Blog African Lions - Tapping the potential of Kenya's economic growth.

 
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From 2000-2014, like many other sub-Saharan African countries, Kenya experienced high growth, at an average of 4.37 percent. Unfortunately, the 2007-2008 election-related violence as well as the global financial crisis halted much of Kenya's economic progress, meaning it has lagged slightly behind the region, whose average growth rate was 4.88 percent over that same period.

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Indeed, in a recent paper, The African Lions: Kenya country case study, Mwangi S. Kimenyi, Francis M. Mwega, and Njuguna S. Ndung'u argue that Kenya's economic gains have been noteworthy, but not transformative. Employment is still concentrated in agriculture. Most of the population is poor and lives in rural areas. Labor productivity is rising, but is still low. The country also falls behind in macroeconomic stability, health outcomes, governance, enrollment rate in higher education, and other important indicators of middle-income countries.

To the authors, it seems, Kenya is not yet meeting its potential, and so in their paper they explore Kenya's growth trends, demographic shifts, and employment landscape to forecast and recommend policies to help Kenya take a hold of its comparative advantages, exploit its so-far-missed opportunities, and reduce poverty. For more on these and related topics, you can read the full paper here.

Despite these challenges and largely thanks to its skyrocketing financial and information and communication technology advancements, Kenya is sub-Saharan Africa's fourth-largest economy (after Nigeria, South Africa, and Angola)--certainly an "African Lion," they say. However, many obstacles to growth are standing in its way, and, left unaddressed, will certainly prevent this lion from roaring any louder.

The shifting population of Kenya provides many opportunities for growth

The youth bulge and the potential for a demographic dividend

The age makeup of Kenya is changing, note Kimenyi et al., creating the potential for a demographic dividend--creating a larger working-age population compared to a dependent (young or retired) population and leading to growth in the supply of productive workforce--if policymakers can successfully prepare for and take advantage of its youth bulge.

Indeed, the youth bulge (and thus opportunity that comes with it) is there: Kenya's birth rates have rapidly declined while mortality rates have dropped significantly too. In 2014, the dependent population was 44.75 percent (20.4 million) of the total population, while the working-age population was larger, at 55.25 percent (25.2 million). The cohort of the population aged 0-14 is the largest now, and as its...

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