Kenya records significant economic growth rate

Kenya's economy grew by 5.6% in 2010, more than twice the 2.6% Gross Domestic Product (GDP) rate recorded in 2009, driven mainly by expansion of the agriculture and the manufacturing sectors.

However, projections for 2011 have been slashed to between 3.4 to 4.5% because of the poor weather and the impact of the rising cost of fuel, says Planning Minister Wycliffe Oparanya.

The government should shore up food reserves as well as establish an oil strategic reserve to safeguard growth, the minister said here Tuesday when announcing the 1010 growth figures.

Agriculture grew 6.3% in 2010 after contracting by 2.6% in 2009, thanks to favorable weather conditions, government intervention through the supply of subsidized seeds and fertilizer and improved prices for some key agricultural exports such as tea and coffee.

Manufacturing grew 4.4% in 2010 after expanding by 1.3% a year earlier, driven by reliable power supplies arising from increased hydrology, and favorable tax policies, including the removal of duty on capital equipments and on some raw materials. The financial sector grew by 8.8%, up from 4.6% growth in 2009.

But despite this growth the government is worried about the spread between the deposit and lending rates which remained relatively high at 12.4 percentage points in 2010.

Overall, domestic credit grew by 30.4% from 978 billion shillings (one USD = about 86.65 shillings) in 2009 to 1.3 trillion shillings in 2010.

This growth was well above the targeted growth of 19.9%.

Tourism earnings, which are a key source of foreign exchange, rose by 17.9% to 73.7 billion shillings in 2010 from 62.5 billion in 2009.

The sector recorded slower growth of 4.5% in 2010 compared with 12.4% in 2009.