THE KENYA VISION 2030 : RATIONALE AND PROGRESS MADE SO FAR
A SPEECH BY DR. EDWARD SAMBILI, CBS, PERMANENT SECRETARY, MINISTRY OF PLANNING, NATIONAL DEVELOPMENT AND KENYA VISION 2030, TO BARCLAYS BANK, LEADERS QUEST GROUP, NAIROBI, 16TH MARCH 2011
Members of Barclays Bank Leaders Quest Group
Ladies and Gentlemen:
I feel deeply honoured to have been invited as the guest speaker for your luncheon today to share with you my thoughts and experience on the rationale behind the formulation of Kenya Vision 2030, and successes and challenges in the implementation of Vision 2030. As many of you recall the Vision was launched by H.E. The President, Hon. Mwai Kibaki, at a memorable ceremony on 10th of June 2008. This speech will hopefully provide us with an opportunity, in which you as part of the Barclays Bank Leaders Quest Group listen to me but also make contributions on how best we in the public sector and you in the private sector can forge a genuine partnership to make our beloved Kenya a middle-income country offering all its citizens a high quality life in a safe and secure environment by the year 2030. H.E. The President has said many times that he expects consultation and collaboration between the Government, private sector civil society, and ordinary Kenyans in the formulation and implementation of public policies. I consider this luncheon to be in line with that policy.
Ladies and Gentlemen:
Our economy went through a particularly difficult phase between 1990 and 2002 as a result of adverse domestic and international factors. GDP grew at only 0.6percent in 2002. When the Narc government took office in 2003, therefore, it put economic recovery at the top of our national agenda. The result was the formulation of the Economic Recovery for Wealth and Employment Creation which guided our overall development policies between 2003 and 2007. Under ERS, our economy did recover. GDP growth rose from 3.0percent in 2003 to 7.1percent in 2007 when ERS expired.
With growth and widespread expansion in all our economic sectors it then became necessary for the Government to formulate a long-term development that would sustain that growth and also see the country to the next phase of developmentâ€”to bring us to a stage comparable to the rapidly-industrializing states in East Asia and even closer home like Mauritius and South Africa. The thinking here was not just merely to catch up. It was about the quickest ways of increasing employment, widening access to quality education, providing adequate housing, water and healthcare to the vast majority of our population who presently have no access to these.
Upon recommendation to the Government by the National Economic and Social Council (NESC) in 2005, the cabinet tasked the Ministry of Planning and National Development (as it was then) with putting together the most competent team of experts, local and international, to put together a Kenya Vision 2030 development strategy to accelerate social and economic development middle-income status by that date. As I have said, H.E. The President, recommended a consultative and inclusive process. As the draft took shape, it received numerous inputs from business, academics, trades unions, farmers associations, parliamentarians, NGOs, students and parents. Consultative forums were also held in all the provinces, before and after Vision 2030 was completed.
Briefly summarized, the Kenya Vision 2030 anticipates a 10percent annual growth rate between 2012 and 2030. It is based on three pillars ”the economic, social, and political. These pillars are in turn erected on a foundation of enablers notably macro-economic stability security, sound infrastructure, energy, ICT, public sector reforms, land use reforms, and human resources investment
Ladies and Gentlemen:
A lot of this will be familiar to you since the Vision 2030 has been widely publicized since it was launched, and it is available in its popular version online at the web sites of the Ministry of Planning, National Development and Vision 2030, and that of the National Economic and Social Council. What I would like to do at this stage of my speech is to devote sometime to the rationale behind Vision 2030 and why certain strategic sectors and flagship projects were selected.
The economic pillar, which is the most relevant to this audience, highlights the following sectors: agriculture, tourism, manufacturing, the financial sector, wholesale and retail trade, and business processes of-shoring. These sectors and the flagship projects contained in them were chosen on the basis of their ability to generate high value-added, widespread employment opportunities, and their potential to draw high amounts of local and foreign investment. The bottom line, however, was that projects selected would position the country along the globally competitive suppliers of the goods or service concerned. This is because competitive, fast- growing countries always claim a greater and increasing share of global trade.
To determine strategic areas in which Kenya could be globally competitive, in agricultural and manufacturing goods, the experts drafting Vision 2030 made extensive use of COMTRADE. COMTRADE is short for the United Nations Commodity Trade Statistics Data Base, the most exhaustive source of trends in merchandise trade worldwide over the last 48 years holding 1.7 million data records. COMTRADE data was matched with projected data on global demand for agricultural and manufactured goods that Kenya is capable of producing. This exercise showed us the strategic entry points for Kenyaâ€™s exports and their potential market destinations, be they regional or international.
