Kenyan firms see opportunity, risk in rapid urbanisation

Rapid urbanisation also has the potential to lift overall productivity and shift the economy from its reliance on agriculture to prop up output.

According to the official statistics, Kenya is becoming increasingly urbanised

In 1950, less that 6 per cent of the population lived in urban areas. Since then urbanization has increased fourfold to 32.3 per cent in 2009.

However, achieving the demographic dividend is not a foregone conclusion.

In general, Africa’s economic growth has largely failed to generate employment and significantly reduce poverty due in large part to low factor accumulation and low productivity growth.

“The weakness of Africa’s manufacturing base is a large component of this weakness, and Kenya is no exception to this,” says Mr. Freemantle.

Economists, however, argue that should Kenya’s youthful population fail to find meaningful employment, the thrust of development will be reversed and the potential benefits of such an increased population will convert into an intensified burden on the state to provide support.

The UN predicts that by 2050 Kenya will have around 85 million people, with the economically active population swelling to 55 million of 65 per cent of the total.

While observers contend that this does provide a unique and abundant opportunity for growth, the critical policies need to support industries with high labour absorption capacities across the region in order to unlock this potential.

In this, intensified investment in critical infrastructure is an absolute must, particularly power.