KENYA'S economy needs far reaching policy, legal and institutional reforms to achieve the double-digit growth targeted by the government by 2017, a new World Bank launched yesterday in Nairobi says.
The 'Achieving Shared Prosperity in Kenya' report notes that the foundation of economy is shaky resulting in “ extraordinary success standing side by side with disappointing failures.”
ICT, horticulture and tea are cited as competitive by world standards while agriculture and manufacturing are holding back the country's economic growth potential.
“While Kenya's sectors demonstrate sharp contrasts, they are also advancing at different speeds,” the report says.
The report observest that policy failures in agriculture
have forced an average Kenyan to pay more for a meal than an average cost globally.
They say the cost of staple maize and sugar which are key components in a daily meal is double and tripple the world prices respectively.
The country's growing reliance on food and oil imports, the report warns, continue to increase its vulnerability to external price shocks thus spiking up cost of living.
It singles out maize as the sleeping giant of the otherwise vibrant agricultural sector whose enhanced growth could prove effective in inducing inclusive economic growth and slashing poverty levels as demonstrated by China's experience.
“Evidence suggests that agriculture-led growth is more than twice as effective at reducing poverty as industry-led growth,” the study notes.
It says the sector also improves equity, and is a viable mechanism for addressing a variety of other challenges including insecurity, high food prices, unemployment and climate change.
“For this to happen, critical reforms and investments have to be undertaken, prioritising interventions that benefit majority of Kenyans while delivering quick results,” it suggests citing declining public spending on agriculture-related public goods.
The study however faults government interventions in maize sub sector as “generally anti-poor” because they raise prices paid to large-scale farmers at expense of poor urban and rural household consumers.
Attracting private sector participation, reducing their cost of doing business and improving public service delivery are cited as incentives.
Economic secretary in ministry of Planning Stephen Wainnaina said most of policy reforms in improving productivity in manufacturing and agriculture are either at advanced stage or in progress.
“We are committed increasing access to our markets and reducing the cost of doing business through an enabling business climate that entails improved security, less bureaucracy and lower energy costs,” he said at the launch.