Country Economic Memorandum and Annex on Agrici iti ilral...

Report No. 3456KE imi; C WVKenya LU

Country Economic Memorandum andAnnex on Agrici iti ilral IssepsJune 12, 1981

Eastern Africa Region

FArI AFFIrlAlI IICF n(TlV

Document of the Ubrid Bank

This document has a restricted distribution and may be used by reciDientsonly in the performance of their official duties. Its contents may not otherwisebe disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

US$1 = KSh 7.57KSh 1 = US$0.123

GOVERNMENT OF KENYAFITrAT. YEAR

July 1 to June 30

FOR OFFICIAL USE ONLY

PREFACE

This report is based on the findings of a field mission, consist-

ing of Mr. T. Ibrahim and Ms. P. Cox, in December 1980. The findings of

the report were discussed with the Government in June 1981.

[ This document has a restricted distribution and may be used by recipients only in the performance II of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. I

KENYA--COUNTRY ECONOMIC MEMORANDUM

Table of ContentsPage No.

ECONOMIC INDICATORS

SUMMARY AND CONCLUSIONS

I. BACKGROUND ........................ 1........................

II. RECENT ECONOMIC DEVELOPMENTS AND OUTLOOK FOR 1981 ........ 2

A. Growth of GDP ........................................ 2

B. Spctoral Developnments ..................... 5

Agriculture ...... ................ 5

Manufacturing ...... ............... 8

Building and Construction .......................... 9

Tourism . ........................ .. ................ 10

C. Wages, Prirpc and Emnlnyment ......................... 10

De Fiscal and Monetary Performance .= .12Budgetary Operations .............................. 12Recent Monetary Develonments ....................... 15

E. The Balance of Payments ................................ 17

III. DEVELOPMENT POLICY AND GROWTH PROSPECTS ........ .......... 21

A. Development Strategy ................................ 22

Agricultural Development .............. 22Industrialization and Trade Policies ...... ......... 23Population and Family Planning .... e-ee ............. 24

Government Expenditures for Development ..... ....... 25

B. The Structural Adjustment Program .................. 27PolLicies flor Struct-ural1 A-dJustment ................................. 27

Implementation of the Program ..................... 29

'Prospect-s for Future Structural AAdJustment Programs. 30

C. The Balance ofi PaymenLts anud Growth Prospects ... ..... 31

A Feasible Growth Scenario ..... .................. 32

Externail Capital Requirements ..... ................ 36

ANNEX Agricultural Issues ..................................... 38

STATISTICAL APPENDIX ......... .................................. 75

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List of Text Tables

1. Real Growth of GDP by Sector, 1977-80 ............... 32. Sources and Uses of Resources 1977-80 ............... 43. Quantum and Price Indices for Marketed Export and Food Crops 6

4. Annual Increases in Construction Costs, 1977-80 .... ........ 105. Wage Employment by Major Sector ............................ 11

6. Employment, Wages and Consumer Prices, 1977-79 .... ........ 127. Central Government Fiscal Operations ...................... 14

8. Kenya--Summary Accounts of the Banking System .... ......... 17

9. Volume Growth of Selected Exports and Imports .... ......... 1810. Kenya--Balance of Payments, 1978-81 ....................... 1911. Growth and Comnosition of ExDorts ......................... 33

12. Growth and Composition of Imports ......................... 3313. Summary National Arconnts PrAnirtions .- --------- 3414. Summary Balance of Payments Accounts, 1980-1990 .... ....... 3515, External Ganita-l Rermirements and their Financing 37

KENYA Page 1 of 3

ECONOMIC DEVELOPMENT DATA(Amounts in millions of tS 5)

Actual Estimate1976 1977 1979 1979 1980

NATIONAL ACCOUNTS (At constant 1976 prices and exchange rates)

Gross Domestic Product 3474.1 3767.0 4077.8 4176.0 4282.6Gains from Terms of Trade (+) - +344.5 +26.3 -17.6 -62.2Cross Domestic Income 3474.1 4111.5 4104.1 4158.6 4220.5

Imports (Incl. NFS) 1103.2 1300.3 1621.4 1344.1 1413.0Exports (Incl. NFS)(import capacity) 1127.4 1438.9 1130.5 1027.8 1021.3Resource Cap -24 .2 -138.06 490.9 316.3 391.7

Consumption Expenditure 2746.7 3021.1 3426.8 3610.1 3750.4lmveoraeme Espea.ditore (IScl. stocks) 703.3 951.8 1168.2 864.6 861.8

Domestic Savings 727.4 1090.4 677.3 548.3 470.1National Savings 604.6 906.8 665.1 528.0 462.7

MERCHANDISE TRADE (At current prices and exchange rates)

Capital Goods 279.4 432.8 850.3 711.2 692.4Intermediate Goods (excl. fuels) 325.2 388.7 465.7 481.7 624.8Fuels and Related Materials 248.8 283.1 305.0 393.3 508.2

of which: Petroleum (245.0) (278.9) (300.3) (390.5) (505.0)Consumption Goods 121.5 189.3 248.2 193.9 408.3Total Merchandise Imports (cif)- 974.9 1293.9 1869.2 1780.1 2233.7

ExportsPrimary Products (excl. fuels) 379.7 755.7 606.0 588.5 615.8Fuels and Related materials lo6.6 2Uc.U i10.7 206.0 293.4

of which: Petroleum (109.9) (175.0) (156.2) (182.2) (260.0)Manufactured Goods 1/ 197.5 167.7 164.6 214.8 259.6Totol Mercha-dfse Exports (fob)- 743.8 1124.4 949.3 1010.1 1168.8

Tourism 120.1 129.3 145.0 166.2 174.2

Merchandise Trade Indices

Export Price Index 105 143 133 146 163Import Price Index 100 109 128 149 178Terms of Trade Index 100 131 104 98 91Exports Volume Index 100 104 96 94 97

VALUE ADDED BY SECTOR (at 1976 prices and exchange rates)

Agriculture, Forestry & Fishing 1157.8 1273.5 1322.6 1314.3 1327.4lndustry and Mining 494.8 566.2 634.3 683.4 700.5Services 'v4 12 1483.0 187.3 1657.2

Total 3054.7 3322.7 3544.2 3654.9 3758.0

PUBLIC FINANCE (At current prices and exchange rates) Provisional(Central covernment) 1975/76 1976/77 1977/78 1978/79 1979/80

Current Receipts 689.2 753.8 1178.5 1289.0 1582.5Current Expenditures 631.8 684.2 1000.2 1229.0 1399.0Budgetary Savings 57.3 69.6 178.3 60.0 183.6Other Public Seetor .. .. ..

Public Sector Investment ----- 93 7. 594 3.

Actual Provisional

CURRENT EXPENDITURE DETAILS 1975/76 1976/77 1977/78 1978/79 1979/80(As 2 of Total Current Expenditure)

Education 27.5 26.6 22.1 21.6 23.4Other Social Services 10.7 10.1 9.5 9.7 9.1Agriculture . 7.5 6.6 5.5 4.4 4.3

Other Economic Services 8.7 9.9 10.1 11.5 11.7Administration and Defense 25.3 30.8 35.0 38.2 35.7Other (Incl. interest on debt) 20.3 16.0 17.8 14.6 15.8Total Current Expenditure 100.0 100.0 100.0 100.0 100.0

SELECTED INDICATORS 1972-1976 1976-1980

Average ICOR 9.2 6.0Import Elasticity -1.4 0.4Marginal Domestic Savings Rate 2.4 -1.5Average National Savings Rate 17.8 15.3Imports/GDP 37.9 35.4

LABOR FORCE AND OUTPUT PER WORKER Total Labor Force Value Added Per Workerin 'UUUs .of Total In US I 1 of Average

1971 1971 1971 1971

Agriculture 4647 86.4 109 36Industry 141 2.6 1426 475Service 301 5.6 1286 429Other 288 5.4 1000 333Total 5377 100.0 300 100

Not Avail.able- Negligible

1/ Data are from balance of payments.

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Balance of Payments and External Assistance(US$Million)

Actual Preliminary Estimated1976 1977 1978 1979 1980

A. Summary of Balance of Payments

1. Exports (Incl. NFS) 1131.7 1572.1 1475.5 1567.6 1821.02. Imports (Incl. NFS) 1132.9 1441.4 2085.7 2020.7 2517.63. Resource Balance -}.2 130.7 -610.2 -453.1 -696.64. Net Factor Service Income -137.4 -143.8 -142.4 -142.3 -178.5

4.1 …et Interes; Payments of whc -34.7 -1.1) I _15.9 -

(Interest on Public M & LT Loans) (-12.7) (-21.3) (-5.2) (-27.4) (-106.8)4.2 Direct Investment income (Net) -113.8 -143.8 -176.5 -142.5 -149.64.3 Workers' Remittance (Net) )4.4 Other Factor Service Income (Net) ) 34.7 12.1 50.0 55.7 59.35. Current Transfers (Net) 14.6 71.3 103.1 105.6 160.66. Balance on Current Account -124.0 58.2 -649.5 -489.8 -714.5

r. Private Direct Investment 22.9 X79 67.7 87.0 ;.8

Pubnlic M & LT Loans8. Disbursements 87.2 80.7 181.0 193.9 351.19. Amortization -19.4 -1.7 -21.0 -26.3 -31.710. Net Disbursements 67.8 79.0 159.9 167.5 319.4

Private M & LT Loans11. Disbursements /1 127.9 115.2 208.9 295.4 168.212. .AmortizatLon Lri -1.9 -1.5 = =.

13. Net Disbursements /1 126.0 113.7 160.6 247.8 58.614= UeTT nf TMF Rpqn,irg'ee 19.8 -54.8 8.0 -10.0 73.315. Short-term Capital Transactions -5.0 7.7 35.0 187.0 0.016. Capital Transactions, n.e.i. 2.6 -4.3 25.1 0.0 0.017. Change in reserves (- = increase) -104.9 -217.4 193.2 -189.5 167.4

B. Grants and Loan Commitments

1. Official Grants 40.3 40.0 40.0 40n A n 02. Public M & LT Loans 210.6 356.7 537.1 566.2 562.02.1 IBRD 31.0 84.0 156.0 110.0 92.52.2 IDA 14.0 36.0 61.0 27.0 184.82.3 Other Multilateral 10.7 67.1 44.3 57.0 50.02.4 Governments 35.5 69.0 173.9 136.7 125.0

of which, centrally planned economies 0.0 0.0 0.0 0.0 0.02.5 Suppliers Credits 56.5 19.4 0.0 0.0 30.02.6 Financial Institutions /2 62.9 81.2 102.0 235.5 79.72.7 Bonds 0.0 0.0 0.0 0.0 0.03. Other M & LT Loans (where available) 7.5 0.0 0.0 0.0 0.0

C. Memorandum Items

1. Grant Element of Total Commitments 23.0 36.5 34.9 35.0 47.92. Average Interest (percent) 6.4 5.2 8.5 8.5 4.73. Average Maturity (years) 17.5 25.6 31.0 30.0 29.8

/1 Includes financing of projected balance of payments deficit (1980-1990) on comercial terms.7T Includes commitments on gapfill.

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Debt /1 and Creditworthiness

Actual Estimated1976 1977 1978 L9,9 1808

A. Medium and Long-term Debt (Disbursed only)(US$ Million)

1. Total Debt Outstanding (DOD: End of Period) 100.5 917.1 1290.7 1616.7 2189.22. Including Undisbursed 1331.2 1700.4 2343.7 2841.9 3470.93. Public Debt Service -49.4 -57.3 -121.9 -118.2 -248.13.1 interest -93-9 -32.4 -52.6 -68.2 -106.84. Other M & LT Debt Service .. ..

