{"id":1578,"date":"2011-01-20T08:51:16","date_gmt":"2011-01-20T08:51:16","guid":{"rendered":"http:\/\/www.global-briefing.org\/?p=1578"},"modified":"2011-01-21T16:53:05","modified_gmt":"2011-01-21T16:53:05","slug":"mobile-power-leads-expansion","status":"publish","type":"post","link":"https:\/\/www.global-briefing.org\/2011\/01\/mobile-power-leads-expansion\/","title":{"rendered":"Mobile power leads expansion"},"content":{"rendered":"

The growth of telecommunications in recent years is helping to stimulate an economic revolution in East Africa\u2019s largest economy, and Kenyans abroad are helping out too, writes Tom Maliti<\/span><\/strong><\/p>\n

Kenya\u2019s economy has been managing to pull through from both the global financial crisis and the country\u2019s domestic meltdown in 2008, in part because the agricultural and manufacturing sectors have recorded positive growth in 2010 for the first time in three years.<\/span><\/p>\n

Central Bank of Kenya\u2019s Governor, Professor Njuguna Ndungu, attributes the growth in agriculture to the good and regular rains since 2008, when the country experienced a drought. Ndungu also said that the Kenyan economy was able to begin recovering faster because, unlike during previous times of economic decline – such as the global oil crisis of the 1970s – the government did not redirect its budget for ongoing infrastructure and other development needs towards the running costs of government or other more immediate priorities. \u201cThis time we protected the development budget and protected capacity for future growth,\u201d Ndungu said. \u201cWe are confident we are going to achieve 5 percent [economic growth] in 2010.\u201d<\/span><\/p>\n

The 5 percent forecast is confirmed by other experts such as the director-general of the secretariat for Kenya\u2019s Vision 2030 programme, Mugo Kibati, whose task is to set out a viable blueprint for Kenya to become a middle-income country over the next two decades. For Kibati, the main driver of growth since 2008 has not been agriculture, manufacturing or even Kenya\u2019s rapidly reviving tourist trade, but the ICT sector.<\/span><\/p>\n

\u201cIf you look at the impact that mobile telephony has had over the last, say, five years, it\u2019s tremendous,\u201d Kibati told Global. \u201cA significant part of GDP growth can be directly attributed to that change. The number of 17 million mobile subscribers is huge because you are now having SMEs [small and medium enterprises] and businesses of all kind, who previously were not able to conduct business, conducting it on mobile telephony. And of course you are having things like M-Pesa and M-Kesho [Kenyan mobile telephone financial services] – access to finance via mobile telephony is on the rise.\u201d<\/span><\/p>\n

Investment in Kenya\u2019s physical infrastructure is also expanding, and this will play an important role, Kibati added. Roads are being built to areas that businesses could not previously access, meaning that these places will now be able to sell their local produce more easily. Rural electrification is also making a big difference. Kibati predicted that Kenya will have \u201c100 percent of all markets and institutions in the country with access to electricity by the year 2012\u201d, allowing businesses to intensify economic activity everywhere.<\/span><\/p>\n

An often-overlooked role in financing Kenya\u2019s ongoing economic expansion is played by the availability of funds that Kenyans abroad send home. The latest World Bank figures indicate that remittances, estimated at $1.7 billion dollars coming through the formal banking system in 2010, have now overtaken Kenya\u2019s other big earners of foreign exchange such as tourism, horticulture, coffee and tea. The real remittance total is almost certainly considerably higher than this, because many people prefer to use informal channels to send money to relatives, friends and businesses back home.<\/span><\/p>\n

High remittance flows help explain why the property prices in Kenya\u2019s up-market residential areas have not fallen, even while the economy was taking a major hit, especially after the post-election violence of 2007\/8. Unsurprisingly, some of the developers of townhouse properties or blocks of flats in Nairobi have targeted the diaspora because of the perception that they are a growing class of customers.<\/span><\/p>\n

While Kibati agreed that remittances now play a significant part in the Kenyan economy, he was keen to stress that \u201cit is only a part, and it will continue to only be a part\u201d. More important, from the authorities\u2019 point of view, is to convert or leverage remittances into substantial foreign direct investment. Both foreign and local private investment is beginning to flow.<\/span><\/p>\n

Kenya has now begun to look forward to receiving a \u2018constitutional dividend\u2019, in the form of short-term and medium-term economic and other benefits, as a result of the approval of the new Constitution which is acknowledged to be more democratic and which, it is hoped, will diffuse political power across Kenya\u2019s national and regional institutions. US Vice-President Joe Biden was among the first to raise such hopes during his June 2010 visit to Kenya, when he told university students that if the country passed the new Constitution and pursued the reforms on the table, Kenya would see more foreign investment. \u201cIf you make these changes, I promise you, new foreign private investment will come in like you\u2019ve never seen and you will have a reinvigorated tourism industry that will exceed the billion dollars it was before the economic crisis,\u201d Biden said.<\/span><\/p>\n

Remittances, estimated at $1.7 billion coming through the formal financial system in 2010, have now overtaken Kenya\u2019s other big earners of foreign exchange such as tourism, horticulture, coffee and tea. The real total is probably higher<\/strong><\/span><\/p>\n

Others are waiting to see how things turn out. A consistent foreign investor in Kenya is the CDC Group (a UK government-owned fund), which has put $90 million into Kenyan firms over the years, as well as investments worth several hundred million dollars across the rest of Africa. Speaking to Global in Nairobi in late November, its chief executive, Richard Laing, said: \u201cI think what is most important of all is that, whatever the politicians decide to do, it is a friendly environment for business. Nobody has to invest in any country. So the countries that will attract the best capital will be the countries that can provide the best opportunities and the easiest environment in which to do business.\u201d<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

The growth of telecommunications in recent years is helping to stimulate an economic revolution in East Africa\u2019s largest economy, and Kenyans abroad are helping out too, writes Tom Maliti Kenya\u2019s economy has been managing to pull through from both the global financial crisis and the country\u2019s domestic meltdown in 2008, in part because the agricultural […]<\/p>\n","protected":false},"author":10673,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[64,43,73],"tags":[],"_links":{"self":[{"href":"https:\/\/www.global-briefing.org\/wp-json\/wp\/v2\/posts\/1578"}],"collection":[{"href":"https:\/\/www.global-briefing.org\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.global-briefing.org\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.global-briefing.org\/wp-json\/wp\/v2\/users\/10673"}],"replies":[{"embeddable":true,"href":"https:\/\/www.global-briefing.org\/wp-json\/wp\/v2\/comments?post=1578"}],"version-history":[{"count":0,"href":"https:\/\/www.global-briefing.org\/wp-json\/wp\/v2\/posts\/1578\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.global-briefing.org\/wp-json\/wp\/v2\/media?parent=1578"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.global-briefing.org\/wp-json\/wp\/v2\/categories?post=1578"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.global-briefing.org\/wp-json\/wp\/v2\/tags?post=1578"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}