Description: Kenya's Quest for Growth Stabilization and Reforms--But Political Stability?

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Kenya's Quest for Growth Stabilization and Reforms--But Political Stability?

Kenya has long had a reputation of being politically risky, manifested in corruption, uncertainty about policies, and the importance of political connections in doing business. Kenya began its economic liberalization in 1993. Reform picked up spe...

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Bibliographic Details
Main Authors:	Bandiera, Luca, Kumar, Praveen, Pinto, Brian
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ARREARS BAILOUTS BALANCE OF PAYMENTS BANK ACCOUNT BANKING SYSTEM BANKRUPTCIES BANKS BASIS POINTS BINDING CONSTRAINT BOND BOND INDEX BONDS BORROWING COSTS BORROWING REQUIREMENTS BORROWINGS BUDGET CONSTRAINT BUDGET CONSTRAINTS BUSINESS COMMUNITY BUSINESS PLANNING BUSINESS PLANS CAPACITY ENHANCEMENT CAPITAL ACCOUNT CAPITAL EXPENDITURE CAPITAL FORMATION CAPITAL MARKET CAPITAL STOCK CASH RESERVE CASH RESERVE RATIO CENTRAL BANK CONTINGENT LIABILITIES CONTRIBUTION COST OF CAPITAL COUNTRY RISK CREDIBILITY CREDITORS CREDITWORTHINESS CURRENCY CURRENCY COMPOSITION DEBT ARREARS DEBT CRISES DEBT CRISIS DEBT DATA DEBT DEFAULT DEBT INSTRUMENTS DEBT MARKETS DEBT PAYMENTS DEBT RATIO DEBT RELIEF DEBT SUSTAINABILITY DEFAULT RISK DEMOCRACY DEPOSITS DEPRECIATION DEVALUATION DEVELOPING COUNTRIES DISCOUNT RATE DIVIDEND DOMESTIC BORROWING DOMESTIC DEBT DOMESTIC INTEREST RATES DROUGHT ECONOMIC DEVELOPMENT ECONOMIC LIBERALIZATION ECONOMIC MANAGEMENT ECONOMIC POLICIES ECONOMIC REFORM ECONOMIC RISK EMERGING MARKET EMERGING MARKET COUNTRIES EMERGING MARKET DEBT EMERGING MARKETS EQUIPMENT EXCHANGE BANK EXCHANGE CONTROLS EXCHANGE RATE EXCHANGE RATES EXPENDITURE EXPORTERS EXTERNAL BORROWING EXTERNAL DEBT EXTERNAL SHOCKS FINANCIAL ASSETS FINANCIAL CRISES FINANCIAL INSTITUTIONS FINANCIAL MARKETS FISCAL CONSOLIDATION FISCAL DEFICIT FISCAL DEFICITS FISCAL POLICIES FISCAL POLICY FISCAL SURPLUS FISCAL SURPLUSES FIXED CAPITAL FOREIGN CURRENCY FOREIGN EXCHANGE FOREIGN EXCHANGE RESERVES FOREIGN FINANCING FUTURE GROWTH GLOBAL DEVELOPMENT FINANCE GOOD GOVERNANCE GOVERNANCE ISSUES GOVERNMENT ASSETS GOVERNMENT DEBT GOVERNMENT INDEBTEDNESS GOVERNMENT SPENDING GROWTH RATES IMPORT LICENSES INCOME INCOME GROWTH INCOME LEVEL INCOME TAX INFLATION INFRASTRUCTURE INVESTMENT INFRASTRUCTURE PROJECTS INITIAL DEBT INSTRUMENT INTEREST PAYMENT INTEREST PAYMENTS INTEREST RATE INTEREST RATES ON TREASURY BILLS INTERNATIONAL BANK INTERNATIONAL CAPITAL INTERNATIONAL CAPITAL MARKETS INTERNATIONAL FINANCIAL STATISTICS INVESTING INVESTMENT CLIMATE INVESTMENT CLIMATE ASSESSMENT INVESTMENT CLIMATE ASSESSMENTS INVESTMENT HORIZON INVESTMENT HORIZONS INVESTMENT PORTFOLIO INVESTMENT PROJECTS INVESTOR CONFIDENCE LABOR FORCE LEVY LIQUIDITY LOCAL CURRENCY LOW INTEREST RATES LOWER INTEREST RATES MACROECONOMIC INSTABILITY MACROECONOMIC RISK