B. Debt Burden

1. Debt Service Ratio 4.4 3.6 7.8 8.4 12.92. Debt Service/GDP 1.4 1.3 2.3 2.0 3.63. Public Debt Service/Government Revenue 6.6 6.1 10.5 8.4 14.9

C. Terms

1. Interest on Total DOD/Total DOD 3.4 3.5 4.1 4.2 4.92. Total Debt Service/Total DOD 7.1 6.2 9.4 7.3 11.3

D. Dependency Ratios for M & LT Debt

1. Gross Disbursements/imports (inci. NFr 1s.9 16.1 17.5 2.3 20.

2. Net Transfer/Imports (incl. NFS) 11.6 12.1 14.2 19.6 15.03. Net Transfer/Gross Disbursements 72M6 75=2 81.0 84e3 72.8

E. Exposure

1. IBRD Disbursements/Gross Total Disbursements 37.0 44.5 14.6 10.7 9.92. Bank Group Disbursements/Gross Total Disbursements 15.0 22.6 20.1 16.4 27.93. IBRD DOD/Total DOD 24.2 37.7 25.2 22.2 18.44. Bank Group DOD/Total DOD 22.0 34.2 35.1 31.4 29.45. IBRD Debt Service/Total Debt Service 29.7 31.3 21.0 28.6 13.46. Bank Group Debt Service/Total Debt Service 31.5 33.2 22.1 29a9 14.1

/1 Includes Kenya's share of a notional 50% of EAC debt.

KENYA: COUNTRY ECONOMIC MEMORANDUM

SUMMARY AND CONCLUSIONS

1. Kenya's economic performance since 1973-74 has been dominated bystrong fluctuations in the prices of its exports and imports. These haveaffected foreign exchange availabilities and domestic incomes, oftendramatically, and have resulted in large year-to-year variations in growthof domestic product. Overall growth during the period 1972-79 averaged 5%per year. This is lower than that during the country's first decade ofIndependence. The strong swings in the country's economic performance andthe slowing down in overall growth reflect the fundamental structural prob-lems of the economy: diminishing opportunities for efficient import sub-stitution behind high protective barriers; slow growth of exports; theslackening pace of agricultural growth; increasing budgetary pressures;and, the rapid expansion of the nation's population.

2. These problems have been catapulted into the center of attention bythe rapid deceleration of economic growth and the severe deterioration ofthe balance of pavments following the latest round nf nptrolpilm nrireincreases and the end of the "coffee boom." The effect of these adverseinternational developments on Kenya's growth and balance of payments wascompounded by poor weather and problems of agricultural policy, which haveled to food (mai7p) shortnagp and r,equiredt vcstly impnorts= Grortjh of GDTP

during 1977-80 averaged 4.2% per year, marginally higher than the rate ofpopulation growth. Even with lower growth, the balance of payments current

account deficit reached unprecedented levels, averaging over US$600 millionper year during 1978-80.

Keny now fa--- the necess-y a ma g - -f -react .7I - -- CO 1.L _ LILCO4 UJi IIUC 4L.LLr U Li 4L LL~ U.L L C dLLU i C ~L .£ CakL4-LLLr

policy decisions to remedy structural weaknesses in the economy in the con-tex t of a generally unfavorable world economic environment. Fur UthLermore,it must do so when its government administrative structure and processesare going through mA el 4iustmo-.-s. In 1978, Kenya's political structurewithstood the shock of the death of President Kenyatta, who had led thecountrv since Independence, and effected a smooth transitionn to- new 1leader-ship with the accession of President Moi and the holding of parliamentaryelections' Subsequelnt-ly, some changes in them style of -overnm nt have

emerged. The Cabinet has been enlarged and is meeting more regularly thanit did in the past. Ministers are more directly and widely involved inpolicy issues and decisions which could previously be made at the technicallevel now often have to1 be elevaFted to Cabinet level Thi s change alms at

promoting fuller participation and coordination in policymaking. However,it has n.ot yet led to increased consistency, wile it sCems t 1 have sloweudown the decision-making process.

4. If Kenya is to attain positive growth of real per capita income andestablish -a more equitabLe pattern ol growth, it must revitalize the agri-cultural sector, restructure the industrial sector to make it more interna-tionally competitive, design government expenditure plans which are conl-sistent with resource availabilities, support growth of the productivesectors and contribute to meeting basic needs, and reduce the rate orgrowth. of population. The country's Fourth Development Plan provides the

appropriate development strategy and policy framework JUL for i thLIsL

challenge. For agriculture, it emphasizes promotion of smallholder produc-tion, improved pricing and marketing policies and encouragement of subdivi-sion of large farms. The main thrust of industrial policy is to effect atransition from highly-protected import substitution to a more outward-oriented sector. This would be accomplished by rationalization of thetrade regime and improved financial incentives and institutional supportfor exporters. The Plan also calls for a major effort by the public sectorto increase adoption of family planning.

5. Despite adverse international and domestic circumstances and admin-istrative adjustments, the Government is determined to carry out the stra-tegy outlined in the Plan. In order to do so it has devised and is execut-ing a program of structural adjustment. The program involves (a) revisionof the Governments investment program to make it more consistent with thecountry s new economic circumstances; (b) ensuring the country screditworthiness by improving external debt management and introducingbetter planning and control of external borrowing; (c) beginning the pro-cess of rationalization of the trade regime; (d) improving incentives forexports and ensuring they are competitive; and (d) reviewing and revisinginterest rate policy to ensure that it is consistent with developmentobjectives.

6. The structural adjustment program has, on the whole, been carriedout satisfactorily. Some weaknesses in administration have been revealedin the process, leading, inter alia, to delays in preparation of the for-ward budget (revised investment program) and of the external borrowingplan. The need to rationalize the process of vetting and approving pro-jects to be financed by external sources and those to be supported bygovernment financial participation or incentives has also been revealed inthe process of implementing the program.

7. The structural adjustment program is the first phase of a processof policy formulation and action which would ultimately result in sustainedgrowth, a more equitable pattern of income distribution and a manageablebalance of payments situation. A second structural adjustment phase isunder consideration which, in addition to supporting continuation of theprocess of rationalization of the system of industrial protection andimprovement of incentives for exports, will include measures aimed at revi-talization of the agricultural sector, and at conserving energy and reduc-ing the country's reliance on imported petroleum.

8. The first years of the 1980s are going to be difficult ones forKenyan policymakers and for the Kenyan economy. The temporary respite pro-vided by the coffee boom is over and the prospect is for an unfavorableworld environment in which the country's international terms of trade arelikely to continue to deteriorate. In addition, debt service obligationswill be high because of heavy borrowing associated with the large cturrent

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account deficits of the past three years. At the same time, theGovernment's fiscal operations are likely to be subjected to extreme pressure because of slower growing revenues and demands for increased expendi-tures. It is within this context that critical policy decisions must bemade involving a fundamental restructuring of the pattern of development.Kenya's easy options have been exhausted and the Government must now cometo grips with the country's basic structural problems. The strong proba-bility of a highly constrained situation with respect to both internal andexternal resource availability is going to make it difficult to carry outthe required policy changes. The strategy set forth in the DevelopmentPlan involves a reduction in government intervention and controls in aperiod when, because of balance of payments pressures and food supply prob-lems, there would be a natural reluctance to do so.

9. With a combination of good weather and good policies, i.e.,appropriate changes in the trade regime, exchange rate policies, exportfinance and insurance and institutional support, it should be possible forKenya to sustain a growth of export volume approaching 6% per annum. How-ever, with the prospect of weak coffee and tea prices and rising petroleumand other import prices, the countryfs terms of trade are expected todeteriorate sharply during 1981/82. In terms of their purchasing power,exports would therefore be growing considerably more slowly.

10. The combination of rising debt service obligations and deteriorat-ing terms of trade over the next few years means that import levels and GDPgrowth will have to be severely constrained. This, however, must be accom-plished in a way which is consistent with the overall development strategywhich calls for reduction of direct controls on imports. In other words,demand management tools, i.e. monetary, fiscal incomes and exchange ratepolicies, should be used.

11. Given the adverse external circumstances, it is unlikely that posi-tive growth of GDP per capita can be maintained during 1981-83. However,growth prospects appear somewhat better from about 1983 onward providedeconomic management (including monetary, fiscal and financial policies)measures up to the challenge. The country's terms of trade should stabil-ize and the growth of external debt should decelerate and current accountdeficits should remain stable over the next few years. It should, there-fore, be possible to follow gradually more expansionary policies and agrowth rate of GDP exceeding 5% per year should be attainable during thesecond half of the decade. A feasible growth scenario would then be one inwhich GDP increases at a pace below that of population in the early years(1981-83) then gradually accelerates, averaging about 4.0% per year duringthe first half of the decade and about 5.3% per year during the secondhalf.

12. Despite the modest growth prospects for the period 1981-85 Kenya'sexternal capital requirements will be substantial. Gross capital inflows

required to finance accumulated current account deficits and amortizationand to keep foreign exchange reserves at a level equivalent to threemonths- imports would be about US$5.2 billion. Financing of this magnitudewould require an increase of foreign direct investment of about 10% a yearand an increase in commitments on bilateral and multilateral aid of about9% per year in nominal terms (and an acceleration of the pace of disburse-ments through improved aid administration and increased rapidly-disbursingnon-project assistance). Even with increased concessionary aid, Kenyawould have to rely on commercial borrowing for about a third of its exter-nal capital inflows. This implies a continual hardening of terms on exter-nal debt and the debt service ratio rising from just under 15% in 1981 toabout 21% in 1987. After the first few years, perhaps beginning in 1982-83, net capital requirements would stabilize in nominal terms. This wouldlead to a tapering off and eventual decline in the debt service ratio tothe 18% range by 1990.

13. In conclusion, the next few years will be a critical period inKenya-s development. The Government will have to take difficult but cru-cial policy measures which will affect the course of economic and socialcharge for decades to come. The Government's development strategy is basi-cally sound and appropriate policies have been identified. In order toadvance the strategy and carry out these policies Kenya will need continuedexpansion of external assistance. Because of the financing gap in the bal-ance of payments over the next few years, it would be helpful if lenderscould, to the extent possible, temporarily shift their financing from pro-ject to program aid or well-conceived commodity assistance. Conversion ofexisting loans into grants, already done by some donors, would also reducethe debt service burden. In addition to this, assistance should be on asconcessionary terms as possible to ensure that, with continued need forborrowing on commercial terms, the debt structure and repayment scheduleremains manageable. It would also be helpful if lenders would be as flexi-ble as possible in terms of financing local costs and recurrent expendi-tures.

I. BACKGROUND

1. By the early 1970s it was already clear that, despite Kenya's rapidgrowthI' after Independence, thIL e ounr had inpet stutua -problems - -- __1_ grow LU 0£ L~L LIL~ LL)ULIL .Y LLaU .L1t.AJ J-LeLLL L LL U%L LULO ± pi PLUt

which would eventually inhibit its development. Import-substitution indus-triallzation behl indA h1igh5 protective barriers was lleaviLng the country moredependent on imports, while resulting in a slow growth of exports. More-over, opportunities fLor efficient import substitution were diminishlng. Inaddition, the pace of agricultural growth appeared to be slowing down whilepopulation growth Was accelerating. The Governmuent's performsance in mobil-izing resources also seemed to be slackening. Most easily implementabletaxes had beenr instituted, and while new taxes could be enacted, they wouldnot be as easy to implement.

2. The world oil price increases and increases in the prices of otherImports in 19774 were a severe shock to the Kenyani economy. import pricesrose by 46%, while export prices increased by only about 12%. The loss inincome as a result of the unfavorable change in terms of trade wasequivalent to about 5% of domestic income. Kenya was able to absorb theinitial impact without severe disruption or tne economy. Tne comfortableforeign exchange reserve position at the beginning of 1974 and high levelsof business inventories helped Kenya weather the crisis. In addition,Kenya was able to draw on her facilities with the IMF to cushion the lossof foreign exchange. However, the outlook was for continued deteriorationin Kenya's external position because of worsening terms of trade and slowexport growth.

