.|archive-date=30 September 2018|archive-url=https://web.archive.org/web/20180930194625/https://opendocs.ids.ac.uk/opendocs/handle/123456789/754|url-status=live}}</ref> In response, the government began a massive intervention in the private sector. Lack of export incentives, tight import controls, and foreign exchange controls made the domestic environment for investment even less attractive.<ref name=":1" />

In the 1980s and 1990s, Kenya signed structural adjustment loans with the World Bank and IMF, the loans were to be given on the condition that Kenya adopts government reforms, a liberal trade and interest rate regime, and an outward-oriented industrial policy, among other reforms.<ref name="oxfordbusinessgroup.com">{{Cite web |date=2018-11-05 |title=Conditions for economic growth have improved in Kenya, but challenges remain |url=https://oxfordbusinessgroup.com/overview/next-level-conditions-growth-have-improved-though-challenges-remain-reduce-deficit-and-support |access-date=2020-12-07 |website=Oxford Business Group |language=en |archive-date=26 December 2020 |archive-url=https://web.archive.org/web/20201226223854/https://oxfordbusinessgroup.com/overview/next-level-conditions-growth-have-improved-though-challenges-remain-reduce-deficit-and-support |url-status=live }}</ref> The Kenyan economy performed very poorly during this era of World Bank and IMF-driven liberalisation at the height of [[Daniel Arap Moi]] administration.<ref>{{cite web |title=Kenya's Trade Liberalization of the 1980s and 1990s:Policies, Impacts, and Implications |url=https://carnegieendowment.org/files/kenya_background.pdf |access-date=10 March 2022 |work=Carnegie Endowment For International Peace |archive-date=11 August 2021 |archive-url=https://web.archive.org/web/20210811120449/https://carnegieendowment.org/files/kenya_background.pdf |url-status=live }}</ref>

From 1991 to 1993, Kenya had its worst economic performance since independence. Growth in GDP stagnated, and agricultural production shrank at an annual rate of 3.9%. Inflation reached a record of 100% in August 1993, and the government's budget deficit was over 10% of GDP.<ref name=":1">{{cite web|url=https://2009-2017.state.gov/outofdate/bgn/kenya/201469.htm|title=Kenya (05/07/12)|work=U.S. Department of State|access-date=11 June 2015|archive-date=30 July 2020|archive-url=https://web.archive.org/web/20200730231627/https://2009-2017.state.gov/outofdate/bgn/kenya/201469.htm|url-status=live}}</ref> As a result of these issues, bilateral and multilateral donors suspended their aid programmes in Kenya in 1991.<ref>{{cite news|url=https://www.nytimes.com/1991/11/27/world/aid-donors-insist-on-kenya-reforms.html|title=Aid Donors Insist on Kenya Reforms|work=New York Times Archives STEVEN GREENHOUSE 27 NOV. 1991|access-date=30 September 2018|date=1991-11-27|last1=Greenhouse|first1=Steven|archive-date=2 September 2020|archive-url=https://web.archive.org/web/20200902043628/https://www.nytimes.com/1991/11/27/world/aid-donors-insist-on-kenya-reforms.html|url-status=live}}</ref>

In 1993, the Kenyan government began a major programme of economic reform and [[liberalisation]]. A new minister of finance and a new governor of the [[central bank]] undertook a series of economic measures with the assistance of the [[World Bank]] and the [[International Monetary Fund]] (IMF). The government eliminated [[price controls]] and import licensing, removed [[foreign exchange controls]], [[privatised]] a number of publicly owned companies, reduced the number of civil servants, and introduced conservative fiscal and monetary policies. From 1994 to 1996, Kenya's real GDP growth rate averaged just over 4% a year.<ref>{{cite book| author = David Bigman| title = Globalization and the Developing Countries: Emerging Strategies for Rural Development and Poverty Alleviation| url = https://books.google.com/books?id=QKFCo5ajRCcC&pg=PA136| year = 2002| publisher = CABI| isbn = 978-0-85199-575-5| page = 136 }}</ref>

[[File:GPD per capita development of Kenya.svg|thumb|450px|Kenya's economic performance since independence.|alt=]]

