Special Paper No. 33 of 2022 on Sustaining Momentum for Achieving the Kenya Vision 2030: A Review of the Status of Implementation of the Flagship Projects

Abstract

Kenya attained relatively higher growth rates during the Medium-Term Plan (MTP) II than during the Economic Recovery Strategy for Wealth and Employment Creation (ERS-WEC) and MTP I phases. Economic growth averaged 5.5 per cent during the MTP II phase compared to an average of 5 per cent and 4 per cent attained during the ERS-WEC and MTP I period. The improvement in growth rates between MTP I and MTP II led to tripling of per capita income during the same period. However, it is noteworthy that the country did not meet the growth targets under MTP I and MTP II. Consequently, there was a significant drop in poverty rates during MTP I and MTP II periods. Economic growth rate translated to poverty reduction, though at a relatively slower pace. According to the KIHBS of 2005/06 and KIHBS 2015/16, poverty rate dropped from 46.6 per cent in 2005/06 to 36.1 per cent in 2015/16. This implies that poverty dropped by an average of 1.1 percentage points per year between 2005/06 and 2015/16. However, during the same period, the country attained an average growth of 5.0 per cent. Therefore, the rate of economic growth was relatively faster than poverty reduction pace. The global financial crisis and a number of security challenges affected the country’s attainment of savings and investment targets. Actual savings and investment as a percentage of Gross Domestic Product (GDP) averaged 12.1 per cent, respectively, during the MTP I against average targets of 21.6 per cent and 27.4 per cent of GDP, respectively. During the MTP II, actual savings and investment improved to an average of 14.6 per cent and 20.0 per cent of GDP, respectively, against average targets of 18.0 per cent and 25.0 per cent of GDP, respectively. The savingsinvestment gap as a percentage of GDP narrowed from 8.0 per cent during MTP I to 5.5 per cent during MTP II.