3. The Kenyan Government therefore introduced a comprehensive program,spelled out in the Sessional Paper No. 4 of 1975, to restructure the pat-tern of economic growth. Broadly, this involved restraining the consump-tion of both the public and private sectors and channelling investments toareas of immediate and productive results. Domestic inflation was to beheld down below world inflation so as to encourage the use of domesticresources and to maintain Kenya's competitiveness in export markets.

4. The program relied mainly on the use of fiscal and monetary instru-ments. In order to restrict consumption, taxes on income and sales taxeson luxury goods and gasoline were raised. In the monetary field, interestrates were raised by about 2 percentage points to a maximum level of 10%.This was accompanied by the revision of the three-year forward budget toshift resources into exports, agricultural production, and industries usingmore labor-intensive techniques. Growth of both government consumption andof the development budget was to be reduced from the Third Plan levels. Toencourage exports, a 10% subsidy on manufactured exports was introduced.In addition to this, Kenya employed an incomes policy which kept averageannual wage increases to no more than 75% of the increase in the cost ofliving. These restrictive measures and the world recession in 1974-75 ledto a slowdown in Kenya's economic growth to 3.7% in 1974 and only 1.2% in1975. The balance of payments current account deficit was, however, nar-rowed substantially.

5. In 1976, Kenya's economic fortunes changed dramatically once again.Frost in Brazil in 1976 reduced the world coffee crop, leading toskyrocketing coffee prices and a major improvement in the terms of trade.Kenya's economy rebounded stronglv reflecting the effect of higher coffee

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prices on foreign exchange availabilities and on rural incnmes, and greatly

expanded government expenditures. The economy grew by 5.6% and 8.8%21 fl7-7 ,A ~ ~*ret respectively in 17 n 1 and Lte current accountU U was iUn surplus in the

latter year. By mid-1977, however, coffee prices had begun to move down-

ward. The expansionary impact of fiscal and monetary policy adopted during

the coffee boom, combined with declining coffee prices, caused the balance

of payments situation to deteriorate seriously in 1978.

6. Performance of the Kenyan economy since 1973-74 demonstrates its

continued vulnerability to changes in the external environment and some of

the underlying weaknesses in economic policies. Wnile tne Government took

some steps to change trade policy and the system of industrial protection

and incentives, the level of protection remained high and continued to

depend on quantitative restrictions. The growth of exports continued to be

slow in the latter half of the 1970s, deteriorating, if anything, because

of the breakup of the East African Community. In addition, export earnings

became even more dependent upon coffee and tea. Thus, despite the restruc-

turing program, the country became even more vulnerable to external forces.

The basic structural problems of diminished opportunities for efficient

import substitution, slow growth of agriculture and rapid populationincrease remained unchanged.

II. RECENT ECONOMIC DEVELOPMENTS AND OUTLOOK FOR 1981

A. Growth of GDP

7. During 1978-79 Kenya again experienced strong external shocks as a

result of further major petroleum price increases and declining coffee

prices. The balance-of-payments and income effects of these were com-

pounded by poor weather, especially affecting coffee and maize production.

As a result, GDP growth slowed to 3.1% in 1979 and an estimated 3.8% in

1980. The growth rate for 1977-80 as a whole was 4.2% per year (at factor

cost), marginally higher than the rate of growth of population.

8. With population currently estimated to be growing at close to 4% per

annum, real GDP per capita has clearly fallen in 1979-80. The poor perfor-

mance of GDP in recent years reflects lagging agricultural output caused in

part by drought in 1979-80, slower growth of manufacturing industry due to

import controls imposed in December 1978 to protect the balance of pay-

ments, and sluggish growth of the tourism sector as a result of interna-

tional recession. Table 1 below gives sectoral GDP growth rates for 1977-80 and sectoral distribution of GDP in 1979.

Table 1: REAL GROWTH OF CDP BY SECTOR, 1977-80(percentages)

Long run trend Share ofGrowth Rate 1977 1978 1979 1980 Total GDP

1972-79 1979

Sector

Agriculture, Forestry, Fishing 2.4 10.0 3.9 -0.8 3.0 36.0

Mining and quarrying 6.7 18.8 0.0 9.8 .. 0.3

Manufacturing 10.9 15.6 12.6 7.1 5.0 13.2

Electricity 8.0 11.8 6.2 7.3 .. 1.9

Construction 0.8 8.9 9.0 7.3 .. 5.5

Trade, restaurants and hotels 3.4 8.3 8.6 -1.0 4.0 10.1Transport 4.0 6.7 10.4 7.2 .. 5.9

Finance 9.7 5.8 8.0 3.9 .. 3.3

Ownership of dwelling 5.0 4.2 3.6 3.8 .. 6.4

Other services 8.0 7.4 9.1 8.6 .. 3.2

Government 6.2 5.1 6.3 7.1 .. 14.5

Total GDP at factor cost 5.0 8.8 6.7 3.1 3.8 100.0

Source: 1978-79 Economic Survey. 1980 mission estimates. Data for 1977-80

are based on 1976 constant prices, long term trends are based on1972 constant price data.

9. GDP growth should recover somewhat In 1981. but will probably not

exceed population growth. The outlook for agricultural output in 1981 isstill a matter of speculation. AssuminQ normal weather conditions, ade-

quate fertilizer supplies and reactivation of seasonal agricultural credit,

and i-n viewT of the recent increase in producer nricrp nf snme kev crons

such as maize and wheat, real agricultural production could grow by 3% in1981. The pace of growth of manufacturing will remain dampened by the

attempts of the Central Bank of Kenya to curtail imports by delaying or notissuing import licenses. As a result, real maanufacturing industry growth

will probably not exceed 5% i.n 1981. Due to continued international reces-sion, trade and tourism, Kenya's other key sector, is expected to grow at4% during the current year. Real growth of total GDP at factor cost is

forecast to be about 3.8% in 1981 compared to an estimated 2.8% for 1980.

10. ntt Anallysi.s of thle sources and uses of resources confirms the slow

growth of the foreign sector in recent years. Exports of goods and nonfac-tor services were marginally lower in 1980 than in 1977. Moreover,

Table 2: SOURCES AND USES OF RESOURCES 1977-80

KL million in 1976 prices Composition Annual Growth(Percentage) Rate, %

1977 1978 1979 1980 1977 1980 1977-80

GDP at factor cost 1390.3 1482.9 1529.3 1571.8 88.2 87.7 4.2

GDP at marketprices 1576.1 1706.6 1748.8 1791.9 100.0 100.0 4.4

+ Imports GNFS 544.1 690.7 558.0 591.2 34.5 33.0 2.8

- Exports GNFS 457.9 472.3 453.4 453.3 29=l 25=3 -0.3

Available Resources 1662.3 1925.0 1853.4 1929.8 105.5 107.7 5.1

Investment 398.2 488.5 361.8 363.7 25.3 20.3 -3.0

Fixed capital T7 4112 -7YW [ 22. 1.7

Cha.,ge in Stocks 46.2 77.3 -17.3 8.9 2=9 0.5 -48=l

Consumption 1264.1 1436.5 1491.6 1566.1 80.2 87.4 7.4PMtblAc I=U52F -7=T:T -T378 -37-T T9T0 776

Private 963.9 1093.3 1139.8 1192.6 61.2 66.6 7.4

Memorandum itemsGross domestic savings 456.1 295.0 243.5 196.7 28.9 11.3

Resource gap -57.9 193.5 118.3 163.9 -3.7 9.1Terms of trade adjustment +144.1 +24.9 -13.7 -26.0 9.1 1.5

Gross domestic income 1720.2 1731.5 1735.1 1765.9 109.1 98.5

Exports adjusted for terms of trade 602.0 497.2 439.7 427.3 38.2 23.8

Sources: Central Bureau of Statistics and mission estimates.

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adjusted for terms of trade effects, exports declined by 10% per year.Imports have grown at less than 2.8%, compared to a 4.2% growth rate forGDP at market prices. This indicates an import elasticity of about 0.7which appears to be a reasonable relationship. With imports increasing andexports stagnant, the resource gap has increased from 5.4% of GDP in 1977to 7.7% in 1980. This does not, however, indicate the full extent of theincrease in the gap. Adjustment for terms-of-trade changes indicates ashift from a surplus of 3.7% of GDP in 1977 to a deficit equivalent to 9.1%in 1980.

11. Investment levels (both fixed capital formation and inventorychanges) were smaller in 1980 than in 1977. Both peaked in 1978 reflectingthe somewhat lagged effect of the coffee boom and have declined in both1979 and 1980. Consumption, on the other hand, has increased considerablymore rapidly than GDP; this is true of the private sector as well as thepublic sector. As a result there has been a steep drop in the saving rate.While the saving rate in 1977 was above the historical average, this is adisturbing picture.

B. Sectoral Developments

Agriculture

12. The agricultural sector has continued to manifest the erraticgrowth performance of the mid-1970s. The growth rate for 1974-79 (in 1972prices) as a whole was only 2.4%, compared to a probable population growthrate of 3.9%. Slow growth appears to have continued in 1980, but there maybe some improvement in 1981.

13. The slowdown of agricultural growth is the result of a combinationof factors: poor weather, especially in 1979 and 1980; a weakening of thebasic forces underlying the country's rapid post-Independence agriculturalgrowth (settlement of high-potential areas, shifts in production to highervalue crops and rapid adoption of hybrid maize); and inappropriate poli-cies. While it is not possible to assign relative weights to these fac-tors, it is clear that policy has played a major role in some years.

14. Production of food for the domestic market appears to have grown ata slower pace than the sectoral average, while nonfood or export crops per-formed better. The average growth rates for most food products since 1972have been negative or less than 1% per year, while population growthapproached 4% per year. Thus. ner canita food Droduction has declinedsharply.

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TazDle 3: UTTANTTTM ANT DDTPRIC TIMTCS FVO MADVTED EXYPOPT ANn FOOD CRPnp

n..)a-a- T-A4-- (107; - 1rflC (D_-4:- T-A4 --- (107 = 1if)(),'.UaflflLLLJ LlULl 1t,1|...... O vvJ. I V -J *'VJ'J lJ C .L LC llttLXLO A. .5, U-lV

1977 1978 1979 1977 1978 1979

Wheat 91 91O 111 111 110WIdlea DI. 02 100 ill iii £12

Maize 75 42 43 116 116 101-~~~~~~~~~ ~ ~ ncA, A c AA I nl1 hA

Rice lOaJ 91 95) 7 L9U 1 10

Coffee 121 105 94 158 112 112Cotton 1/0) 1 I1Jo Ia 151 1J7

Sisal 96 94 109 117 108 142

Sugar 114 142 190 121 127 127

Source: Economic Survey, 1980.

15. Maize is the key agricultural crop, being the staple foodstuff.Maize production has fallen rrom 2.25 million tons in 197/8to 1.6 mil-

lion tons in 1980/81, while deliveries to the official marketing agency,the National Cereals and Produce Board (NCPB) have fallen from 256,000 tonsin 1975/76 (25% of production) to only 135,000 tons (8% of output) in1979/80. This has led to unprecedented shortages of maize in urban areasand to extraordinary food imports. The poor performance of other foodcrops, notably wheat, and of dairy products has also contributed to theneed for increased food imports in 1980/81.

16. Both coffee and tea output have been adversely affected by poorweather and input supply difficulties in 1979-80. However, longer termgrowth trends for these commodities have been favorable as plantings havecontinued to increase. Sugar has been a bright spot, with output doublingbetween 1975 and 1979, resulting in a small exportable surplus. There issome question, however, whether sugar production has actually substitutedfor maize, as since 1975 the maize price has declined by about one-fourthrelative to that of sugar.

