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Kenyan Economic Council Forecasts 3.5 – 4.5% Growth Rate

PM Odinga

Kenyan economy is expected to grow at between 3.5 and 4.5 per cent in the 2011/2012 financial year, Kenya’s National Economic and Social Council (NESC) has noted.

NESC which held its 25th full council meeting in Naivasha, Kenya, said the lower economic growth compared to the last financial year is a result of high oil prices, depreciation of the shilling against foreign currencies and increasing food prices.

To address the challenge of food constraints, the Council, which was chaired by the Right Honourable Prime Minister, Raila Amolo Odinga, recommended the adoption of strategies for the funding of the agricultural sector, including facilitating credit and subsidized inputs to farmers to increase productivity. The Council further recommended innovative forms of collateral to enable farmers to access credit from financial institutions.

The Council, whose Secretary is Mr Julius Muia, and its members are cabinet ministers of the 49 recommended leveraging credit reference bureaus. The agencies take the place of land title deeds which are, in some cases, unacceptable to commercial banks. Observing that the current food supply shocks were bound to drive up costs and fuel inflation, the Council underscored the need for coordinated food imports to bring down food costs and tame inflation.

Noting the importance of increasing agricultural productivity, the Council recommended;

  • The creation of a coordination mechanism between the Ministries of Agriculture and that of Water and Irrigation;
  • The involvement of unemployed youths in the agricultural sector;
  • Exceeding domestic food needs for the country to become a net exporter.

Members also agreed that more efforts should be directed to high potential sectors such as horticulture while fast-tracking the privatization of the sugar sector.

To contain the current fiscal constraints, Council members underscored the need to address the rising cost of imports, particularly oil, while increasing exports to stabilize currency fluctuations. Coordination in the East African Community (EAC) region was also recommended.

Noting the significant contribution of diaspora remittances to the Kenya’s foreign currency reserves, the meeting concurred on the need to issue infrastructure bonds tailored to suit the diaspora to sustain and increase this source of investment.

The meeting appraised major achievements in the development of the Konza Technology City and commented on the quality of the architectural designs. The Council recommended the fast tracking of the Public Private Partnership (PPP) law as well as the acquisition of land for a new airport by investors.

The Council, which is charged with the realization of the country’s Vision 2030, noted that the mass rapid transport system for Nairobi is now underway and will greatly decongest the capital city. Members were briefed about the Lamu Port – South Sudan– Ethiopia – Transport Corridor (LAPSSET) that provides a second transport corridor for Kenya from Lamu through Isiolo to Sudan and Ethiopia.

It was noted that seven components of the project were complete to technical design level. The relevant government ministries and various agencies will take over the implementation process. It was noted that this project has the potential to triple the value of Kenya’s economy.

Members were updated on the implementation of Vision 2030 flagship projects and noted areas of success and challenges. To take advantage of the success, tackle challenges and fast track this development blueprint, the Council recommended the unlocking of policy and legal constraints that are hampering the roll out and implementation of these projects as well as a concerted focus on competitiveness to ensure achievement of the goals.

The meeting considered the need for a national integrated urbanization policy especially in view of the expected rapid urbanization and devolution of government through county structures. Integrated urban planning would help correct historical urban planning problems facing urban centers such as illegal construction and slums. To this end, the Council recommended strict enforcement of the law.

The Council considered the unique position and potential contribution of knowledge management in Kenya. Despite the fact that the global ranking of Kenya in knowledge economy was poor, the Council reiterated the need to increase efforts to compete with the best performing countries.

This can be achieved through sector-wide coordination, linkages and improvement in the various knowledge economy sub-sectors that are lagging behind while leveraging on the sub-sectors where Kenya is doing well.

The Council recommended more training in science and mathematics in schools and enhanced support for universities. Appreciating the knowledge economy sector as a potential means for wealth creation, the Council recommended that ministries and government agencies help to leverage data and content that will be tapped through ICT applications.

The Council also recommended the fast tracking of automation and shared services platforms particularly e-services throughout the public sector. To this end, the Council underscored the need to put in place the right laws that will lead to commercialization of innovations.

In order to ensure high professional standards in the labour market and in learning and training institutions, the Council recommended strategies to provide for high standards at all levels. In addition, the Council recommended closer collaboration between industry and training and institutions, stepping up of the patenting of intellectual property and innovations.

Observing that unemployment remains a key challenge in the country, the Council was informed that a manpower survey was underway to provide data on which skills Kenyans have and where they are deployed.

The Council recommended more focused programmes such as those targeting the most vulnerable persons, labour market training, skills enhancement and mentorship, the creation of a conducive environment for entrepreneurship and social protection including the enactment of the Micro and Small Enterprises (SME) Bill. This, the Council advised, should be applied according to relevance across age cadres, geographical location and educational levels.

The Council recommended the establishment of labour information management systems – the highlight of which should be the establishment of employment bureaus.

The Council proposed the establishment of an institutional framework to oversee a concerted and coordinated approach to the unemployment problem. This framework should also put in place a time-bound national employment creation action plan.

The Council received a study by Kenya Institute for Public Policy Research and Analysis (KIPPRA) that showed that job creation as opposed to cash transfers contributes better to cost effective poverty reduction. The Council recommended the tapping of high impact sectors in addressing unemployment such as livestock and vegetable production and the hospitality sub sectors.

About Robert Okemwa Onsare

Robert Okemwa Onsare
Robert Onsare is pursuing Electronics Technology at the University of Eastern Africa, Baraton. He is a Cluster Strategy trained facilitator by Kenya's National Economic and Social Council (NESC). Mr Onsare has been an incubation student at the University of Nairobi, School of Engineering, FabLab, a venture project of the university and Massachusetts Institute of Technology (MIT). He is a member of the African Technology Policy Studies Network (ATPS) and a published poet. Mr Onsare is based in Kenya.

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