Development Context

Last Updated: 21 February 2020

Kenya ranks 142nd out of 188 countries in the global Human Development Index (HDI), which is a composite index across a range of developmental indicators. The country’s HDI value stood at 0.590 in 2018 – above the average of 0.537 for sub-Saharan countries.

Kenya is categorised as a lower middle-income country, following the rebasing of its economy in 2014. However, rapid population growth, unemployment, inequality, climate change-related issues such as food insecurity and access to water, along with access to healthcare and instability in neighbouring countries remain major challenges for the government and its development partners to address.

Kenya is the second largest economy in East Africa after Ethiopia. An estimated 74% of the population lives in rural areas and 62% of the working population depends on agriculture. Though the country has experienced significant economic growth since 2005, it has not been inclusive and there are significant disparities in terms of human development and inequality between counties. With a Gini coefficient of 47.7, the country also presents a higher degree of inequality compared with Ethiopia, Tanzania and Uganda, the region’s other main economies. Between 1990 and 2017, Kenya’s HDI value increased by 26%, highlighting a positive trajectory in developmental indicators. The country’s most notable results have been achieved in the health sector, seen through an increase in life expectancy at birth of 9 years and a 51% decrease in child mortality rates for under five-year-olds between 1990 and 2015. In the education sector, the mean years of schooling has increased from 3.7 in 1990 to 6.5 in 2017.

Following dismal economic performance in the 1980s and 1990s, the country saw its economy recover in the early 2000s and growth since then has mainly been driven by the services sector. Kenya has emerged as a regional centre of finance and transport, though agriculture has remained the bedrock of the economy. Nonetheless, growth has been volatile, with trade and global commodity prices, insecurity and volatile election cycles impacting on economic performance.

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