KEY FINDINGS

Kenya may now be at a tipping point for robust growth. Five factors are creating a positive momentum: the new constitution, EAC integration, ICT innovations, strong macroeconomic management, and recent investments in infrastructure.
For 2010, the World Bank is revising its growth forecast upwards to 4.9 percent. For the first time in 3 years Kenya will experience balanced growth across all sectors and quarters of the year.
For 2011, we project GDP growth at 5.3 percent, and even 6.0 percent if no shocks occur. Public sector investments in infrastructure will stimulate growth. Timely implementation of constitutional reforms would also bolster business confidence.
Kenya has experienced a telecommunications revolution in the last decade. Without the robust growth in ICT, growth in GDP per capita would have stagnated.
The explosive growth in ICT happened because the government liberalized the telecoms sector, allowing competition. This is a very useful lesson for other sectors.
Mobile moneyhas become a game-changer for the economy. For example, nearly 70 percent of all adult Kenyans have access to financial services, compared to less than 5 percent in 2006. Fifteen million Kenyans are expected to transfer US$7 billion (20 percent of GDP) via mobile money in 2010.
One of the reasons mobile money is so successful is that regulation followed innovation. An optimal regulatory regime should have rules tight enough to protect users and to discourage fraud, but loose and open enough to encourage innovation and the development of new services.
Kenya could become a global hub for IT innovations and IT-enabled services. Recent innovations―in crisis monitoring, in healthcare services, in public awareness campaigns, in commodity prices, in mobile money, etc.―and investments in fiber-optic cables, the proposed ICT city, and a well-educated and urbanized labor force provide the basis for developing Kenya into a global ICT hub.

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contacts

Wolfgang Fengler

Lead Economist

Tel.: (254-20) 322-6408
E-mail: wfengler@wb.org

Peter Warutere

Communications Officer

Tel.: (254-20) 322-6444
E-mail: pwarutere@wb.org

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