To give some examples, we know that as incomes rise everywhere, the demand for protein (meat, meat products, milk and dairy goods) tends also to rise. Kenya is capable of expanding the production of such goods given the right public sector investments and incentives. From our projections, it was clear that as incomes in African, Middle Eastern, and Asian countries rose, so too would the demand for these products. In addition we observed that if our pastoral communities were given the right incentives and support ”through better infrastructure and disease-free zones----Kenya could (in addition to meat) also establish a world-class leather-processing industry producing final-use leather goods for local and international markets. But that did not in any way mean turning our back to flowers and horticulture. These too will expand. As for beverages (coffee and tea) for European and other existing markets, the Vision's strategy is to attract branded international manufacturers to produce final use coffee and tea not to mention other products derived from our cotton, fruits, nuts, and pyrethrum.
The same kind of evidence-based strategic thinking was applied to how we framed the tourist sector in Vision 2030, starting with our own experience and projected global trends in that industry. You may already know that according to projected global trends in tourist travel by World Tourist Organization, long-distance haulage to destinations like ours will be one of the leading sub-sectors by 2020, when it is estimated to involve 400 million travelers. Although Sub-Saharan Africaâ€™s share of global tourism was only 3.6percent in 2009, WTO expects tourist arrivals to Africa, South Asia, and East Asia to grow faster than in other regions.
Part of this is due to the novelty of these regions and the expected rise in the number of tourists from the newly-rich countries of Asia travelling abroad. In making our projections in tourism, we were also motivated by the knowledge that new technology and aircraft will make long-haul tourism even cheaper and hence available to more people. As you may know, the Boeing 787-9 Dreamliner, now entering the market has the capacity of 290 passengers. The Airbus A380-800, the so-called â€œSuper-Jumboâ€ has the record capacity of 555 passengers. It is with the expectation of such mass arrivals that we are expanding the capacity and facilities of our international airports (Nairobi, Mombasa, Kisumu, Eldoret and Wajir), and a national network of national airports and airstrips.
Ladies and Gentlemen:
It would be unfair for me, addressing a luncheon of bankers to omit a summary of the rationale that we applied in Nairobi as an emerging-economy financial centre at par with Cairo, Dubai, Port Luis (Mauritius), Lagos and Cape Town in our region. As it is, a steering committee on this project is at an advanced stage working on the legal, institutional, technical and physical planning requirements. The urgency of this project was stated by the Deputy PM and Minister of Finance, Hon. Uhuru Kenyatta, when he opened a strategic workshop to go through the first comprehensive consultancy report on this project at Upper Hill on 1st March 2011. The steering committee is discussing at least two major financial clusters: one in Nairobi, the other at the proposed technopolis at Mailili, past Athi River.
In framing Kenya Vision 2030 financial sector strategy, we were aware that, for the first time, Kenya will be surrounded by resource-driven economics (notably Sudan, Uganda and Tanzania) and that we could also tap into the financing of huge resource-based trade in the DRC, Angola and all of Central African,”most of it now within reach via Kenya Airways. We could also deepen and diversify the product base of our financial sector. We have not even drawn the majority of our population into the banking system. The sector currently accounts for 5percent of our GDP, and the Vision 2030 expects to raise it to triple that amount in a GDP three times the current one in constant 2008 terms.
I could go on into the remaining strategic economic sectors (trade and ICT) but the same logic applies. We want Kenya to find a niche that suits its human resource base and competence, expand it rapidly to globally-competitive status and use that to draw in new investment, for job creation, and increased standard of living for most of our people.
Ladies and Gentlemen:
It is now time for me to make some remarks on the progress and challenges we have faced in the implementation of Kenya Vision 2030. At the outset, I should state that our challenges as a nation seem to draw more publicity than our success. The Kenya Government and the Ministry of Planning, National Development and Vision 2030 will do more in future to bring the achievements of Vision 2030 to public notice. As a Government, we have already agreed to brand all the major projects currently under implementation with a prominent sign that reads â€œPROJECT OF KENYA VISION 2030â€, to inform Kenyans better.
I assume that we are all familiar with the challenges: the triple shocks suffered by the economy in 2008 (post-election crisis, global recession, and drought), the rise in global food prices, the drought this year, and the high oil prices in 2008/09 and now this year. I will therefore concentrate on some of the most important achievements.
