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Country risk of Kenya : Economy

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Kenya has enjoyed a decade of strong economic growth, allowing the country to access the status of a middle-income country in 2016. The country was one of the fastest-growing economies in Sub-Saharan Africa until the outbreak of the Covid-19 pandemic. After contracting by -0.3% in 2020, GDP growth rebounded to an estimated 5.9% in 2021, and is forecast to remain strong in 2022 (5.8%) and 2023 (5.5%) (IMF, latest estimates). Private consumption will be the main driver of growth (Coface). Downside risks include the country’s reliance on foreign loans for infrastructure and the rise in its external debt levels (Focus Economics).

Kenya's economy suffered from the consequences of the COVID-19 pandemic, mainly the fall in tourism, but showed remarkable resilience and recovered in 2021. The authorities pursued a reform program aiming at responding to the pandemic, supporting economic recovery and addressing debt vulnerabilities (IMF). As revenues dropped and social and health expenditure increased, the budget deficit deteriorated, but fiscal consolidation efforts managed to stabilise it. Public deficit reached -8.2% GDP in 2021, and is expected to remain at that level in 2022 before decreasing to -5.8% GDP in 2023 (IMF). The government removed Covid-19 related subsidies and expenditures, but increased spending to fight insecurity and drought in the North (Coface). Public debt continued to grow from 63% GDP in 2020 to 67.9% GDP in 2021, and is expected to stabilise at 71.2% GDP in 2022 and 2023 (IMF). As a large part of the debt is owed to international creditors in foreign currency, public finances are vulnerable to exchange rate movements. Fuelled by higher energy prices, inflation increased from 5.2% in 2020 to 6.4% in 2021, and is expected to decrease to 5.8% in 2022 and 4.8% in 2023 (IMF). The central bank is expected to respond to inflation by hiking its interest rate(Coface). Kenyan authorities remain committed to the 38-month program under the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) arrangements (worth USD 2.34 billion) approved by the IMF in April 2021. This program aims to reduce debt vulnerabilities by raising tax revenues and tightly controlling spending, while safeguarding resources to protect vulnerable groups (IMF). Expanding the Covid-19 vaccination program, supporting the state-owned enterprises reform, responding to the drought in the northern regions and tackling security issues are the priorities. The government will also pursue the previously launched Big 4 development agenda. This program, which is part of the long term development plan of the country, Vision 2030, will prioritize four major areas: manufacturing, universal healthcare, affordable housing and food security.

Kenya has been invested in reducing child mortality, meeting this Millennium Development Goals (MDGs) target. The country also managed to almost reach universal primary school enrolment, while narrowing gender gaps in education. Kenya has been ranked 143rd in the 2020 UNDP Human Development Index. The unemployment rate was estimated at 3% in 2020 (World Bank). After three consecutive poor rainy seasons, food security deteriorated in the arid and semi-arid lands of Kenya, which need continued humanitarian assistance (Euler Hermes).


Indicator of Economic Freedom


The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.


Business environment ranking


The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

World Rank:

Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024

Country Risk
See the country risk analysis provided by Coface.
Main Online Newspapers
Daily Nation Kenya
Standard Media Kenya
BBC Country Profile, Kenya
Allafrica, Kenya News
Useful Resources
Ministry of Finance
Ministry of Tourism
Ministry of East African Community (EAC), Labour and Social Protection
Ministry of Agriculture, Livestock and Fisheries
Ministry of Mining
Ministry of Transports and Infrastructure, Housing and Urban Development
Ministry of Industrialisation, Commerce and Cooperatives
Ministry of Energy and Oil
Central Bank

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Latest Update: November 2022