Reviving agriculture, Kenya’s main pathway to poverty reduction –World Bank

Kenya should pay more attention to its key economic sectors to provide opportunities for its citizens to create and grow their own small businesses, to own an affordable home, save college funds for their children, to invest and save for retirement; to ensure it has a sustainable and flourishing economy, the World Bank said on Tuesday.

The report — the Kenya Country Economic Memorandum: From Economic Growth to Jobs and Shared Prosperity— looks at Kenya’s present economic model and projects how this will perform in the future.

Besides forecasting economic growth in Kenya of 5.6 per cent this year and 6.1 per cent in 2017, it is below the 6.8 per cent it says is needed to achieve the “Vision 2030” goal.

The report points out that Kenya has performed well in the past decade in terms of economic growth, and modern services are behind the acceleration of growth.

It cites, agriculture and manufacturing sectors to have stagnated by not being able to create enough jobs for Kenya’s growing working age population.

“Most of the jobs are created by the informal economy and are concentrated in low productivity segments of trade, hospitality, and jua kali. Improving the ease of doing business is one way towards job creation and higher productivity.”

It adds, “However there is still a need for creating job opportunities for the rural poor, for poverty reduction and achieving shared prosperity. Reviving agriculture, in particular, remains the pathway for poverty reduction.”

Diariétou Gaye, Country Director for Kenya World Bank says, “Achieving rapid growth will require macroeconomic stability to boost investment and savings.”

She emphasized more on the agriculture sector “Reviving agriculture remains Kenya’s main pathway to poverty reduction. On jobs, improving the business environment, the education system, and reforming dated labour laws will help.”

To scale this up, World Bank lead economist and program leader for Kenya, Rwanda and Eritrea Apurva Sanghi says, “To accelerate short-term growth, the current savings rate needs to be doubled, primarily by mobilizing domestic savings. The report also identifies three long-term growth drivers: Innovation, Oil, and Urbanization. But, underpinning these recommendations is one overarching theme; that of functioning institutions.”

The Country Economic Memorandum is a strategic World Bank product that analyses key aspects of the country’s economic development with the main aim of providing an integrated and long term perspective of the country’s development priorities.