Country Information - Kenya

ECONOMIC BACKGROUND Kenya, the regional hub for trade and finance in East Africa, is hampered by corruption and reliance upon several primary goods whose prices continue to decline. Following strong economic growth in 1995 and 1996, Kenya's economy has stagnated, with GDP growth failing to keep up with the rate of population growth. In 1997, the IMF suspended Kenya's Enhanced Structural Adjustment Program due to the government's failure to maintain reforms and curb corruption. A severe drought from 1999 to 2000 compounded Kenya's problems, causing water and energy rationing and reducing agricultural output. As a result, GDP contracted by 0.3% in 2000. The IMF, which had resumed loans in 2000 to help Kenya through the drought, again halted lending in 2001 when the government failed to institute several anticorruption measures. Despite the return of strong rains in 2001, weak commodity prices, endemic corruption, and low investment limited Kenya's economic growth to 1%, and Kenya is unlikely to see growth above 2% in 2002. Substantial IMF and other foreign support is essential to prevent a further decline in real per capita output. (Source: World Factbook, 2002) Click here for Country Map [23kB]

BI-LATERAL TRADE OVERVIEW Kenya's bi-lateral trade with the United States has increased 3-fold in 2001 over the previous period, with most of this increase being the result of an expansion of U.S. exports to Kenya. In 2002, however, this trend had been reversed somewhat. The trade balance in 2002 was in favour of the US ($ 82 million), down significantly from the previous year ($ 449 million). Kenya qualified for the AGOA 'Wearing Apparel' provisions on January 18, 2001, being one of the first Sub-Saharan African countries to do so. His no doubt has played a critical role in assisting Kenya's exports of 'textiles and apparel' goods to the U.S., which have now become that country's dominant export category to the U.S. In fact, over 95% (2001: 80%) of Kenya's exports of 'textiles and apparel' comply with the AGOA provisions. In addition, Kenya is regarded as a 'Lesser Developed Country', allowing it the use of third country textile inputs until September 30, 2004. Other export categories to the U.S. include 'agricultural products', 'electronic products' and 'miscellaneous manufactures' (see link to Country Trade Profile below).U.S. exports to Kenya are dominated by 'transportation equipment'. The 2002 data points indicates that Kenya's trade deficit with the US is declining substantially (due to rising exports and significantly lower imports), and that exports qualifying under AGOA are also expanding (having more than doubled to $ 130 million in 2002, mainly in 'textiles and apparel', and to a lesser extent in 'agricultural products' and 'chemicals and related products'). Click here for Detailed Trade Profile