Equatable growth the key to Kenya’s upper middle-income dream
Council of Governors chairperson Anne Waiguru speaks at the launch of the Kenya-World Bank Group Country Partnership framework at KICC, Nairobi on Tuesday. She is flanked by Kenya Private Sector Alliance (Kepsa) CEO Carole Kariuki and Isiolo Senator Fatuma Dullo. PHOTO | DENNIS ONSONGO | NMG
Tuesday's launch of the Kenya-World Bank Group (WBG) Country Partnership Framework offers an opportunity to revisit the country's long-term development trends.
It is also a crucial chance to take stock of the country’s longstanding engagement with the WBG since independence.
The last 59 years have seen Kenya attain some key achievements including the highest Human Capital Index in continental sub-Saharan Africa, a dynamic and diversified private sector, leadership in digital innovation and critical improvements in infrastructure development.
The last two decades have seen robust economic growth, and today Kenya is rebounding from the Covid-19 pandemic and on the right path to becoming an upper middle-income country. However, three challenges remain along this path: productivity, equity and resilience.
In recent years, Kenya’s growth has been driven by public investment and private consumption, with national savings and private investment falling behind. Consequently, Kenya has not achieved the productivity levels that helped other middle-income countries maintain a steady rise in incomes.
However, if the country puts its resources, such as an increasingly better-educated and healthier labour force, rich natural capital and its financing from national savings, public revenues, global capital markets and development partners, to better use it can achieve those incomes.
In addition, the heavy public investment in infrastructure will complement private investment and so drive economic vibrancy in the near future.
Raising national productivity will require re-invigorating private investment by shifting the balance between the public and private sectors, improving the business climate and levelling the playing field between large and small firms, male and female-owned businesses and between enterprises in the capital and those in the counties.
It will also require strengthening institutions mandated to secure the benefits of free trade and fair competition.
To support Kenya in facing these challenges, the Country Partnership Framework will make use of the financing and knowledge that the World Bank Group can bring toward these three high-level outcomes.
The first is faster and more equitable growth in labour productivity and incomes by focusing on fiscal sustainability, the quality of public expenditures, and small firm and small producer performance.
The second is greater equity in service delivery outcomes by shrinking disparities in health and learning outcomes and bringing sustainable infrastructure services to all Kenyans.
The third is greater resilience and sustainability of Kenya’s natural capital by helping to stem its degradation and by working to enhance water security.
Prof Ndung’u is the National Treasury & Economic Planning Cabinet Secretary.
Dr Hansen is the Country Director for Kenya, World Bank
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