17. While recent unfavorable weather has affected production of virtu-ally all agricultural commodities, the slow longer term growth of foodcrops also reflects inappropriate policies and the limited institutionalcapacity of the Government to effect its agricultural development plans andprograms. Government control of producer and consumer prices and marketingchannels for major foodstuffs, especially maize, beef, and milk, has intro-duced distortions and disincentives and has thus adversely affected thegrowth of production. Insufficient margins between fixed producer and

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consumer prices have led to operating losses for many of the Governmentmarketing boards responsible for handling agricultural commodities, withserious consequences for the budget. Guaranteed producer prices have notalways encouraged stability of production, both because producer priceshave sometimes been too low (as has been the case for beef and milk) andbecause official buyers have not been adequately represented in certainmarkets. In the case of maize, rigid Government controls in interdistrictmaize movements have prevented the informal maize market, which servesmainly the rural areas, from balancing supply and demand among districts.Market controls and inadequate market development have inhibited the growthof marketed surDluses and provided onnortunitles for corruption. The nric-ing and distribution of inputs, notably the inadequate seasonal creditscheme and late deliveries of fertili7ers haue also contrihiited to nrodiuc-

tion instability. Review of policy interventions in relation to the majorfood commodities of mai7e- beef and milk- shows that in most nases- Govern-

ment marketing and pricing policies have not succeeded in their goals ofsthilizinp siinnlies, guaranteeing nrices, and henefitting the lnwer income

groups. (See Annex on Agricultural Issues).

18. Recent shortages of maize illustrate clearly the problems of agri-cultural nolicv. DlurIng 1977-78, when maize production was high, NGPB,

which is supposed to have a monopoly over the maize trade was not able toDurchase the sron at nrevionuslv annnount-ced guaranteed prices because ofinadequate storage capacity. This, in turn, was the result of failure tonermit- t-imelv evnorts during previous years when nroduction*as in excess

of domestic requirements. Restrictions on private maize trade and ship-mentR nrevented this from bhing an effectiJe snialsc outlet. Markeot galuts

led to low effective prices to farmers and eventually to reduced planting.This was aggravated by a subsequent reduction in the offica p , plems in the supply of fertilizers and a change in agricultural credit pro-grams (dropping Lh Le Guaranteed MILinimum Returr, scheme, which hIdU been tihle

basic seasonal credit program for large farmers, without an adequatereplacement) wh1 ichl redAuced credit availablity. I iT.us, bad weather hIt a

crop which would have been smaller in any event. Finally, with productionazlmost certain tlo dLrop sharply, exports weted pir LILItLeU, LUL LILCLh CxacaL U=L

ing the poor domestic supply situation.

19. Government has given more attention to short-term issues than tolong-range planning, and the slowness of impiementation or tne agriculturaldevelopment strategy contained in the Fourth Development Plan has also con-tributed to agriculture's poor performance. The more difficuit iong-termstructural issues relating to food and agricultural policy have not beenadequately addressed, as the Ministry of Agriculture has been preoccupiedwith short-term problems. Moreover, the large number of official, parasta-tal and private organizations servicing the agricultural sector hasincreased difficulties in policy coordination in a number of areas affect-ing agricultural production, and has resulted in problems in policy imple-mentation. The Ministry of Agriculture is also constrained by a shortage

of qualiried personnel in tne areas of management, policy preparat--i and

analysis, as well as in field operations. Recent reductions in budgetaryaLlocations, due to ReLya s present LLscaL pproULems, have ecreased the

resources available to the Ministry, and poor financial management hasoften resulteu in inel'icient use of existing resources.

Manufacturing

20. This sector hLas beeri tLie most UydyLamiLc in thtIe economy. Over thLe

years 1972-78 it grew at an average rate of 10.5% per year in real terms.Nevertheless, it remains relatively small, contriDutLng about 13% of GDP

and 14% of modern sector employment. Industrial growth has become increas-ingly volatile and the magnitude of year-to-year rluctuations in output hasincreased. Development of import-substituting industries has increaseddependence on imported capital and intermediate goods. Thus, reductions in

foreign exchange availabilities due to adverse trade developments have led

to import restrictions which inhibit industrial output.

21. Growth of the sector has dropped dramatically in the past fewyears. In 1979 the sector grew by 7.1% compared to 12.6% in 1978; afurther decline to 5% is estimated for 1980. This was due to import res-

trictions imposed by the Central Bank, virtual collapse of the Ugandan

market and weakened consumer demand caused by declining real farm incomes. 1/

22. Kenyan industrialization has been encouraged by heavy protectionagainst foreign competition and government assistance in the form of directloan and equity capital. The two most striking characteristics of the sec-

tor are its heavy and increasing orientation to the domestic market and itsdomination by relatively large firms. That the pattern of manufacturing

growth has been strongly characterized by import substitution is evidencedby a decline of the share of imports in the supply of manufactured goods

from 44% in 1972 to 31% in 1978. At the same time, the share of exports inthe sector's gross output has fallen by about half; from 23% in 1972 to

only 11% in 1978. It should also be noted that the ratio of value added tototal output of the sector has declined substantially. This indicates that

new products represent shallower manufacturing processes. Insofar as thedominance of large firms is concerned, when compared to that of other low

or middle income countries, Kenya's industrial structure appears heavilyskewed to large scale units and to product groups which are more capital

intensive.

23. Sustaining growth of industry by continuing the strategy of heavy

1/ The terms of trade index for agriculture (1976 = 100) declinedfrom 1- in 1977 to 95 in 1979.

protection of import substituting industry is not feasible. Most of theeasy or obvious import substitution investments have already been made.Moreover, high levels of protection have resulted in an anti-export biaswhile the positive contribution of some recent industrial investments toforeign exchange saving is questionable.

24. The Government's industrial strategy is to promote the efficiencyand competitiveness of domestic industry and to encourage the growth ofexports. This would be accomplished by changing the incentive structure,i.e. the structure of input and output prices, largely via changes in thetrade regime. Such changes will affect the profitability of existingindustries, in many cases adversely, and are bound to encounter strongresistance from those adversely affected. Moreover, even if incentivechanges are well designed the responses, especially in terms of manufac-tured exports are not likely to be dramatic because of the many handicapsthe country faces as a newcomer to the world market for manufactures (e.g.transport difficulties, lack of marketing outlets, inadequate knowledge ofstandards). However, the country does not appear to have a viable alterna-tive. Pushing industrialization further by increasing protection can buysome growth over the near term but at the cost of an inefficient sector,intensification of anti-export bias and further discrimination againstagriculture.

Building and Construction

25. Although the building and construction sector is relatively small.accounting for only about 5.5% of GDP in 1979, it is an important source ofurban employment. The sector has performed better in recent years thanagriculture or manufacturing. But due to its minor share in GDP, thesector's boom did not provide a major source of dynamism. The high levelof building and construction, especially in the years 1977-79, was sparkedby the coffee boom in 1976/77. Nairobi. with its raDid population growthand concentration of industries and services, has accounted for about 70%of the value of private buildings constructed. The value of building plansapproved by the Nairobi City Council reached a record level of KE 53.5million, or 40% more than in 1978. Other major urban areas reported simi-lar high increases in 1979. As a result, cement consumption, in volumeterms, increased by 18% in 1979 over 1978. In 1980 growth began toslacken, registering only 7%, as the coffee boom petered out and theeffects of rapidly accelerating construction costs were felt.

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Table 4: ANNUAL INCREASES IN CONSTRUCTION COSTS. 1977-80

(percent)

Est.1977 1978 1979 1980

Materials 8.8 10.9 14.1 14.5

Labor 4.5 - 10.6 14.6

Total 7.4 8.3 13.2 14.6

Douarce: EIconomiLc .lurvey 8-0 and - data.

Tourism

26. Tourism is an important service sector constituting, together with

trade, about 10% of total GDP in 1979 (Table 1). rowtLL of t

sector was somewhat lower in 1979 than in 1978. The growing use of pack-

aged tours and charter arrangements which reduce hotel and other rates for

visitors has resulted in tourism receipts growing at a slower pace than bed

nights. Revenues from tourism were estimated to be about Ue-170 million in

1980, an increase of only 4.8% over 1979. Visitors from Western Europe

remain the largest group while visitors from other Africani couLtries

declined.

C. Wages, Prices and Employment

27. Despite the slowdown in GDP growth, wage employment in the modern

sector rose from 857,400 in 1976 to 972,300 in 1979, or 4.3% per year.

However, more than half of the total increase occurred in 1979 alone in

response to a 10% increase in the number of employees decreed by President

Moi in early 1979. Employment in the public sector increased by 6.3% per

year, or more rapidly than that in the private sector, which grew at a 3%

pace. The increase in the private sector employment was accounted for

largely by the industry and service sectors, while employment in agricul-

ture declined slightly. The decline in this sector is misleading since it

reflects breakup of large estates and a shift from wage employment to agri-

cultural self-employment. Due to slow growth across all sectors of GDP in

1980, employment is estimated to have grown by only 2%. Employment pros-

pects for 1981 are not bright due to continued slow economic growth.

Table 5: WAGE EMPLOYMENT BY MAJOR SECTOR(thousands)

Rate ol 'ro" t

1976 1979 1972-79 1976-79

Private Sector 501u 547.5 30 3 .0

Agriculture 197.7 193.8 -0.3 -0.7Rest of Private Sector 303.4 353.7 6.0 5.2

Public Sector 356.4 427.7 5.5 6.3

TOTAL 857.5 972.3 4.0 4.3

Source: Economic Survey, 1980

28. The Government½s wage policy has in recent years limited annualwage increases to no more than 75% of the increase in the cost of living.This policy has resulted in a gradual decline in modern sector wage rates,with beneficial consequences for employment, income distribution and con-tainment of inflation. While the Government remains committed to maintain-ing this wage policy, significant adjustments were granted in 1980. Publicsector wages, which were not adjusted for cost of living increases in1977-79 were raised substantially in 1980. Based on the recommendationsmade by the Waruhiu Committee, wages and salaries of employees of the civilservice were raised by 23-30% effective October 1, 1980. Moreover, in Mayof the same year, minimum wages per annum were increased by an average of28%.

29. Including recent wage adjustments, increases in nominal wages in

the modern sector during 1977-80 were about 48%. During the same period

the cost of living increased by about 46%. Thus, real wages were margi-nally higher in 1980 than in 1977. While perhaps justifiable from other

points of view, given the tight balance of payments situation and recentterms of trade losses, the increases seem at least ill-timed.

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Table 6: EMPLOYMENT, WAGES AND CONSUMER PRICES, 1977-79(% increases)

1972-79 1977 1978 1979

Wage Employment 4.0 5.3 1.0 6.7

Current Prices Average Wages 11.2 7.9 10.9 9.4

Consumer Prices 12.8 11.7 12.3 8.4

Real Average Wages -1.4 -3.4 -1.2 0.9

Source: Economic Survey, 1980

D. Fiscal and Monetary Performance

Budgetary Operations

30. The years following the coffee boom have seen the emergence ofserious budgetary pressures. On the revenue side these reflect a certainlack of buoyancy of the tax system which has required a series of discre-tionary adjustments to keep revenue growth up and a vulnerability to fluc-tuations in domestic income and import levels caused by variations in thecountry's international terms of trade. On the expenditure side, therehave been a series of major initiatives: (a) heavy capital expendituresassociated with the formation of domestic corporations to replace defunctEast African Community entities (Public sector capital formation hasincreased from 42.2% of the total in 1976 to 44.7% in 1979); (b) a majorincrease in military expenditures. about five-fold berween 1975/76 and1978/79, or from 1.6% of GDP in FY1975/76 to 4.9% in FY1978/79; (c) anincrease in outlays for social programs; such as elimination nf school feesfor two more years of primary education, a school milk program and anational litpracv cnmnnign- and n d _ 9n-iTh% incrPqCA in cnlnriae for nil-lic employees effective October 1, 1980. To this must be added the generalpressure to exnand sorinl servirces inrrease public sector employment and

meet the recurrent costs associated with earlier investment.

