Economics essay help online: Kenya economy
Abstract
Kenya has remained a country that offers high performance in the context of Africa. Political, economical, social, technological, legal and environmental factors of Kenya are analysed in this article. Kenya is not a very safe country to invest in and it is highly due to the climatic factors. The development is happening in Kenya at a faster rate now. This is one of the reasons why one should not hesitate to invest in Kenya. The development rate of Kenya has remained at 5% where there is an improvement of .7% from its development rate last financial year. The development is expected to improve because of the various policies that are to be introduces in the next five years and also because technological, social, and economical advancements in the country
Introduction
Kenya has become a regional strategic foreign investment destination because of the expansion of the community markets of East Africa. Doing business in Kenya ranks 109th position among 183 economies (Doing Business 2012). Analysis of the business environment is highly required for an organisation to act and respond adequately and make decisions proactively. It is also necessary to analyse oneself in the background of a context and make maximum out of the opportunities and to overcome any threats (Trahan & Trahan, 2006).
Economy Overview
Region- Kenya, Sub-Saharan Africa
Income category-Low Income
Population- 40,862,900
Gross National Income in US dollars: $780
Doing business rank of 2012-109
Doing Business rank of 2011-106
Following is a figure on how Kenya ranks on doing business and the various important factors that are considered.
Source: (Doing business 2012)
Kenya has had external and multiple domestic shocks for a while and has been affected by reduced gains. It is being recovered right now. The development rate is also high by .7% in the than the 4.3% last year (World Bank 2012). The development is the aftermath of all the developments that happens in the country on basis of business environment.
Political Analysis
It is important to analyse on the political scenario to understand the viability of the policies. There was a considerable amount of unrest in the country due to the presidential elections of 2007 and the time is due for another election. The forth coming election will also be of a kind because it will be conducted in the transformative new constitution that was made by the president Mwai Kibaki in 2010. This constitution is also accountable to 27 ambitious countries that are a part of the devolution program. This model that is accepted by Kenyan government is also very useful because of the equitable development model and creation of opportunities for new growth centres (World Bank 2012).
the coalition government under president Kibaki and prime minster Raila Odinga is divided were reforms of the police, electoral boundaries, land reforms, election of the successor to Anti-corruption commission in Kenya, are concerned (World bank 2012). There is a high level of concentration from the government where the remaining policies and legislative processes are concerned. A large amount of political risk is also paused by regional imbalances and unemployment of the youth (World Bank 2012).
Economical environment
The economical growth of Africa can be dedicated to the financial intermediation and improvements in the major sectors including agricultural, construction and tourism sectors. it can be said the the growth in 2011 was highly affected by the rising inflation rates, unstable macro environment, costs due to high energy and exchange rate depreciation. The growth has been moderate at 4.5% and has increased to 5.2% in 2012 (African Economic outlook 2012).
This economic development was made possible because of robust and independent private sectors and also macroeconomic policies that are formed by a government who has a very strong fiscal discipline. Kenya is not very strong on natural resources like mineral and oil and that is one of the reasons they have adopted prudent and free market economy to provide a stable environment for Kenya. The strong sectors still remain to be agriculture and forestry, wholesale and retail trade, manufacturing, transport and communications, financial services constructional and real estate. Also the private sector in Kenya here is a combination of both firms of various sizes including small, medium and large and accounts for about 80% of GDP.
Some of the major economical constraints for making investment in Africa are the tax rates, finance and practices of the informal climate. This would mean high payment of taxes for the new initiative. But there are also chances of easily available of labour as the unemployed rate is high and there is existence of untapped potential labour.
Kenya Imports
Kenya imports were around 128.8 billion in May, 2012. The highest amount of imports they have ever managers to have is 136122.0 KES in 2011. Most of the imports in Kenya are machinery, equipments for transportation, motor vehicles, petroleum products, resins, iron, steel, plastics. The main associates of Kenya in import are China, India, South Africa, U>S, Japan and South Africa.
Source: (Trading economics 2012)
Social Developments
The numbers of people who are suffering from the repercussion effects of the drought have decreased to 2.2 million from about 3.7 million in the last year. This number can still be considered very high because there is high amount of vulnerability to the eastern regions. The increase in the population size of Africa is about 1 million a year. Rift Valley is most populated. Demographic trends also prove that people are moving into urban areas from rural areas. Their vulnerability is high to the climate and the drought and poverty remains a major threat for development. There are also regional disparities when it comes to division of poverty. There has been considerable amount of social developments in Kenya during the past few years (World Bank 2012)
The growth that is depicted by Kenya in the educational sector cannot be omitted. This would also mean that the number of public universities in Kenya has also increased to seven and this would mean educated citizens the world. Availability of labour can make the company open a big time operating centre in Kenya as there is availability of efficient labour for fixed contracts. There are also requirements where the health and safety standards are to be complied with along with standard expectations of accountability from the organisations. Women empowerment is also encouraged in a Kenya as ladies are rising up to power in new positions. This will also mean that extra requirements should be considered for women employees. But these are all acceptable conditions of performance in the case of a well reputed company.
Market consumption
The GDP based purchasing power was US$ 1728.21 in 2009. This shows that the market is highly sensitive to prices. The middle class families are more oriented in purchase for need. It can be seem that considerable number of middle class families has been uplifted from poor households. There is an increase in the mall culture because of it. The housing market is also booming. The country will soon become a middle income nation as they aim by 2030. But their purchasing power is yet to rise. (IMF 2012).
Technological Environment
It can be said that Kenya is very innovative when it comes to technology. Telecommunication sector in the country is really booming along information technology. Technology plays an important role in running business. The technological development will help the organisations to work with minimal number of workers. The cost of travel has reduced due to the infrastructural developments irrespective of the challenges that are kept in by the climatic conditions. There are real time work systems which enable accessibility to employees and increase customer service. E-commerce has been developed here and is yet to develop to its full potential.
The analysis of the technological scenario lives up to the requirements of the organisation. The climate pause a threat along with contagious diseases, irrespective of which the idea of opening up a new branch is Kenya cannot be ignored.
Legal analysis
The legal system in Kenya is very well developed. A new constitution was adopted in 27th of August 2010 and the intention behind it formation was better governance, stability and accountability. Trusts are recognised under various laws here. there are various laws that have to be adhered to the Kenya Communications Act, the Bank Act , The Land use Act, The environmental Management and Co-ordination act and many others. The legal system is sometime blamed to be corrupt. There are requirements for improvement in the implementation of the policies. But they are targeting to become a middle income country by 2030 (Kaplan & Stratton Advocates 2010).
Environmental analysis
Kenya is on the eastern side and provides an important infrastructural, economic and geopolitical part of the East Africa. It has an area of about 582,646 square kilometres. Water is only 11,230 and two thirds of the left land is either desert or semi desert. The altitude of the land that stretches towards west from his sea level gradually changes through East and West. The important ecosystem devices are stressed and degraded and estimated deaths here are 2.4 million a year and impact the poorest of the poor and make them even more vulnerable. Environment also plays an important role in determining the community health. Human health is highly affected here because of the physical, chemical and the biological risk factors. Kenya is also a region that is highly susceptible to climate change and adaptive capacity. Disability Adjust Life Years are also high here and so is hugely proportional disease burden. Kenya is also dusty and prone to water shortage (Republic of Kenya 2009).
Conclusion
The risk of investing in Kenya is medium. It is not an extremely easy place to invest in because of the environmental as well as social factors. But they are strategising towards making it a friendlier environment. Also, many positive changes are expected to be brought about in Kenya in favour of the foreign investors, which is why it will be favourable to invest in.
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