MACROECONOMIC STABILITY MACROECONOMIC STABILIZATION MACROECONOMIC UNCERTAINTY MACROECONOMIC VARIABLES MACROECONOMIC VOLATILITY MARGINAL TAX RATE MARGINAL TAX RATES MARKET ACCESS MARKET ECONOMY MATURITY MONETARY POLICY NET CAPITAL NET WORTH NOMINAL INTEREST RATE OPTIMAL INVESTMENT OVERSEAS BANK PENSION PENSION FUNDS POLICY CREDIBILITY POLITICAL RISK POLITICAL STABILITY POLITICAL SYSTEM POOR INVESTMENT POVERTY ALLEVIATION POWER OUTAGES PRESENT VALUE PRIMARY EDUCATION PRIVATE CAPITAL PRIVATE INVESTMENT PRIVATE INVESTORS PRODUCTIVITY PROFIT MARGINS PUBLIC DEBT PUBLIC EXPENDITURE PUBLIC FINANCES PUBLIC INVESTMENT PUBLIC INVESTMENTS PUBLIC SECTOR DEBT PUBLIC SPENDING RATE OF RETURN RATES OF RETURN REAL ESTATE REAL EXCHANGE RATE REAL GROWTH RATE REAL INTEREST REAL INTEREST RATE REAL INTEREST RATES RECURRENT EXPENDITURE REFERENDUM REPO REPUTATION RESERVE RESUME RETIREMENT RETIREMENT BENEFITS RETURN RETURNS RISK PREMIUM SALE SCANDAL SCANDALS SEIGNIORAGE SENIOR SOLVENCY SOVEREIGN DEBT SUSTAINABLE ECONOMIC GROWTH T-BILL T-BILL RATE T-BILL RATES T-BILLS TAX TAX COLLECTION TAX COLLECTIONS TAX POLICY TAX RATE TAX RATES TELECOMMUNICATIONS TOTAL DEBT TRADE LIBERALIZATION TRANCHE TREASURIES TREASURY TREASURY BILL TREASURY BILLS WORLD INTEREST RATE
Online Access:	http://documents.worldbank.org/curated/en/2008/08/9737086/kenyas-quest-growth-stabilization-reforms-political-stability http://hdl.handle.net/10986/6813

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Summary:	Kenya has long had a reputation of being politically risky, manifested in corruption, uncertainty about policies, and the importance of political connections in doing business. Kenya began its economic liberalization in 1993. Reform picked up speed after a tightening of aid by donors on governance grounds and an attempt to re-establish credibility following the costly Goldenberg scandal uncovered in 1992. But tangible results in the shape of favorable government debt dynamics and a pick up in growth took a decade to materialize. The paper argues that the peaceful presidential election and transfer of power in December 2002 was central to the economic upswing after 2002. The subsequent decline in political risk was singled out by the private sector as an important development. The paper draws on an analysis of debt dynamics, the evolution of domestic interest rates, and the latest Investment Climate Assessment to present evidence on the criticality of low political risk in facilitating good economic outcomes after 2003. The December 2007 elections have highlighted other aspects of political risk - ethnic and social tensions with roots in inequality. The findings of this paper underline the importance of establishing a foundation for long-term political stability and social cohesion in view of the disruptions following the December 2007 elections. This process is likely to be at least as difficult and lengthy as fundamental economic policy and institutional reform.