31. The oil price increase and the slowdown in economic activityreqnuiired tha agovernment- toA fnllo a restrte-r4,-- -1e- po 4in fis a 1

years 1975/76 and 1976/77. However, coffee prices rose in 1977/78, bring-ing1 about a substantial increase in resource availability. The fovernment

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increased its snpndingy dramatir211y; bhnh deelnopment and recurrentoutlays were boosted (the former particularly to meet the needs of newKenyan airline and railway cornnrations). Total exnpndituire inrreased bvabout 45% but this was almost matched by revenue gains (part of the revenueinreas.cr wasQ diip tn assignment tf- tho hbudgot nf rortn-in imnort diltiofc whirhhad previously been allocated to EAC regional activities). While thenovrall defirit- parnrndpd onmPwhat, inrrpeapd rv,il1hilitv of PYtPrnal

financing allowed a reduction in domestic financing.

32. In 1978/79 a further substantial increase in expenditure was budg-eted. By this time, however, the effects of the coffee boom were dissipat-ing and the increase in expenditures was not matched by revenue growth. Asa result, there was a shiarp rise iLn the deficit LLrom a0bout 6U/I of GDUPLJ in1977/78 to a record 9% in 1978/79.

33. This left the Government with an extremely difficult budgetaryU±lemma. ILt facedu tLe nee to reuuce t[he deficit in order eo avoid severeinflationary pressures, with the almost certain prospect of very slowgrowth of revenues. Thus, taxes were increased; the general rate of the

sales tax was raised from 10% to 20%, the rate for "nonessentials" wasraiLsedU from 20% to 25% adu other specific taxes were iLLreasedu as well.

The rate of growth of expenditures was reduced sharply, from 17% betweenIfl-77 P70 j I Al7O /fl - W r . ff ff 197i/7O anid 178/079 to aDout 5% ror tne 1979,/80 budget but this could onlybe done by keeping development expenditures 15% below the level budgetedand 5% below the level in the preceding year. This enabled the Governmentto bring the deficit down to less than 6% of GDP.

34. The budget for 1980/81 forecasts a 24% increase in revenues and an18% rise in total expenditures, which would have permitted further reducingthe overall deficit somewhat in nominal terms and significantly relative toGDP. The substantial increase in revenues would be in large measure theresult of an additional 10% levy on dutiable imports, plus a series ofother tax measures (introduction of a telecommunications tax, discontinua-tion of certain refunds of the sales tax, increase in excise taxes on beer,gasoline and diesel fuel). in addition, substantial increases in dutieswere introduced to provide equivalent protection for industries previouslyprotected by -letters of no objection" and other quantitative import res-trictions which were eliminated. The increase in expenditures was to belargely on the development account where 29% nominal growth was budgeted.

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Table 7: CENTRAL GOVERNMENT FISCAL OPERATIONS(millions of KE )

1977/78 1978/79 1979/89 1980/81Staff

(Actual) (Actual) (Revised) Estimate

Total Revenue 481.2 516.2 593.4 706.9Recurrent revenue (472.0) (498.5) (575.4) (679.9)

Foreign grants ( 9.2) ( 17.8) ( 18.0) ( 27.0)

Total expenditure 578.4 676.5 708.0 882.5Recurrent expenditure (390.3) (456.4) (510.8) (664.5)

Development expenditure (188.1) (220.1) (197.2) (218.0)

Overall deficit 97.2 160.2 114.6 175.6External financing 39.2 63.8 88.9 58.5Domestic financing 58.0 96.4 25.7 117.1

Memorandum items:Percent of GDP

recurrent revenue 29.4 28.1 29.1 29.9total expenditure 35.7 38.1 35.8 38.9

recurrent (24.1) (25.7) (25.8) (29.2)

development (11.6) (12.4) (10.0) ( 9.6)Overall deficit 6.0 9.0 5.8 7.7

Source: Economic Survey, 1979 and 1980, Statistical Abstract 1979, BudgetSpeech, June 1980 and data provided by Ministry of Economic

Development and Planning.

35. Tt now apnears; however, that these ambitious budgetary goals will

not be realized. Revenue collections will probably be below budget esti-mate-p hbprcuse of the rescinding of thp salep tax on imnorted raw materials

and slower than anticipated GDP growth. At the same time, recurrent expen-ditures will probably be considerably above budget. This reflects (a) the

anticipated additional ministerial supplementary appropriations, including

the~ LimaLted add itilLonall emergency ou import's required and tLe subsidies

associated with them; (b) the projected cost of the Organization of Afri-can Unity (OAU) Sumt to be held in Nairobi in June 1981; (c) the 20-307salary and allowance increases for civil servants effective October 1,1980v; and (d) adia-tionall Government support for tfinancially troubled state

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enterprises.

36. Thus, it is estimated that funds available for investment (totalrevenues less recurrent expenditures) will be K1E 100 million less than hadbeen budaeted= Carrying out the planned development expenditure would meana total deficit of twice the magnitude provided for in the revised esti-mates… Develonment expenditures would have to be cut back sharply in orderto attain a further reduction in the size of the budget deficit. Thelikely outcome is a moderate reduction in expenditures from budgeted levelsand an overall deficit of over 7% of GDP.

37. The outlook is for continued budgetary difficulties over the nextseveral years. With slow growth of economic activity and imports, bud-etrevenues can also be expected to grow slowly. At the same time, there willbe pressures to expand recurrent expenditures. This implies a squeeze onthe resources available to finance development expenditures. Increases inthe overall budgetary deficit would lead to inflationary domestic bank bor-rowing in the absence of expanded external aid flows. Thus, growth ofdevelopment expenditures will have to be restrained if deficits are to beheld within manageable bounds. Only if there is better management ofresources--resetting of investmuent priorities, improved tax collection and'administration, better forward budgeting, improved project evaluation andmonitoring, improved p'LanniLng of externaL 'Uorrow'Jng andu better coorainationof aid donors--will there be scope for new projects and expeditious execu-tiLon o01 projects unuer way

Recent Monetary Developments

38. Monetary and credit policies in 1979 were formulated in the expec-tation of continued tight balance of payments constraints from 1978.Therefore, the liquid assets ratio 1/ was kept at its level of 18% duringthe first half of 1979, despite declining aggregate liquid assets of thecommercial banking system, and the cash ratio was maintained at 3%. Thequantitative ceiling on the monthly growth of commercial bank credit wasleft unchanged at 1.5%. However, in the second half of 1979 a turnaroundin the balance of payments position became apparent, while the growth inthe demand for credit was showing clear signs of sluggishness. As aresult, the liquidity ratio was reduced to 10% in June 1979. While thesepolicies have been maintained through 1980, a substantial increase inprivate sector credit in September of that year, combined with a growingconcern over the decline in foreign exchange reserves, forced the CentralBank to introduce a measure requiring the limitation of credit extended tothe private sector by commercial banks and other financial intermediaries

1/ Defined as liquid assets divided by total deposit liabilities.

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to amounts outstanding as of August 31. 1980. Furthermore, commercialbanks have been required to limit growth of credit to the private sector tonot more than 18% in any twelve months period. Since commercial bankscredit to the private sector grew in average by 20% in FY1979/80, thisimnlipe a reduiction of conmmerclI hank credit to the nrivate sector.

39. Owing to a sharp rise in the countryvs foreign exchange reservesresulting from an improved balance of payments position, monetary growthaceeae consieably 4in 1Q7Q (TphM o Q Ac a roc-l.,t tho not fr%voi on

assets of the banking system increased by about KE 72 million. OverallmonetLlary supply rose by 14% and that of money and qa- b 18 .An 8respectively, due to the growth of both net foreign assets and domesticcredit during the year. Y,owever, net foreign --aset have been the yaJo

source of monetary expansion and accounted for 74% of the increase inoverall money supply. Components of money accelerated at slightly dif-ferent paces and the ratio of currency to demand deposits remainedunchanged at its 1078 level of about A.'

40. In contrast to its shlar p growth o .f 3570 in 1978, net Aomestic creAit

grew by only 13% in 1979. Credit to the private sector expanded by 10%,while that to Government by 7%. Credit to "other public sectors-however, by an unprecedented rate (104%) after experiencing a large drop in1 07

Al. Because of slow economic ac-ivity anA a deteriorated b-alance-of-I ~ ~ U ~LIW .UIUILt L~. -. LLJ aiu a uL. -JtL Lu U JaLL_ U

payments position in 1980, the overall money supply rose by less than 1% inthCe first five months 0of 1980t. , wVlJ.ae tLat of net loreign assets oU thle

banking system increased by only 8%. However, based on the latest avail-aule data, overall monetary supp'ly expaUdedU L.2% duruLng the third quarter

(July - September) of 1980. Over the same period, credit extended to theGovernment by the banking system rose by 46o% comparea to only oi. co Eneprivate sector. While the first figure is normal during the first quarterof each fiscal year, the latter reflects the tight liquidity position ofthe commercial banks induced by a decline in the net foreign assets of thebanking system of KEL 555 miliion during July - September of 1980.

42. The trade-off between public sector and private sector expenditurebecomes evident in monetary budgeting unless the central government deficitcan be brought under control, credit to the private sector will have to berestricted with adverse consequences for the growth of private GDP.

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Tabie 8: KENYA--SU'Mi"uY ACCO'uiTS OF TnE BATWlING SYSTEM

1978 - MAY 1980

(in KE million)

End of Period May _ _ increase

1978 1979 1980 1978-79 1979-May 1980

Values End of Year

Net Foreign Assets 107.2 179.3 193.9 67.2 8.1Central Bank of Kenya 106.4 179.6 - 68.5 -Govt. foreign exchange 1.4 0.5 - -64.0 -

Commercial banks -0.8 -0.8 - 0.0 -

Net Domestic Credit 614.4 692.4 711.9 12.7 2.8Government 146.5 157.1 131.0 7.2 -16.6Other public sector 22.8 46.6 43.4 104.4 -6.9Private sector 445.1 488.7 537.5 9.8 10.0

Other Items -7.7 -60.1 -88.6 - -

Money and quasi-money 713.9 811.6 817.2 13.7 0.7Money 402.0 473.5 530.5 17.8 12.0

Currency (115.2) (133.6) - (16.0) -Demand deposits (286.8) (339.) - (18.5) -

Quasi-money 311.9 338.1 286.7 8.4 -15.2

Source: Central Bank of Kenya and Ministry of Finance

E. The Balance of Payments

43. Kenya's balance-of-payments performance over the past few yearsreflects the general tendencies evident during most of the 1970s, i.e.slow real growth and lack of diversification of exports and vulnerabilityto external events. The volume of exports is estimated to have declined by7.7% in 1978 and a further 3% in 1979. Export volume in 1979 was no higher

than it had been in 1975 (and probably no higher than in 1972).

44. There was a sharp improvement in the balance of payments in 1976-77because of the dramatic rises in the prices of coffee and tea. Coffeeexports increased almost six-fold in this two year period and tea exportsthree-fold with substantial increases in the volume of exports as well asskvrocketing nrices. In 1977 coffee and tea accounted for about 58% of

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domestic exports, compared to 27% in 1975. Largely because of this, thebalance of payments current account moved from a deficit of US$228 million

in 1975 to a surplus of US$558 million in 1977 and reserves mounted toalmost 5 months imports.

45. In 1978, however, the situation changed in an equally dramaticfashion. The export price of coffee declined by 33% and that of tea by 27%

(and the volume of coffee exports fell because of unfavorable weather).