In 1997, however, the economy entered a period of slow growth, due in part to adverse weather conditions and reduced economic activity before the general elections in December 1997. In July 1997, the Government of Kenya refused to meet earlier commitments to the IMF on [[governance]] reforms.<ref>{{cite web|url=https://www.independent.co.uk/news/world/nairobi-halts-imf-and-world-bank-reforms-president-moi-says-it-is-impossible-for-kenya-to-meet-the-1499533.html|title=Nairobi halts IMF and World Bank reforms|work=independent.co.uk|access-date=30 September 2018|date=1993-03-24|archive-date=4 December 2020|archive-url=https://web.archive.org/web/20201204092352/https://www.independent.co.uk/news/world/nairobi-halts-imf-and-world-bank-reforms-president-moi-says-it-is-impossible-for-kenya-to-meet-the-1499533.html|url-status=live}}</ref> As a result, the IMF suspended lending for three years, and the World Bank put a $90 million [[structural adjustment]] credit on hold.<ref name="allafrica.com">{{cite web|url=https://allafrica.com/stories/200101180259.html|title=Kenya: World Bank, IMF Suspend Financial Aid to Kenya|work=allafrica.com|access-date=30 September 2018|archive-date=1 August 2020|archive-url=https://web.archive.org/web/20200801122032/https://allafrica.com/stories/200101180259.html|url-status=live}}</ref>

The Kenyan government subsequently took positive steps on reform, including the establishment of the [[Kenya Anti-Corruption Authority]] in 1997. The state also implemented measures to improve the transparency of government procurement and reduce the government payroll. In July 2000, the IMF signed a $150 million Poverty Reduction and Growth Facility, and the [[World Bank]] followed shortly after with a $157 million Economic and Public Sector Reform credit. However, both were eventually suspended.<ref name="allafrica.com"/> Despite setbacks, the process of reform established Kenya as East Africa's economic powerhouse and the region's business hub.<ref name="oxfordbusinessgroup.com"/>

Economic growth improved between 2003 and 2008, under the [[Mwai Kibaki]] administration.<ref>{{cite web|url=http://siteresources.worldbank.org/KENYAEXTN/Resources/ERS.pdf|title=ECONOMIC RECOVERY STRATEGY FOR WEALTH AND EMPLOYMENT CREATION 2003 - 2007|work=Kenya Government 2003|access-date=30 September 2018|archive-date=19 July 2020|archive-url=https://web.archive.org/web/20200719125641/http://message.worldbank.org/isp_error_page.htm|url-status=live}}</ref> When Kibaki took power in 2003, he immediately established the National Debt Management Department at the treasury, reformed the [[Kenya Revenue Authority]] (KRA) to increase government revenue, reformed financial laws on banking, wrote off the debts of strategic public enterprises, and ensured that 30% of government tax revenue was invested in economic development projects. With these reforms, driven by the [[National Rainbow Coalition]] government, the KRA collected more tax revenue in 2004 than was anticipated. The government then initiated investments in infrastructure. By 2005, the Kenyan public debt had reduced from highs of 80% of GDP in 2002 to 27% of GDP in 2005. The financial sector greatly improved, and [[Equity Bank Kenya]] became one of the largest banks in East Africa. Economic growth improved from 2% in 2003 to 7% in 2007.<ref>{{cite web|url=http://vision2030.go.ke/wp-content/uploads/2018/05/Vision-2030-Popular-Version.pdf|title=Kenya Vision 2030|work=Kenya Government 2007|access-date=30 September 2018|archive-date=30 July 2020|archive-url=https://web.archive.org/web/20200730224202/http://vision2030.go.ke/wp-content/uploads/2018/05/Vision-2030-Popular-Version.pdf|url-status=live}}</ref> In 2008, the growth slumped to 1%<ref>{{cite web|url=https://ke.boell.org/sites/default/files/uploads/2013/02/election_dispatch_six.pdf|title=The Impact of Election (2007/2008) Violence on Kenya's Economy: Lessons Learned?|work=Dr. Kiti Reginah M.K Kitiabi (PhD), ke.boell.org|access-date=30 September 2018|archive-date=30 July 2020|archive-url=https://web.archive.org/web/20200730235451/https://ke.boell.org/sites/default/files/uploads/2013/02/election_dispatch_six.pdf|url-status=live}}</ref> due to [[2007–2008 Kenyan crisis|post-election violence]] before returning to an average of 5% between 2009 and 2013.<ref>{{Cite web | url=https://www.knbs.or.ke/download/economic-survey-2018/ | title=Economic Survey 2018 | access-date=30 September 2018 | archive-url=https://web.archive.org/web/20180930120021/https://www.knbs.or.ke/download/economic-survey-2018/ | archive-date=30 September 2018 | url-status=dead }}</ref><ref>{{cite web|url=https://newafricanmagazine.com/news-analysis/politics/kenya-after-kibaki/|title=Kenya After Kibaki|date=2012-05-08|work=New African Magazine|access-date=24 March 2019|archive-date=24 March 2019|archive-url=https://web.archive.org/web/20190324094318/https://newafricanmagazine.com/news-analysis/politics/kenya-after-kibaki/|url-status=live}}</ref> However, in 2009, due to drought and the global financial crisis, high input costs as well as a fall in demand for some of the country's exports caused the agriculture sector to contract by 2.7%.

