KARIBU KENYA - UNON - the United Nations Office at Nairobi

The Economy
Following strong economic growth in 1995-96, Kenya’s economy stagnated,
with GDP growth failing to keep up with the rate of population growth.
Between 1997 and 2003, two suspensions of International Monetary Fund aid
due to the government’s failure to maintain reforms and curb corruption
combined with severe droughts, weak commodity prices and poor investor
confidence severely limited Kenya’s economic growth. In 2002, declining
donor support and political infighting in the run-up to the December elections
caused growth to fall below 1%. However, the arrival of a new government
and several promising breakthroughs in efforts to root out corruption –
particularly the trial over Goldenberg International’s receipt of state compensation
for non-existent gold and diamond exports – have boosted future
prospects, and helped to win back strong financial support from the IMF and
the World Bank.
Despite the new promise, however, vast challenges remain, particularly in
the creation of jobs and overcoming of the crippling poverty that still sees half
of all Kenyan families surviving on less than US$1 a day. Much of the Kibaki
government’s poverty reduction efforts are focused on improving public services
and market access for the country’s vital agricultural sector, which
accounts for an estimated 75% of its employment and 60% of its income.
Much of the country’s economy continues to be based on a lively jua kali
(informal) sector, which is responsible for manufacturing everything from
clothes and soap to wooden furniture and tin goods. The country’s major
export commodities include tea, coffee, flowers, vegetables and petroleum
products, with Uganda and the UK as the largest export markets.
The Currency
The basic unit of currency is the Kenya shilling, which is divided into 100
cents. The currency has undergone significant changes since the NARC
government came to power, with new Ksh 5 and 10 notes joining the existing
Ksh 20, 50, 100, 500 and 1,000 bills (the latter being the highest denomination
available). Copper and silver coins are available in denominations of
Ksh 5, 10, 20 and 40, with larger coins representing larger denominations.The
common usage of a “pound” refers to 20 shillings – once equivalent to a sterling
pound! The United Nations follows a standard exchange rate between
the shilling and the US dollar, which is updated each month. Banks general-
CHAPTER 1: KENYA • 5