Let us start with infrastructure and roads in particular. The Vision 2030 achievements in this sector go beyond the impressive Nairobi-Thika highway and its inter-changes, important as it is for all of us. Our total expenditure on roads rose from Shs.10.4 billion in the 2005/06 FY to KShs.60.4 billion in 2009/10â€”a six fold increase. There has been spectacular progress spread in all parts of the country. Examples from 2009 are:
- Isiolo - Merille Bridge, the longest, 136 kilometres
- Emali - Loitokitok, 100 kilometres
- Mariakani - Kilifi, 56 kilometres
- Kamukuiyw â€“ Kaptama - Kapsokwony, 67 kilometres
- Kipsigis - Serem, 53 kilometres
- Kitui - Kangonde, 45 kilometres
- Keroka - Nyangusu (Phase I), 40 kilometres
- Daraja Mbili - Miruka, 50 kilometres
- Mukurwe-ini â€“ Wahuaini, 31 kilometres
- Ebuyango - Ekero, 31 kilometres
Another important area under infrastructure â€œenablersâ€ is energy and electricity in particular. Our total generated electricity in Gigawatt/Hours rose from 5,547 GwH in 2005 to 6,468 GwH in 2009. We have experienced a steady increase in installed Geothermal capacity from 351.3 megawatts in 2005 to 158.0 megawatts in 2009. The Governmentâ€™s policy has been to move away from thermal sources (which are relatively expensive) to the less expensive hydro and geo-thermal sources as a way of reducing the cost of electricity to business. Unfortunately, the current drought may slow down the progress we have made in that regard.
But it is also worth noting the attention paid to rural electrification bringing our rural families and institutions into the national electricity grid. But emphasis has also been placed on electricity connections to schools, market centres, health centres and administrative centres. In 2008/09 a total of 607 rural electrification projects spread throughout the country were completed at a total cost of KShs.3.5 billion.
Ladies and Gentlemen:
The true test of how well an economy is serving its people depends on GDP growth and its distribution to the people in a fair manner and in a way that changes their livelihoods for the better. Planning under the Kenya Government has always believed in the policies of growth with redistribution because without expanding the pie there will never be enough to redistribute in a way that improves our peopleâ€™s lives. For this to happen, macro-economic stability is a must, and we have done quite well in that regard.
Despite the decline in GDP growth in 2008 that I mentioned earlier, our economy has demonstrated a remarkable capacity to bounce back. GDP growth was 1.6percent in 2008, 2.6percent in 2009 and a projected 5.4percent in 2010. The drivers of this growth have been diverse: tourism, building and construction, the stimulus economic package by the Kenya Government, transport and communications. By and large our core (underlying) inflation has been at around 5percent (as projected under the Vision 2030) indicating that external shocks like global oil price increase, drought and the resulting rise in food prices have been the main culprits of rising prices.
Let us also not forget that our GDP estimated at US$29.4b in 2009 is bigger than that of Tanzania (US$21.6b), or Uganda (US$16b). Even a low or modest growth in Kenya will have a larger impact overall than a higher growth in our neighbours.
Ladies and Gentlemen:
I now come to the final part of my speech in which I would like to highlight some of the challenges we face in raising our global economic competitiveness as spelt out under Kenya Vision 2030. For this, I will rely on the 2009 Africa Competitiveness Report from the World Economic Forum (WEF) in Davos, Switzerland.
To start with, we are ranked number 8 in Sub-Saharan Africa behind South Africa, Mauritius, Namibia, Botswana, Gambia and Senegal. We dropped four places after the 2008 crisis. With the new constitution in place, the Government and the people of Kenya are determined never again to go down that path. There is a national consensus on this, which is good for the economy. Kenya will definitely raise its ranking in 2010.
Secondly, despite the 2008 setback, the WEF ranks us among the best in some areas. In business innovation and sophistication, Kenya is ranked among the top 50 countries globally, close to India. In your area of specialization, that is â€œfinancial market sophisticationâ€, we are ranked number 44 globally which is above most African states.
All this indicates that Kenya can achieve the globally competitive standards that it seeks to achieve under the Kenya Vision 2030, even before 2030. Whatever the challenges we must maintain that determination that our globally-distinguished long-distance runners are renowned for. You are all leaders. I can assure you that our political leaders from H.E. The President, are committed to achieving the Vision 2030. So are all the line ministries.
Let us all unite in ensuring that we attain the goals of Vision 2030 in whichever sector we are in.
God bless you all and thank you for listening to me.