Between 2013 and 2018, under the [[Jubilee Party]] government led by [[Uhuru Kenyatta]], the GDP growth averaged above 5%.<ref>{{cite web|url=https://www.worldbank.org/en/country/kenya/overview|title=Kenya Overview 2013-2018|work=World Bank|access-date=30 September 2018|archive-date=23 December 2020|archive-url=https://web.archive.org/web/20201223112449/https://www.worldbank.org/en/country/kenya/overview|url-status=live}}</ref><ref>{{cite web|url=https://www.knbs.or.ke/download/economic-survey-2018/?wpdmdl=4856&ind=NqCti4zG9i8MCZGvGUmRHsMzDNPGBToCfxmPbYsi3W8iViyAJeRSC1yuQW_6AjGFVdTXfv-Z8p1Q6fv0rSCNAQ|title=Kenya Economic Survey 2018|work=KNBS, REPUBLIC OF KENYA|access-date=24 March 2019|date=2018-04-25}}{{Dead link|date=November 2019 |bot=InternetArchiveBot |fix-attempted=yes }}</ref> Growth in small businesses is credited with some of the improvement.<ref>[http://www.inwent.org/ez/articles/192561/index.en.shtml KenInvest supports small businesses to become engines of growth in Kenya {{!}} dandc.eu] {{webarchive|url=https://web.archive.org/web/20110809095903/http://www.inwent.org/ez/articles/192561/index.en.shtml|date=9 August 2011}}</ref> Real GDP growth (annualised) was 5.7% in Q1 of 2018, 6.0% in Q2 2018 and 6.2% in Q3 2018.<ref>{{cite web|url=http://documents.worldbank.org/curated/en/766271538749794576/pdf/Kenya-Economic-Update-18-FINAL.pdf|title=Kenya Economic Update:Kenya's Economy Poised to Rebound in 2018 and Remain Robust through 2020|date=2018-10-11|work=World Bank|access-date=24 March 2019|archive-date=26 November 2019|archive-url=https://web.archive.org/web/20191126104951/http://documents.worldbank.org/curated/en/766271538749794576/pdf/Kenya-Economic-Update-18-FINAL.pdf|url-status=live}}</ref> Despite this robust growth, concerns remained about Kenya's debt sustainability, current account deficit, fiscal consolidation and revenue growth.<ref>{{cite web|url=http://www.treasury.go.ke/component/jdownloads/send/203-budget-policy-statement/1348-2019-budget-policy-statement.html|title=2019 BUDGET POLICY STATEMENT|date=2019-02-11|work=The National Treasury, Republic of Kenya|access-date=24 March 2019|archive-date=21 December 2019|archive-url=https://web.archive.org/web/20191221050413/http://treasury.go.ke/component/jdownloads/send/203-budget-policy-statement/1348-2019-budget-policy-statement.html|url-status=dead}}</ref><ref>{{cite web|url=https://cytonn.com/uploads/downloads/the-draft-2019-budget-policy-statement-note.pdf|title=The Draft 2019 Budget Policy Statement Note|date=2019-02-11|work=Cytonn Kenya|access-date=24 March 2019|archive-date=30 July 2020|archive-url=https://web.archive.org/web/20200730230640/https://cytonn.com/uploads/downloads/the-draft-2019-budget-policy-statement-note.pdf|url-status=live}}</ref>

The table below shows the GDP of Kenya [http://www.imf.org/external/pubs/ft/weo/2006/01/data/dbcselm.cfm?G=2001 estimated] {{Webarchive|url=https://web.archive.org/web/20100611172746/http://www.imf.org/external/pubs/ft/weo/2006/01/data/dbcselm.cfm?G=2001 |date=11 June 2010 }} by the International Monetary Fund, with exchange rates for [[Kenyan shilling]]s.
{| class="wikitable"
|-
! Year || Nominal GDP(USD) || US Dollar Exchange
|-
| 1980 || 7.265 billion || 7.42 shillings
|-
| 1985 || 6.135 billion || 16.43 shillings
|-
| 1990 || 8.591 billion || 22.86 shillings
|-
| 1995 || 9.046 billion || 50.42 shillings
|-
| 2000 || 12.71 billion || 78.58 shillings
|-
| 2005 || 18.74 billion || 75.55 shillings
|-
| 2010 || 40 billion || 78.90 shillings
|-
| 2015 || 63.77 billion || 96.85 shillings
|-
| 2020 || 101.1 billion || 107 shillings 
|}