While the export slide abated in 1979, there was a sharp increase in importprices. As a result the index of Kenya's international terms of tradedeclined from 131 (1976 = 100) in 1977 to 97 in 1979. This deterioration

has continued into 1980 and is projected to do so in 1981. Because there

were no countervailing improvements in export volume these terms of tradechanges have dominated balance of payments oriented policies and perfor-

mance.

Table 9: VOLUME GROWTH OF SELECTED EXPORTS AND IMPORTS(in % and constant 1976 prices)

Actuals Mission Estimates1972-78 19/8 19/9 198U 1981

Total Exports of Goods -0.2 -7.7 -3.0 3.5 6.6Coffee 5.3 -4.2 -7.8 3.0 4.8

Tea 9.6 20.9 10.6 -8.0 12.0Petroleum products -4.3 -16.2 -16.3 15.0 5.0

Manufactured goods -2.4 -21.0 11.4 6.0 7.0

All othprs .. -9.1 -6.8 3.0 6.0

Exports of goods, NFS 2.0 -7.0 -5.3 3.6 6.4

Total Imports of Goods -0.04 24.8 -18.4 5.2 -4.8Food -12.0 43.7 -14.1 162.3 -37.5

Other consumer goods .. 1.6 -31.9 12.4 -1.4

Petroleum, oil, lubricants -0.8 2.6 1.6 -21.3 2.0

Other intermediate goods .. 6.7 -15.5 15.3 2.5Capital goods -1.4 56.9 -29.7 -9.4 2.9

Imports of goods, NFS 1.7 22.4 -17.1 5.1 -3.7

JouUL Le: 1972=791 J , Ecnoi c curvey, 1900, and C alt a. 1980-81 Mission

Estimates.

46. In volume terms, the strongest performer among Kenyan exports hasbeen tea; coffee exports have been hampered by poor weathLer and manufac=

tured exports have been damaged by the final collapse of the East African

Community. There was, however, some improvement in manufactured exports in

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1979 with a modest recovery of th.e UganAan marketI

Table 10: KENYA--BALANCE OF PAYMENTS, 1978-81(TUS$ m4i1 14ion

Actua'ls Estimates1977 1978 1979 1980 1981

Exports of goods, NFS 157.1 1572.1 47 .5 1567.6 1 8 2U1.0 .IImports of goods, NFS 1441.4 2085.7 2020.7 2517.6 2707.3

Resource gap A-- : = defi it 130.)'7 --<1 ̂.o) ='5. ALL. = t ICA5°- -30-A U~.L LLJ .LJ L.I U.L)L J.~ QtJ± ~ . UJ.

Factor service Income, net A 1 4. _ 1 1. 4._1 37. 5 _ 212_1 nsau>Ux~~~~~~~~~~~ _ji or a -+UUv If.- -It. -I- -I. -a /. -) 4 If.:

Interest payments, net -12.1 -15.9 -55.5 -88.2 -122.2Direct Investment iLncome, net =143.81 =1 76AC.5C =142.5' : I/ =149. =15r 7.1I

Other factor service income, net 12.1 50.0 55.7 59.3 57.4Transfers, net I1. 103.1 105.6 160.6 1.

Current account balance 58.2 -649,5 -489.8 -714.5 -679.9

Private direct investment, net 17.9 67.7 87.0 95.8 122.4

Public M & LT loansDisbursements 80.7 181.0 193.9 351.1 512.0Amortization -1.7 -21.0 -26.3 -31.7 -47.1Net disbursements 79.0 159.9 167.5 319.4 464.9

Private M & LT loansDisbursements 115.2 208.9 295.4 168.2 144.4Amortization -1.5 -48.3 -47.7 -109.6 -148.3Net disbursement 113.7 160.5 247.8 58.6 -3.9

Use of IMF Resources, net -54.8 8.0 -10.0 73.3 146.5Short term cap. transactions 7.7 35.0 187.0 -Capital transactions, n.e.i. -4.3 25.1 - -Change in reserves

= increase) -217.4 193.2 -189.5 167.4 -50.0

Source: 1978-79, Ministry of Economic Planning and Development and the CentralBank of Kenya; 1980-81, Government and Bank Staff estimates.

47. Reflecting expansionary economic policies followed during the cof-fee boom years, import volumes increased substantially in 1977 and 1978.The increase in 1978 also reflected some building up of inventories in

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anticipation of imposition of import restrictions. While the consequentincrease in import value could be accommodated in 1977 because of the largerise in export earnings, the further increase in 1978 combined with adecline in exports resulted in a shift in the current account balance froma small surplus to a deficit of about $650 million, and a loss of $193 mil-lion in reserves; a large nart of that accumulated in the previous year.

48. As anticipated, the rapid deterioration of the reserve position ledthe authorities to restrict imports. An advance deposit requirement wasImposed and importers of capital goods were required to negotiate 9o-180day credits from their foreign suppliers. The latter resulted in part in areductior. of impots and in part in increased short-term capni-tal inflnws-

Overall, import volumes declined steeply in 1979 (about 18%) and valuedecline4d marginally as well. The value of exports increased by about 67and as a result it was possible to temporarily reduce the current accountdeficit to under US$T500 million.

49. External capital flows, which had been increasing rapidly since themid-1970s, accelerated in 1978-79. This was in large measure the result ofheanvy reouirse t-o spie,1r rso credit-c andi rnmmerrial hank hnrr-m-inO. A

US$200 million Eurocurrency loan was signed in mid-1979, of which US$100million was drawn in 1979 and the halanre in 1980. Tn 1979 there was alsoa short-term capital inflow of US$187 million as a result of the measurerit-d ahnue. The increaned canital inflnws in 1979 enabled Kenya to recoup

the reserves lost in 1978 despite the large current account deficit.

50. The improvement in the balance of payments in 1979 proved to beshort-livedo The im-pact of petroleum price increases combined with theneed for food imports resulted in a rise of almost US$500 million in

impots,about 25%, in 18. Tbese two categories alone accounted for

about two-thirds of the increase in merchandise imports. While exportsiLncreased by 16%, this was not sufLfLiciLent to prevent a rise in tLh'e currentaccount deficit to over US$700 million. Capital inflows were not suffi-cient to finar,ce this deficit. OveraLll, thLe bUaLance of payments registereda deficit of US$167 million despite drawings under an IMF standby arrange-ment and under a World Bank (and EEC) structural adjustment credit. Byyear end gross reserves stood at US$352 million, equivalent to only 1.5months- imports.

51. The outlook for 1981 does not suggest a major improvement in thebalance of payments. Prospects are for a modest recovery in export volumesbut for continued deterioration of the country-s terms of trade. Concernedabout the rapid decline in foreign exchange reserves, the Central Bankbegan slowing down granting of foreign exchange for imports in october1980, and import volumes are likely to be compressed. This, coupled withthe increase in export volumes, should produce a small reduction in thecurrent account deficit (to around US$680 million).

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52. The high level of current account deficits during 1978-80, averag-ing over USS600 million per year (or roughly 10% of GDP) has necessitated amajor increase in external borrowing. The country's external debt out-standing has increased from US$917 million at the end of 1977 to anestimated US$2182 million at the end of 1980. Including undisbursed debt,it increased from US$1700 million to US$3451 million. Terms on external

debt have hardened because of the large component of commercial borrowing.The debt service ratio has risen from 3.6% of exDorts of 2oods and nonfac-

tor services in 1977 to 12.6% in 1980. The service of external debt will

be a main-r drain on foreign exchange earnings over the next several years.

III. DEVELOPMENT POLICY AND GROWTH PROSPECTS

53. If Kenya is to sustain positive growth of per capita income, estab-lish a pattern of growth which provides for a more equitable dist-ributionof income and meet the basic needs of its populace it must:

(a) revitalize the agricultural sector so that it can provide thefood, foreign exnchnange and opporturnties for productiveemployment vital to the nation's social, political andeconomic development;

i~UJ L~~LU~ UL LL1 £ LUU L ±4 ~ LJ iMI L U

(kb) restructure the industrial sector to malke 1it more outward-looking, internationally competitive and based on the use ofAomestic resources;

(c) Ades-gn publc invest-ment and government ex enditure pro-ramsin a way which both supports and complements rapid growth of

agricuLture andU [ilnustLry andl contri4L.butes to meeting basicneeds; and

(d) reduce the rate of growth of population.

54. Kenya's Fourth Development Plan provides the appropriate develop-

merit strategy and policy fLramework for meeting this challenge. The

emphasis of the Plan is on expanding income-earning opportunities, espe-cially Lr ruraL areas. ILt recognLzes tiLat this will requiLre greater aLLen

tion to the problems of smallholder agriculture and rural infrastructure,both social and economic. Further, it recognizes that the pattern of

industrialization through heavily protected import substitution has reached

its limits and that emphasis must now be placed on rationalizing protection

and expanding exports. Finally, it acknowledges the heavy burden rapidgrowtn or population is placing on the country's development effort.

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A. Development Strategy

Agricultural Development

55. The performance of the agricultural sector will be the key to

Kenya's development. Unless the growth of the sector can be increased to

4% per year, the country will become bogged down in chronic balance of pay-

ments and employment difficulties. A comprehensive strategy for agricul-

tural revitalization which addresses the issues of land use (the roles of

large and small farms, balance between export crops and those for domestic

consumption, the future of forest areas and strategy for semi-arid zones),

pricing and marketing, availability of agricultural inputs and institu-

tional capacity (research and extension, planning and budgeting and

administration) is set forth in the Development Plan.

56. The Plan proposes a major change in land policy--the legalization

of the informal subdivision of large scale mixed farms. It also calls for

the Government to help owners of large farms who wish to subdivide to do so

and proposes that the Government have first option purchase rights on any

parcel over 20 hectares to be made available to smallholders on a leasehold

basis. In addition, the Plan calls for establishment of a National Land

Commission to review the full range of land issues alluded to above.

Despite the importance of these issues, and the appropriateness of the

Plan's recommendations, progress has been slow. Legalization of subdivi-

sion has not been effected and the National Land Commission has not been

yet established.

57. Government policy, as set forth in the Plan calls for agricultural

pricing policy to pay closer attention to the relationship between domestic

prices and world prices and to the price relationships among crops. It

also calls for a broader role for the private sector in the marketing of

crops and for the lifting of internal restrictions on maize marketing.

Nevertheless, price policy still seems to reflect ad hoc responses to short

run supply conditions for individual crops. Pricing decisions do not fully

consider crop price interrelationships nor their effect on production.

Producer and consumer prices are set independently with potential for

supply-demand disequilibria and financial problems for marketing agencies.

Moreover, there is an uncertainty about the appropriate role of government,

parastatals, cooperatives and the private sector in agricultural marketing.

in fact, the maize crisis of 1979-80 has led to the Government tightening

its grip on the marketing mechanism rather than following the strategy set

forth in the Plan.

58. While the Plan recognizes the need to improve the terms of tradefor farmers, it expresses pessimism about the prospects for doing sobecause of the projected slow growth of world prices of Kenyan agricultural

products. This view of the price constraint and of Kenya's policy options

Ls too restrictive as iL does not take explicit accour.t of exchange rate

policy. Deterioration of the real level of producer prices could beavoided through a reduction in the level of protection for industry andadjustment of the exchange rate.

59. Historically, both research and extension efforts have beendirected primarily toward larger farmers, or at least the more progressivesmallholders, and toward maize, wheat, and cash crops grown in high-potential areas. The Plan outlines a program of research and extensionmore closely attuned to the needs of smallholders and the requirements ofintensified land use. The Plan proposes discontinuing the GuaranteedMinimum Return Scheme, which supplied credit for much of large farm agri-culture, because of major repayment problems. The credit system was to beredesigned to raise the amount available to farmers, eliminate the minimumacreage requirement and eliminate the crop insurance component. While theGMR was discontinued, no carefully redesigned program was available to takeits place.

