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The Kenyan government implements new economic initiatives to update and internationalize its development model. Its economy is the most vigorous in East Africa, and it has been characterized by a long and consolidated diplomatic trajectory and efforts. The African country is a strong ally of the United States, and its foreign policy is directed towards the main and most relevant centers of power.
According to recent reports on the economic development of Kenya, its economy is expected to grow at a slightly faster pace this year. The World Bank highlighted the recovery in the key agriculture sector.
The East African nation’s economy will expand by 5.0% in 2023, the bank said in its latest biannual Kenya Economic Update report, inching up from 4.8% last year.
Following a debilitating drought in the past two years, many farming areas have enjoyed adequate rainfall in recent months, which could boost production and reduce inflationary pressure.
According to foreign investors, the economy of the country has many opportunities but also many risks. A promising macroeconomy, but divorced from a largely impoverished and profoundly unequal society.
The revenue growth is attributed to implementation of key strategies as enshrined in KRA’s 8th Corporate Plan. Some of these strategies included:
1. Customer support programmes
2. Tax base expansion
3. Taxation on digital economy
4. Tax at source
5. Debt collection programmes
6.…— Kenya Revenue Authority (@KRACorporate)
July 14, 2023
Kenyan President William Ruto, a former businessman who has been vice president since 2013, has taken on the challenge of reversing the country’s high inflation, political polarization, and the effects of a deep drought.
The visit of Iranian President Seyed Ebrahim Raisi to Kenya two days ago hit international headlines. Five memoranda of cooperation were signed in the areas of health, communication, culture, fishing, and professional technology. News coverage has focused on the Iranian president’s tour, his time in Africa, and his objectives to promote economic diplomacy, strengthen political relations, and diversify export destinations. These are possible strategic objectives that may be at stake.
However, the international media also stressed that this visit is the result of the efforts and actions that the African country has been carrying out this year to be included in numerous international agendas. Raisi acknowledged that the visit “is a turning point in the development of relations” between both nations and that his talks with President Ruto reflect “the determination of both countries to expand economic, trade, political, and cultural cooperation.”
The electric car industry is perhaps one of the most daring initiatives that Kenya has implemented. Although this industry has just started in Kenya, where there are barely 350 electric vehicles, the government intends to boost this uptake between now and 2025 to increase the number of electric vehicle imports to 5% of total imports.
The question is whether Kenya is ready for an exodus to EVs. In its 2023 Budget Policy Statement, the government promised to provide financial and tax incentives for PSVs and commercial transporters to convert to EVs.
Excise duty on EVs is already lower than on ICE vehicles, but as EVs are expensive due to the high cost of batteries, the lower duty rate may not be effective in achieving affordability.
Since 2022, the country has implemented agreements with other countries in the health sector. A Japanese high-tech company has been working in Kenya since 2022 to address chronic blood shortages. The agreement stems from the intention of both sides to develop work with a strong social impact. The work of this company is focused on saving the lives of sub-Saharan mothers, and the government implements an educational policy that encourages blood donation in the next generation.
The government also set up development programs in agriculture, which is one of the pillars of the country’s economy. The sector represents almost a quarter of total production and employs more than 70 percent of the workforce.
The peaceful latest elections in the country, which, unlike the previous ones, promoted a climate of consensus and national reconciliation, activated many foreign investments that were waiting for events.
Ruto seeks to promote investment in agriculture, especially in small businesses, enabling affordable working and living conditions, medical care, and technology in the sector.
