Insecurity holding back Kenya’s growth

The Government has been urged to stabilise the Kenya-Somali border to safeguard foreign direct investment into the country. According to a new report analysing the competitiveness of East Africa’s largest economy in relation to other key developing economies in the world, the threat of terrorism has been identified as Kenya’s largest impediment to sustainable growth.

The report by Deloitte Africa, however, states that Nairobi is emerging as a strategic platform for intra-African trade, giving traditional African mega-cities like Lagos and Johannesburg a run for their money. This has been attributed to the country’s growth in the ICT sector, which has been projected to be the fastest growing sector over the next decade.

“More exciting is Kenya’s rapid emergence as a hub of technology and innovation for the African sub-continent,” read the report in part. “Even in the face of the ongoing terrorist threat, important global IT players like Google, Microsoft, IBM, and Samsung have all chosen to set up regional offices in Nairobi, the city that pioneered the use of mobile money.”

Deloitte further states that stabilising the Somali border and reducing the threat of terrorism will remain major Government priorities, as unsettling attacks will deter tourists.

Strategic advantage

Kenya has for the last three years borne the brunt of increased insurgent activity blamed on the Al-Shabaab militia from neighbouring Somalia. The country’s tourism industry has been the major casualty, with industry players reporting billions in losses leading to thousands of job cuts.

The World Bank earlier this year said Kenya’s economy was poised to grow by as much as 7 per cent by 2017 buoyed by falling international crude oil prices and sustained investment in infrastructure. Kenya particularly enjoys the strategic advantage of being the only major economy in Africa, apart from Senegal, that does not currently rely on resource wealth to drive economic growth.

“Industrialisation, consumer spending, tourism, and business services — along with more innovative and productive agriculture — can be key to spurring sustainable development in Kenya and Nigeria,” said the report. “And, while Nigeria is a giant nation with a major dependency on oil production, Kenya is much smaller and more diverse, having gained more traction in manufacturing and agro-processing.”