60. In sum, while the Plan provides an appropriate framework for agri-cultural policy, the carrying out of that strategy is lagging. There areseveral reasons for this: first, the need to respond to immediate pres-sures has led to a continuation of ad hoc and short-sighted decisionmaking;second, translating the strategy into action has been hampered by difficul-ties involved in coordinating the proliferation of official, parastatal andprivate organizations supplying services and inputs to the sector and mark-eting its output; and third, there is a shortage of qualified personnelboth for policy preparation and administration.

Industrialization and Trade Policies

61. The maior thrust of industrial policy as set forth in the Plan willbe to bring about a transition from import substitution to a strategyemphasizing penetration of export markets. It is recognized that this willrequire making the industrial sector more efficient and competitive. Thiswill involve rationalization of tariffs, elimination of quantitative res-trictions on imports and gradually phasing out duty concessions to newindustries. Reliance on various forms of quantitative restrictions wouldbe phased out and the tariff would be made the major form of protection.Moreover, tariff rates on finished goods would be reduced while those oncapital and intermediate goods would be raised making the structure of pro-tection more moderate and uniform.

62. It is recognized that reduction of protection and increased indus-trial efficiency, while necessary to mounting a sustained export drive maynot be sufficient. Thus, the Plan also calls for strengthening the KenyaExternal Trade Authority, implementing an export credit guarantee scheme,establishing exDort houses. strenethening and extending the role of theKenya National Trading Company as an export agency, and simplifying theexistine exnort incentive scheme.

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63. No fundamental change is proposed in Kenya's traditionally liberalpolicy with respect to foreign investment, with the important exceptionthat review, negotiation, and approval of projects for which special con-cessions or government participation are being sought would be centralizedin a new agency within the Treasury. In the case of industry, appraisal,evaluation and negotiation would be undertaken by the Department of Indus-tries and the New Projects Committee, but the Treasury would establishguidelines and approve decisions. This measure, along with the establish-ment of investment criteria incorporating calculation of both financial andeconomic rates of return, would eliminate the problem of ad hoc approval ofinadequately evaluated projects.

64. Progress has been made in implementing at least some aspects of theindustrial strategy. The first phase of rationalization of the traderegime and improvement of export incentives has been completed. This con-sistpd of Plimination of the vast maioritv of import nrohibitions; includ-ing Letter of No Objection privileges, and their replacement witheqiivalentf- tariffs imnosition of a 10% siircharge on all dutiable imnorts,completion of a study leading to establishment of an export finance andinsurance system and increasing export comnensation from 10% to 20%. Inaddition, the exchange rate has been adjusted marginally (by 5%).

65. These measures represent the first phase of the adjustment process.However, the impact of the measures taken so far on the profitability ofindividual firms is marginal. Subsequent phases of the process, whichshould involve elimination of quotas, and establishment of a more moderateand even level of protection, accompanied by compensating exchange ratemovements, could have a orofound effect on individual firms or industries.There are bound to be strong objections from the more inefficient firms andIt will he narticularlv diiffirtilt tn rdtiicep nrntertion when firm- claimthat doing so would result in the cutting back of production and employ-ment. It will also be difficult to reduse nrotec-tion in cases where thefirm affected is owned, wholly or in part, by the Government. Finally, itwill be difficult to reduce protecnr tioin nuor the next few years when,because the country will be experiencing balance of payments pressures, thei,ot,vr- 1 ton.-nr4D-r.u w; 1 1 ho t-rs ro.a-r4 ,t r:1-hor th:n 1a ho.rn 14s7 4 mnArts.

66. While significant progress has been m-ade in reshaping the ince"ntive.structure, less has been made in developing a rationale for government par--icipation in inLustrial enterprises. DJecisilons on gove,mment participa-tion in industry are still being made on an ad hoc basis and there is noevidence that economic criLteriLa are being applied on a systematic and co

sistent basis. Projects of very doubtful economic benefit have been begunor are rLow undUer consideration.

Population and Family Planning

67. The rapid growth of populatLon is probably Kenya s single most

-25-

serious obstacle to a sustained, long-run rise in living standards. ThePlan is extremely frank in acknowledging that the pace of population growthis a serious problem, magnifying the problems of creating income earningopportunities and providing basic needs.

68. Kenya established family planning services as an integral part ofmaternal and child health services in the Ministry of Health in 1967. The

main emphasis of the program was on building up infrastructure and trainingpersonnel for the delivery of family planning services. The objectives ofthis program were largely achieved. However, the number of newly-recruited

acceptors has been disappointing and the drop-out rate too high, so thatthe program fell short of its demographic targets.

69. This Plan makes promotion of family planning a matter of publicpolicy of the highest priority. Thus, while proposing to continue to

expand infrastructure and staff, it calls for an increase in informational

programs to increase public awareness of the consequences of high popula-tion growth and of the benefits of family planning. It also calls for a

coordinated effort of all relevant ministries and non-governmental organi-zations involved in development activities related to family life toincrease public awareness.

70. The targets for new acceptors during 1979-83 is 700,000, comparedto 280,000 recruited during 1974-78. In order to do this, field educators

are to be tripled and the number of fixed service delivery points is to be

doubled. Most economic and social indicators suggest that Kenya is not yetat the point of demographic transition. Therefore, a dramatic decline in

the birth rate should not be expected in the near future. The Government

is making a strong effort to build up the facilities and technical staff to

ensure that family planning activities are not limited by supply factors.With the expanded informational program reinforcing the more gradual effect

of rising living standards on preferences for family size, the countrywould be on the forefront of family planning activities on the continent.However, it is likely that considerably more will have to be done on thedemand side (to influence acceptance) if the beginning of the transition to

lower fertility rates is to be accelerated significantly.

Government Expenditures for Development

71. The Government's budget is an important mechanism for translating

development plans into action through the allocation of revenues to sectorsand specific projects. Budgetary pressures are bound to be severe for the

foreseeable future. With the prospect of deteriorating international terms

of trade. growth of GDP and imports is bound to be slower than it was overmost of the past decade. This implies slower growth of government revenues

than had occurred during most of the 1970s. At the same time, there are

going to be pressures on government to maintain, if not increase the pace

of expenditure growth. Over the past few vears a series of measures annear

-26-

to have resulted in a permanent increase in expenditure levels. Theseinclude (a) a large increase in expenditures for military equipment withhigh maintenance and operating costs; (b) establishment and equipping ofnational enterprises to replace defunct East African Community corporationsand their evolution into deficit-running firms; (c) continuation of theprocess of elimination of school fees for higher levels of education; (d)decreed increases in employment in the public sector, continued "wage-creep" and a recent general salary increase for public employees; and (e)the growing operating and maintenance expenditure requirements associatedwith the high level of capital expenditures and initiation of new projectswhich took place throughout the 1970s. To this list must, unfortunately,be added the budgetary cost of food imports (the subsidized differencebetween consumer prices and the cost of imports). While these imports havebeen viewed as an "emergency measure, unless the growth of agriculture canbe accelerated they will become a chronic drain on public revenues and thebalance of payments.

72. The virtual certainty of greatly increased budgetary pressures forthe near and medium term implies that the Government must improve the plan-ning and control of its expenditures. clarify the role of parastatal organ-izations and monitor their performance and define and/or clarify the natureof central government-local government relationships.

73. The Government recognizes that the countryvs changed economic cir-cumstances require a reformulation of its public investment plans involvingboth a scaling-down and restructuring of xnpenditures. The (ovPrnmPnt hasinstructed individual ministries to:

(a) give priority to promotion of exports, to increasing domesticproduction of aPririi1tiiral commoditieq and to more lahor-intensive production techniques;

(b) reduce the rate of growth of administrative services and socialservices, concentrating instpnd on nrniPrt- and programs whie-hpromise more immediate returns in added production and employ-

(c) review programs and projects in the Development "lan in relationto new information on costs and benefits.

Furthermore, the ministries have been instructed to restructure theirexpenditures to ensure thLaLt suftficient Lfunds are available fLor completionof ongoing projects and for operation and maintenance of existing facili-ties.

74. Th-e Government s fiscal -guidelines thu mod oiie hc

should be effective in promoting objectives crucial to the progress of theKenyan economy: the more rapid increase in exports; more efficient use or

-27-

domestic productive resources and greater capacitv utilization. Unfor-

tunately, application of these guidelines to the budgetary process itself

is being hampered by lack of technical canacity in the various ministries

to evaluate costs and benefits of projects and to prepare budgets with an

appropriate balance between deve10nment (rnpital) and recurrent funding.

There is also an inadequate program and project monitoring system so that

Information on progress of ongoino activities is deficient. These areas

must be strengthened if effective fiscal planning is to be possible.

Fin-lly, the budgetary process is often confounded by nolitical decisions

involving unanticipated expenditures or organizational changes.

B. MT.S ALdJustment Program

tOI1CiS 10L LLuCL Lde 'atrucblura'L l

Po'licies iLor Satructura'l Adjustment

75. The Government recognizes that external circumstances will limitthe extent to which it can achieve the targets and goals it has set forth

in the Fourth Development Plan. It now also appears that it will be v'rtu-

ally impossible to achieve the target GDP growth rate of 6.5% per year.

This is largely due to the fact that balance of payments and budgetary

problems are much more acute than had been foreseen at the time of Plan

preparation. in addition to their direct effects, tightness of the LforeLgL

exchange position and, more recently, shortages of food, will make it pol-

itically difficult to carry out the relaxation of controls which is a key

element of the strategy. Nevertheless, the Government is determined to

carry out the basic strategy of the Plan. it was recognized, however, that

this would require, inter alia, improved macroeconomic management, revision

of plans for public expenditure, modification and rescheduling of some

specific measures and acceleration of efforts to promote exports. It was

also recognized that carrying out the strategy and maintaining acceptable

levels of economic growth would require considerable additional assistance.

76. In view of this, the Government worked out a structural adjustment

program designed to carry out the industrial strategy set forth in the Plan

while preserving the country's financial stability and international

creditworthiness. Highest initial priority was attached to industrialstrategy since it was felt that rationalization of industrial protection

and improvement of export incentives would contribute to more rapid and

diversified growth of exports while producing a pattern of industrializa-

tion more appropriate in terms of factor use and more equitable in terms of

incomes generated.

77. It was recognized that the program would take several years tocarry out. Furthermore, it was recognized that the first structural

adjustment program involved only one aspect of development strategy and

that, while industrial policy is critical, future phases would have to bebroader in sectoral coverage if the country's balance of payments current

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account gap were to be brought to sustainable levels over reasonableperiod.

78. The Government's first program covers in detail measures to (a)revise the Government's investment program to make it more consistent withthe country's economic circumstances; (b) ensure the country'screditworthiness and improve external debt management; (c) reorient theindustrial development strategv through a rationalization of nrotection;and, (d) promote exports.

79. The Government's future expenditure plans are generally expressedin a rolling three-year forward budget. The Drogram provided for prenara-tion of a forward budget which was consistent with a lower rate of GDPerowth than anticinated in the Plan and which: (a) gives nrioritv to promo-tion of exports, to increasing domestic production of agricultural commodi-ties and to use of more labor-intensive techniques: (b) concentrates onprojects and programs which promise more immediate returns in added produc-tion and employment; (c) reviews the costs anA hpnpfits nf nrograms andprojects in the Development Plan; and (d) ensures that sufficient funds areavailable for completion of approved on.-oing projects and the operation andmaintenance of existing facilities.

80. In order to improve debt management the program included acomnrehansivu surveyu of all debt outstanding of the Government, its cor-porations, statutory boards and public enterprises. Machinery for process-ing and approving external debt transactions was to be strengthened and anannual program for external borrowing was to be introduced.

