Please enter and activate your license key for Cryptocurrency Widgets PRO plugin for unrestricted and full access of all premium features.
Search
Close this search box.

Three Contrarian Ways Kenya Can Become the New Economic Lion of Africa

Three Contrarian Ways Kenya Can Become the New Economic Lion of Africa

I conduct market analysis and provide insights on economics, investing, bitcoin, real estate, and personal finance.

I am also keenly interested in the possibility of the future prosperity of Africa, and including Kenya.

The Back Story

Kenya’s formal plan for economic growth is called Vision 2030.

Looking back, Kenya has been a major trading hub for almost 2,000 years, attracting the Portuguese, Arabs and British before becoming colonized by the latter. Kenya officially regained its independence from the British 1963.

Currently Kenya is a middle income nation and plans to be a newly industrialized nation in 2030. It has the third largest economy in sub-Saharan Africa, behind Nigeria and South Africa.

Kenya added new political and economic systems when their new constitution became law in 2010. The East African nation held its first election under this system in 2013, and its most recent one in 2022.

This new system appears to be a winner for the economy, per some stats from the World Bank:

  • From 2015 to 2019, Kenya’s economy overall economy grew an average of 4.8% annually
  • Poverty was reduced 34.4% in 2019.

The Barriers

Times are tough around the world, and Kenya is no stranger to this. Here are some points relevant to Kenya’s economy:

  • Kenya does not have fast mining resources like some of its neighbors, which could be seen as a blessing in disguise.
  • As a developing economy, it is hit hard by its devaluation to the US dollar caused by the Fed.
  • And like many other developing nations, it is faced with the pains of growing, least of which is corruption.
  • Kenya is the most stable nation set at the bottom of a very unstable East Africa — conflicts and deep problems in nearby Ethiopia and Somalia affect Kenya in a negative way.

The Solution

To solve issues, one key action is to identify the resources. I like to look at people, existing economic activity, and connections. I pulled these figures from short Google searches on line, so pardon me if there is inaccuracy. My goal in using this information is to humbly offer a roadmap that can be used to increase prosperity in Kenya and East Africa.

Let’s examine these three resources.

First, the people.

Kenya’s population is about 50–55 million, and out of this its workforce is over 24 million. The unemployment rate is around 2–6%. In other words, there are somewhere around 500 thousand to 1 million Kenyans seeking employment.

Kenya’s most important resources is its youth and its hard-working citizens.

Next, existing economic activity.

Estimates of economize size put Kenya at $116 billion, the 65th largest economy in the world. Broken down by broad sectors the GDP is divided this way:

  • Agriculture — 29%
  • Industrial — 18%
  • Services — 53%

Annualized growth was over 5% in Q2 2022. This is positive.

Finally, the connections.

The top three export partners are Uganda, Pakistan and the United States. The top three import partners are China, India and the United Arab Emirates.

As it has been for thousands of years, Kenya is pretty open a diverse set of trading partners East and West.

The Plan

How can they keep this going? Here are three actions it can take to pave the way for continued success.

And here are two caveats before I start.

a) Beware of too many changes. This can make the true source of an improvement or worsening situation harder to find. Also, too many changes in any going activity is destructive, even if the changes themselves are good.

b) I understand many are upset about government corruption, as people are in every country that I am aware of. That being said, if this plan is executed, prosperity should increase, all other factors, including corruption, the same.

Ok, so finally, here is the plan:

1. Invest Heavily in Education for Skilled Industry & Light Tech Jobs

Invest Heavily in Education for Skilled Industry & Light Tech Jobs

A large educated workforce is necessary for Kenya to rapidly transform from an agriculture-based economy into an advanced free-market high-tech economy.

However, it is not a realistic solution to call for training 100,000 computer programmers and making Kenya the world’s leading tech hub.

Kenya is not going to be able to compete with the likes of the US, Canada, Western Europe, Japan, China, etc. in this area. Even Nigeria has a much larger pool of coders to pull from.

However, a talent pool that has the foundation of no-code of light tech skills is lacking everywhere in the world, including the US.

