Destinations Africa

Tourism helps drive Kenya’s rapid economic expansion

May 23, 2013 7:35 am

Skift Take

Kenya’s vital tourism sector was heavily impacted by a violent dispute in 2007, but its newest president is a former head of tourism and is expected to prioritize tourism as the country’s economy grows.

— Samantha Shankman

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Dylan Walters  / Flickr

Converted garbage trucks are used to transport groups of 26 tourists around Kenya. Dylan Walters / Flickr


Kenya’s government said the economy is forecast to expand 6 percent in 2013, the fastest pace in six years, as investors gain confidence after a peaceful political transition and good weather boosts farming output.

Gross domestic product may expand from 4.6 percent last year, Anne Waiguru, planning secretary, told reporters today in the capital of East Africa’s largest economy, Nairobi.

“The stable macroeconomic environment, investor confidence after peaceful elections and favorable weather conditions for the main economic sector of agriculture” are factors driving growth, she said. Tourism and manufacturing industries are also seen driving the expansion, she said.

Kenya’s economic growth rate has never returned to the 7 percent level reached in 2007 when a disputed presidential election at the end of the year sparked two months of ethnic clashes that left more than 1,100 people dead. The turmoil triggered an immediate plunge in the stock market and currency and cut economic growth to 1.5 percent in 2008.

In March, Uhuru Kenyatta was elected president a vote that was largely peaceful, taking over from Mwai Kibaki who retired after two terms. Kenyatta has pledged to accelerate growth to at least 10 percent, create a million jobs a year and elevate the country to middle-income status within a generation.

Kenya’s central bank cut its policy rate by 9.5 percentage points since it started easing monetary policy last year as it tries to boost domestic demand. The rate was lowered 1 percentage point to 8.5 percent on May 7 after being raised to a record 18 percent in Dec. 2011 where it stayed until June.

Agriculture, which accounts for a fifth of the economy, grew 3.8 percent in 2012 from 1.5 percent a year earlier, while construct increased 4.8 percent from 4.3 percent, Waiguru said. Kenya is the world’s largest exporter of black tea and it supplies a third of the flowers traded in Europe.

The central bank in December forecast the economy would grow 5.6 percent this year from an estimated 5 percent last year.

With assistance from Eric Ombok in Nairobi. Editors: Sarah McGregor and Ben Holland.

To contact the reporter on this story: Johnstone Ole Turana in Nairobi at jturana@bloomberg.net. To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net.

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