Recent stability bodes well for continued economic expansion

As one of the continent's heavyweight diplomatic players, and one of the largest economies in East Africa, Kenya has long served as a stepping stone for investors looking to expand deeper into Africa. In spite of its modest natural resources, the country has a comparatively diversified economy that has posted steady expansion in recent years. Although it saw a slowdown during the 2008 economic crisis and post-election riots, it avoided contraction and has since seen a regular increase in growth. Population demographics and recent events suggest promising future developments.

History

Evidence of some of the earliest human settlements comes from Kenya, and the area has been host to a number of different groups and civilisations throughout history. European contact first came in the 16th century when Portuguese explorers sought to establish a base along Kenya’s coast.

However, by the late 17th century the Portuguese had been repulsed by Swahili tribesmen and the Arabs, who had been settling the area since 600 AD. During the 1830s, the Omani Arabs consolidated control of the coast and used the area to facilitate their trade routes on the Indian Ocean. By the end of the 1800s, European powers were increasing their influence in East Africa, and Kenya was incorporated in the British East African Protectorate, with British settlers moving to the country in the early 1900s.

Independence

Movements towards independence from the British first begin in 1944, with the formation of the Kenyan African Union (KAU). This year also marked the first time an African had been appointed to the country’s legislative council. In 1953 a guerrilla group known as the Mau Mau began a campaign of violence aimed at pushing white settlers from the country, and the following year the KAU was banned. By 1956 the British had largely put down the rebellion, and the state of emergency was lifted in 1960.

Despite successfully preventing the armed resistance, the British officially indicated their intention to hand Kenya over to African majority rule. In 1963 Kenya gained independence, and Jomo Kenyatta, who had been a prominent member of the KAU and president of the new political party, the Kenya Africa National Union (KANU), became the country’s first president.

Political Situation

Following independence, a rival political party was formed in 1966; however, this was banned in 1969, and Kenya was officially declared a one-party state in 1982. Following many years of suppression of the opposition, and accompanying pressure coming from both within and outside of the country, the Kenyan government eventually allowed multiparty elections in 1991. Subsequent elections were frequently marred by tensions and conflict between supporters of various parties, and concerns were raised that the Constitution provided excessive power to the president. After a failed reform attempt in 2005, the Constitution was successfully amended in 2010.

Political System

Since independence, Kenya has operated as a republic with a bicameral parliament consisting of the Senate and National Assembly. Following the 2010 reforms, the National Assembly has 349 members and is made up of 290 individuals elected from throughout the country’s consistencies; 47 women, who are elected from each of the country’s counties; and 12 members, drawn from political party lists in order to represent certain special interests (youth, persons with disabilities, etc).

The Senate has 67 seats, with 47 of these elected from each of Kenya’s 47 counties, 16 women who are nominated by their respective political parties, two members representing youth (nominated from party lists) and two members representing people with disabilities (nominated from party lists). As well, the new Constitution introduced population quotas for constituencies to help reduce gerrymandering as well as public funding for political parties, and, for the first time, permitted independent candidates to run in elections.

The country’s most recent elections were held in March 2013, and the National Assembly was largely divided among three centrist parties: the Orange Democratic Movement with 96 seats; the National Alliance with 89 seats; and the United Republic Party with 75 seats. A similar breakdown resulted in the Senate, with the National Alliance and Orange Democratic Movement each securing 11 seats and the United Republic Party receiving nine. In the presidential elections, Jomo Kenyatta’s son, Uhuru Kenyatta, was elected president with 50.07% of the vote, narrowly avoiding a run-off vote by exceeding the 50% threshold, and beating Raila Odinga, who received 43.7%.

Although the vote was disputed by Odinga and his supporters, Kenya’s Supreme Court upheld Kenyatta’s victory and Odinga quickly accepted the verdict, likely averting the clashes that followed the 2007 elections and resulted in the deaths of over 1200 people. Although the country has avoided major unrest in 2013, the potential for it remains, as both President Kenyatta and his vice-president, William Ruto, are facing charges of crimes against humanity at the International Criminal Court for their role in the wave of violence that swept Kenya following the 2007 elections.

Population

With a population of just over 43m people, Kenya is one of Africa’s most populous nations. Furthermore, the World Bank has indicated that the population has been growing by 2.7% over the last five years. Like many other developing countries, Kenya has an exceedingly young population, with some 42.4% under the age of 15. This presents the country with an opportunity to benefit from a substantial demographic dividend when this population bulge enters the labour market. Kenya is also undergoing a process of urbanisation, and this is likely to have a highly transformative effect on the country. For 2012 the World Bank reported that 75.6% of the population lives in rural areas; however, in 2011 and 2012 the country’s urban population expanded at a rate of 4.4% a year, compared to only 2.2% in rural areas. Nairobi, the capital, is the largest city, with 3.1m people as of 2009, when the most recent census was conducted.

The 2009 census reported over 40 individual tribal or ethnic groups in the country. Of these, the Kikuyu (6,622,576m), Luhya (5,338,666), Kalenjin (4,967,842) and Luo (4,044,440) are the largest, along with a sizeable group of Kenyan Somalis (2,385,572).

Language & Religion

Kenya has two official languages, English and Kiswahili, although it is estimated that as many as 60 tribal languages are also spoken throughout the country. English is the primary language of education and is largely regarded as necessary for progressing in Kenyan society.

As part of the 2009 census, Christianity was found to be the country’s predominant religious affiliation, with 31.9m adherents, more than half of whom, 18.3m, identified as Protestant. Muslims are the second-largest religious group, at a total of 4.3m, and traditional religions were reported as having 635,352 followers. Additionally, the country has a small contingent of Hindus, at 53,393, and 1.48m reported that they followed an unlisted religion (557,450 ) or no religion (922,128).

Geography & Climate

Located on Africa’s eastern coast, Kenya covers some 582,646 sq km ( rendering it slightly larger than twice the size of the US state of Nevada) and shares borders with South Sudan, Somalia and Ethiopia to the north, Uganda to the west and Tanzania to the south. The country’s geography is diverse, including plains, highlands in the centre of the nation and a plateau region in the west. The climate differs accordingly, with tropical weather along the coast and an arid climate in the interior. Rainfall and temperature likewise vary; major droughts have occasionally struck the country, causing severe hardship for the country’s rural inhabitants.

Economy

According to the World Bank, Kenya posted 4.3% GDP growth in 2012, compared to 4.4% the previous year. This is still well below the 7.0% posted in 2007 but marks a significant recovery from the 2008 economic crisis, when Kenya’s GDP growth dropped to 1.5%. For 2011, the most recent year for which statistics are available, the Kenya National Bureau of Statistics reported that agriculture and forestry was the most important segment of the economy, accounting for about 24% of GDP. Other key segments include wholesale and retail trade at 10.6% of GDP; transport and communications, worth 9.7%; and manufacturing, which was equal to 9.4% of GDP in 2011.

A number of recent developments also have the potential to make a significant impact on the country’s economy. In 2012 and 2013 the UK’s Tullow Oil identified oil reserves estimated to amount to 300m barrels in Turkana County in the north of Kenya, and the company plans to begin production as early as 2014, with export starting as early as 2016. This holds the potential to not only provide the country with well-paying jobs and increased government revenues, but also reduce Kenya’s reliance on imported energy.

In a second major discovery, in September 2013 researchers identified a massive underground water aquifer that has the potential to not only allow Kenya to expand its already sizeable agricultural production, but should also help buffer the sector against droughts, which have in the past caused significant hardship.