Lacking even more is the talent in less “sexy” professions that are a bedrock for an advanced economy:

  • Electricians
  • HVAC technicians
  • Mechanics
  • Commercial Drivers
  • Pilots
  • Architects
  • Engineers
  • Machinists
  • Agricultural Science

There are other jobs that are crucial for economic growth that are not computer programmers:

  • Project Managers
  • IT Support
  • Web Developers
  • Financial Managers
  • Accountants

The target would be 100,000 new experts in these fields would need to be trained in the next five years.

Policy that would be helpful would encourage public, private and foreign investment in this.

This would including the building of trade schools and other educational institutions to support this.

Existing colleges and high schools would be given incentives to support this.

Large corporations over these fields should be given incentives to partner with schools using apprenticing programs.

Foreign investors would be given incentives to move to Kenya to establish these schools.

Special student VISAs could be given to those in neighboring countries as well.

Kenya may not have the resources, but they are already an industrial hub. This would further establish Kenya as the educational, industrial and transport center of East Africa.

This would spur new future startups and support existing industries active in the country looking to expand their workforce over the next five years.

And over the next decade plus, this would increase the size of the better paid workforce that could then pay taxes to support the country.

Having a strong and talented workforce at home also strengthens the nation’s security and makes it less dependant on foreign powers like the U.K. and China.

2. Encourage Peace in the East Africa Region

Encourage Peace in the East Africa Region

Without getting into too much commentary on government, there is a new one in Kenya. The Ruto Administration would be wise to vigorously use the knowledge that peace is more profitable than war.

This could be encouraged in any many possible through peace talks, trade deals, and many other things that I am not familiar with. What I do know is that Ethiopia and Somalia’s trouble will spill over into Kenya. And since Kenya is an East African transport and industrial hub, the more prosperous East Africa is, the more prosperous Kenya will become.

If the first step is accomplished well, legal immigration of the best and brightest from other nations in the region could be generated, further adding to the prosperity.

3. Enhance Remittances — Give Bitcoin a Special Protected Class

Enhance Remittances — Give Bitcoin a Special Protected Class

Many actions should be taken to increase remittances. The most important involves Bitcoin.

El Salvador and Central African Republic have made Bitcoin legal tender. While I am not suggesting their entire approach, if this plan works, I would expect increased legal immigration of the brightest and best to other countries such as the UK, US, Western Europe, South Africa, etc. for university studies.

Also, skilled hands in Kenya involved in the global gig economy would be a greatly increased.

Following this, I remittances will grow tremendously.

Too many Kenyans have been victimized by PayPal and other issues with centralized companies with poor tech support.

Greasing the lines for the use of Bitcoin as a remittance channel would benefit Kenyans. Taxes on this would be zero thus encouraging this as a channel and instead taxation on the other parts of the economy would grow.

This would also give Kenya an edge in its growing tech status and likely avoid the ire of the US, the World Bank, IMF and Bank of International Settlements that El Salvador has experienced. Being a martyr is cool, but becoming more financially prosperous is a lot cooler.

Can Kenya accomplish its Vision 2030? I think there is a chance, and implementing these concepts will increase that chance.

If you enjoy reading stories like these from thelatestblock.com, consider subscribing.

 


This content is for educational purposes only. It does not constitute trading advice. Past performance does not indicate future results. Do not invest more than you can afford to lose. The author of this article may hold assets mentioned in the piece.

Author

Alexandre Lores is a personal finance writer from Tampa Bay, Florida, with the goal to help one million people achieve financial freedom. He has spent over five years studying markets and economics, finding Bitcoin in 2017 and never turning back. He frequently appears on TV and in online news articles and is a regular Twitter spaces host.

Share this article
Facebook
Twitter
LinkedIn
WhatsApp
Email
More Articles
NFTs

NFTs Explained

An 8-Minute Guide to Non-Fungible Tokens If you follow the news in the cryptocurrency markets, the broader financial markets or just watched Saturday Night Live

How Are You Trading the Ethereum Merge
Crypto

How Are You Trading the Ethereum Merge

The Ethereum Merge is fast approaching. After many delays, it is now set for September 15. This is a major event for the crypto space,

Leave a Reply

Your email address will not be published. Required fields are marked *

The Latest Block Newsletter

Subscribe Now

Sign up for our exclusive email list and be the first to hear of
our weekly summarization of Crypto and Fintech News