In 2003, the government of the National Rainbow Coalition (NARC) formulated a five

year development strategy. This strategy was anchored on the principles of

democracy and empowerment (The strategy put a case for empowerment of the people
through creation of employment and other income earning opportunities. Despite all
these interventions, creation of adequate, productive and sustainable employment
continues to be the greatest economic challenge for Kenya. For or more than four
and a half decades now, the Kenya government has continuously articulated the need
to create sufficient employment opportunities to absorb the country’s growing
labour force. Unemployment and underemployment have been identified as Kenya’s most
difficult and persistent problems.
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Where Do Kenyans Work?
Jobs in Kenya can be hard to find simply due to the high rate of unemployment in
the country, and lack of job diversity. The main industry in Kenya is agriculture
(with tea, coffee and flower farming being rather big), and approximately 75% of
the population is employed in that field. In terms of revenue, tourism is big as
well. The official unemployment rate in 2004 for 15%, though some estimates place
the true figure much higher. People with very specialized training in fields other
than agriculture may find Kenya job opportunities to be scarce. This has created a
difficult situation as more and more young Kenyans pursue higher education, only to
find the job market cannot accommodate them. Minimum wages for Kenya jobs vary by
location and skill level, and are not consistent through the country. In 2006, the
minimum wage for an urban worker was approximately 4,600 Kenyan shillings, which
was $60 US per month (at 2006 exchange rates). This not enough income to support a
family, which leaves many workers relying on additional work or subsistence farming
to survive.
The agricultural sector continues to dominate Kenya’s economy, although only 15
percent of Kenya’s total land area has sufficient fertility and rainfall to be
farmed. Agriculture is the second largest contributor to Kenya’s gross domestic
product (GDP) after the service sector. Kenya’s services sector, which contributes
about 63 percent of GDP, is dominated by tourism. The tourism sector exhibited
steady growth in most years. In Kenya the sevice sector contributes 47.7% and thee
agricultural sector contributes 35% and the industry contributes upto 17.6% to the
economys gdp.
As an agricultural exporting and capital goods importing nation, Kenya routinely
runs a balance of trade deficit that renders it highly dependent on loans and aid
to finance needed imports. The balance of trade deficit varies widely, depending
upon, among other things, the market success of agricultural export commodities in
a given year (as we have seen, this in turn, depends on both weather conditions and
international commodity prices). In 1996, for instance, the deficit stood at
US$73.5 million, while this figure increased dramatically to US$251.7 million in
2000—a year of endemic drought. With a large amount of foreign exchange reserves ,
however, which equaled US$875 million in 2000, Kenya has been able to reduce its
total external debt significantly, from US$6.9 billion in 1996 to US$5.7 billion in
2000. Kenya’s principal exports include tea, coffee, horticultural products, and
petroleum products. Exports designated to Western Europe, particularly the United
Kingdom and Germany, have increased considerably.
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Kenya is the largest exporter of tea in the world. Tea is grown on more than
110,000 hectares of land. It’s also the 17th largest exporter of coffee. Much of
the coffee is grown on farms around Nairobi. Kenyan coffee is bought and sold at
the Nairobi Coffee Exchange every Tuesday of the week. Kenya’s chief exports are
horticultural products and tea. In 2005, the combined value of these commodities
was US$1,150 million, about 10 times the value of Kenya’s third most valuable
export, coffee. Kenya’s Main trading partners include Uganda, Tanzania, Rwanda,
Burundi Egypt, South Africa, European Union (EU) United Kingdom, Saudi Arabia,
United Arab Emirates, United States of America, Japan, Pakistan and India Kenya’s
other significant exports are petroleum products, sold to near neighbours, fish,
cement, pyrethrum, and sisal. The leading imports are crude petroleum, chemicals,
manufactured goods, machinery, and transportation equipment.
Every day, Kenya’s capital Nairobi is facing endless traffic jams. Our colleagues
spend hours every day to commute to and from work. One Kenyan colleague escapes
traffic by leaving home at 4.30am, others by leaving the office as late as 9pm.
Given this congestion, escalating costs of living and high crime, why are Kenyans
moving into cities more rapidly than ever – more 250,000 every year? Our fourth
Kenya Economic Update titled ”Turning the Tide in Turbulent Times” argues that East
Africa’s largest economy can benefit from demographic change and rapid
urbanization, despite the pains it entails. First, like the rest of Africa, Kenya
is still predominantly rural but urbanizing rapidly. Today, 30 percent of Kenyans
live in cities. From now on, most of Kenya’s population growth will be urban. While
total population will double by 2045, the urban population will more than quadruple
(see figure 1). By 2033 the country will reach a “spatial tipping point”, when half
of Kenya will be residing in the urban areas.
Second, population growth and urbanization go together. Today, Kenya has 40 million
people, and adding more than one million each year. By 2030, there will be 63
million Kenyans and the country will also have the opportunity to reap a
“demographic dividend”. With more people in the same space, there will be more
cities and bigger cities: Kenyan cities of 100,000 people and above will grow from
21 today to 37 in 2020. Third, urbanization and growth go together. As the World
Development Report 2009 demonstrates convincingly, no country has ever reached high
income with low urbanization. Kenya’s cities are already powering the country’s
economy. Nairobi and Mombasa are home to 10 percent of the population but represent
40 percent of the country’s wage earnings. If cities thrive, the overall economy
will benefit. But cities will only become true growth poles if Kenya continues to
upgrade infrastructure within and between urban centers.
Fourth, Kenya needs a coastal hub. Given the high transport costs within East
Africa, only a coastal hub, i.e. Mombasa, would be in a position to become a
manufacturing center for global products. Rising wages in Asia will provide
incentives for manufacturing companies to locate to Africa. Mombasa could be an
attractive destination, but it will only live up to its potential if it manages to
tackle inefficiencies in the port, a dilapidated urban infrastructure, and the
opaque system of land titling. Fifth, cities need to grow and thrive. Kenya’s new
constitution prepared the ground for substantial devolution of power to 47
counties, which provides opportunities for better accountability and local service
delivery. However, despite rapid urbanization, 42 out of the 47 Kenya’s new
counties will be predominantly rural. At the same time, there is a risk that
Kenya’s medium-sized cities with 100,000 to 400,000 people, will not receive the
autonomy and resources they need. Kenya needs a separate urban tier to help manage
rapid urbanization successfully.