81. The program provided for the first steps toward rationalization ofthe trade regime to be taken. "Letters of No Objection," which gave cer-tain firms the right to prevent imports they viewed as a threat to theirmarkets, were to be eliminated. Existing tariffs and quantitative restric-tions on imports were to be reviewed and recommendations for the system ofprotection to be i-mlemented were to be developed. A schedule was preparedfor carrying out the studies and implementing its recommendations.

82. The program to promote exports provided for simplification of theexport compensation mechlanism, establishment ofL an export fLLinance andUinsurance scheme, and a general commitment to ensure that prices of export-ables remaLin competitive on worLIU marLLets.

83. Fin.ally, the Government was to review the interest rate structureto identify modifications required to improve its effectiveness in promot-ing economic development.

Implementation of tne Program

84. Carrying out of the structural adjustment program has, on the

-29-

whole, been satisfactory. However, actions have been slower than antici-pated in some areas and more rapid in others. While the general thrust ofthe program has been maintained, attempts to execute the policy measureshave revealed some weaknesses in planning and administration which wouldhave to be remedied if the Government's efforts to carry out the programare to be successful.

Rs. Forward Budgeting. Although instructions were sent to ministriesfor preparation of a forward budget for 1980/81-1982/83 which were con-siRtent with the cmi4tlin tlin the process of prepar atin hadto be abandoned. This was, in part, due to a reorganization of the Govern-mpnt and; in nart, hbcaiuP tho macroeconomic framewiork became outdated as aresult of further deterioration of the country-s economic prospects.Because of time constraint, Ministry of Finance officials were forced toturn their attention to the more immediate problem of preparing the 1980/81nnniunl hilbudgot Tn the tehrA quarter of 1980 preOpatf4no - f a forward

budget for 1981/82 - 1982/83 began. The Government is now in the finalstages of reviewing and approving that forwarA bkdget-

86. Despite the problems of execution, the forward budget process hasbeen very useful in providing for a full scale review and revision ofexpndiur pln.._ 1_ Tt als 1pro4vides a v _ 1ta `,nk 'ewe .eeomn pan_1___ ._1__C a1I. *lXa EJ DV .LVVUCav LLaL ILlIN urLwreI UC VC LUWUI I L pidll

ning and the annual fiscal budget. Preparation of the budget has, however,revealed serious weaknesses in- the operating ruinistries in their technicalL V .L u r .L.U ,.LC I LIIC L _.L~ UL IL~ L L L 1 LIte _L LC i ILL _Ld

capacity for project evaluation, project implementation and monitoring andbudU3get ing.

87. External Debt Management. Preparation of the external borrowingplan has proceeded.very slowly. In order to devise a plan it was necessaryfirst to build the statistical base by surveying debt outstanding. This,in turn, required reorganization of the Ministry of Finance and establish-ment of clear responsibility for debt reporting. A debt unit has beenestablished and staffed and a debt report has been devised and sent to allmin'istries and parastatals. The data collected are now being verified.

88. At the same time, the Government has formed a task force to checkinto the reasons for slow reimbursements on expenditures, incurred on pro-jects LfinancedU by externLia aiu. This i9 ari Lmportant task and its hig1hpriority is justified, but use of staff in carrying it out and in reviewing

debdata has delayeu preparat'onL of t[e external debt borrowing plan.

89. Rev'iew of external debt and preparation of the forward budget hasrevealed that there are weaknesses in the process of vetting and approvingprojJcLb 'UL l'inancing by external aid donors. rrojects requiring directbudgetary support or government guarantees are frequently conceived andprepared without Treasury participation and eventuaily presented as faitsaccomplis, with political backing which limit the Treasury's options.Their subsequent inclusion in the budget either squeezes out funds for

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higher priority projects, forces delays in the execution of the investment

program as a whole, reducing the rate of return on projects or exacerbates

imbalances between development and recurrent expenditure allocations.

90. Rationalization of the Trade Regime. In July, 1980 Letters of No

Objection and other outright import bans were abolished and replaced with

equivalent tariffs. At the same time, a 10% surcharge was placed on all

dutiable imports. This had the effect of making the tariff more uniform

since it applies to the lower tariffs previously applied on capital and

intermediate goods. These measures not unexpectedly provoked some adverse

reactions from industrialists (although not as great as might be expected)

and from the bureaucracy charged with the responsibility of administering

the restrictive regime. There have been attempts to reimpose restrictions

by other mechanisms. The Government is, therefore, going to have to make

sure that there is internal adherence to established policies before

further steps are taken.

91. Promotion of Exports. The 1980/81 budget provided for an increase

in export compensation from 10% to 20% and for a simplification of its

administration. A proposal for an export insurance and financing scheme

has been made and action is expected in the near future. Moreover, in

February 1980 the Kenyan shilling was devalued by 5.1%. While the amount

of the exchange rate change is small, it is a important step in the right

direction.

92. Interest Rates. Interest rate policy is evolving in a positivemanner. Studies of the level and structure of interest rates were com-

pleted and the Government has articulated a policy recognizing their impor-

tance in influencing saving/investment decisions, resource allocation and

factor use. Interest rates on commercial bank operations, and those lend-

in' onerations linked to commercial bank rates, have been increased margi-

nally. Furthermore, to ensure that interest rates are flexible and prop-

erly reflect chanoing eronomic conditions, the Dractice of periodic review

has been established.

Prospects for Future Structural Adjustment Programs

93. This structural adjustment program is viewed as the initial phase

of a process of policy formulation and action which would ultimately result

in sustained growth, a manageable balance of payments situation and a more

equitable pattern of in.come distribution. It was recognized that this

would require policy actions taken over a period of three to five years and

thLat, blecause balance of payments prospects were not favorable, Kenya woula

require additional rapidly-disbursing assistance. Execution of the first

program has been relatively successful and a second program is under con-

sideration.

-31-

94. The policy package to be supported by the second structural adjust-ment program will, of course, include continuation of the process ofrationalization of the system of industrial protection and of measures toimprove incentives for exports. It will, in addition, seek to bring aboutimprovements in forward budgeting and planning of external borrowing wherenerformanre under the first nrogram was slnwer t-han nnticipnted

Q95 Whil- r1ic:riir,inmq nf thic c'rnnd nroranm are Rtill nt an earlvstage, it is evident that the scope of policy action should be broadened toinrcltiide agricuillre ani d energy= Revitalization of the agricultural sector

is crucial to sustained growth of GDP, increased opportunities for produc-tiveP employment, imnroxyedj income destrition and a healtthv extarnal npu-

ments situation. Performance in agriculture in recent years has been ham-pered buy i4nequrv.n,n4i in priningc aQnA marketcing poli,i-ci TImnrneaments in

these policies could have a rapid impact on agricultural incentives andoutlpult- and should, therelfore, forml part of a structural adjustLUent palkage.

96. Givenr Kenya's dependence on foreign oill and its importance for thebalance of payments, an energy program designed to increase the supply ofdomestic energy in an economic fashion and encourage conservation shouldalso be incorporated in the policy package.

C. The Balance of Payments and Growth Prospects

97. While the structural adjustment program will have a favorableimpact on the bUa'Lance of payments over thre longer term, the first years oi.the 1980s are going to be difficult ones for Kenyan policymakers and forthe 'Kenyan economy. The temporary respite provided by the corree boom isover and the prospect is for an unfavorable world environment in which thecountry's international terms of trade are likely to continue todeteriorate. At the same time, the Government's fiscal operations arelikely to be subjected to extreme pressure because of slower-growing reve-nues and demands for increased expenditures. It is within this contextthat critical policy decisions must be made involving a fundamental res-tructuring of the pattern of development. Kenya's easy options have beenexhausted and the Government must now come to grips with the country½sbasic structural problems--the inefficient and unsustainable pattern ofindustrial growth, the slowdown in the rate of growth of agriculture andthe explosive increase in population.

98. The strong probability of a highly constrained situation withrespect to both internal and external resource availability is going tomake it difficult to carry out the required policy changes. The strategyinvolves a reduction in government intervention and controls in a periodwhen, because of balance of payments pressures and food supply problems,there would be a natural reluctance to do so. Kenya will, therefore,require increased rapid transfer of external resources if the program is tobe carried out successfully.

-32-

A Feasible Growth Scenario

99. Kenya's export growth will depend on a number of factors, some ofwhich are amenable to policy actions and others of which are not. Natur-ally, weather conditions and the state of the world economy are in thelatter category. Evolution ol thle former East r"rican market may be at

least partly in Kenya's hands, inasmuch as it is a party to negotiationsover division of' the asset's o1L EAC corporaL4Ltons ('obviously, it cannotinfluence political or economic developments in Uganda or Tanzania). OntIte oth'Ler hlandU, iLncentLives fLor exports car. bUe influenced throughU approprLi=ate changes in the trade regime, exchange rate policies, export finance andiuLurance ana flnst.Ltutional support. if tne measures outlined in theDevelopment Plan and in the Government's structural adjustment program areI-mplemented, it should be possible for Kenya to attain a growth of exportvolume approaching 6% per annum. However, with the prospect of weak coffeeand tea prices and rising petroleum and other import prices, the country'sterms of trade are expected to deteriorate sharply during 1981/82. Interms of their purchasing power, exports would therefore be growing consid-erably more slowly.

100. In order to accommodate the rapid increase in debt service paymentsand keep the balance of payments situation manageable, i.e. maintain anadequate level of reserves with capital inflows which are both feasiblefrom the point of view of likely availabilities and within the country-sdebt servicing capacity, the balance of payments current account deficitshould remain roughly constant in nominal terms over the period 1981-85(i.e. it should not increase beyond the high levels registered during theperiod i978-80).

101. The combination of rising debt service obligations and deteriorat-ing terms of trade over the next few years thus means that import levelsand GDP growth will have to be severely constrained. This, however, mustbe accomplished in a way which is consistent with the overall developmentstrategy which calls for reduction of direct controls ot imports. In otherwords, demand management tools, i.e. monetary, fiscal, incomes and exchangerate policies, should be used.

102. It is unlikely that positive growth of GDP per capita can be main-tained during 1981-83. However, growth prospects appear somewhat betterfrom about 1983 onward. The country-s terms of trade should stabilize ifpetroleum price increases do not substantially exceed projected interna-tional inflation and the decline in coffee prices is arrested as the worldsupply/demand situation normalizes. With a stable current account deficit

-33-

Table ll: GR..nh -rnrnCTMTnj O EXDODT8

1980-1990

Value, million KL Composition (Percentage of Total) Growth rate (%)(At Current Prices) (At Current Prices) 1980-85 1985-901980 11980 !1985!980 !985 1990 I Value V^1-me Value

Coffee 287.1 456.5 827.9 24.6 20.3 19.4 5.7 9.7 4.3 12.6

Tea 162.7 316.2 550.5 13.9 14.0 12.9 6.4 14.2 5.5 11.7

Petroleum 293.4 623.2 1188.2 25.1 27.8 27.8 4.2 16.3 4.0 13.8

Manufactures 259.6 527.2 1115.5 22.2 23.4 26.1 6.5 15.2 9.6 16.2

Others 166.0 329.3 589.8 14.2 14.6 13.8 6.0 14.7 6.0 12.4

Total 116882252. A 42z71.9 100.0 100.0 100.0 5.8 14nO 5.9 13=7

Table 12L GROW,UH A;ifu CO.-rOUITION OF rIPORTS1980-1990

Value, million KL Composition Growth rate (Z)(Percentage of Total)_

(At Current Prices) (At Current Prices) 1980-85 1985-901980 1985 1990 1980 1985 1990 Volume Value Volume Value

Food 274.9 214.5 294.4 12.3 6.0 4.9 -17.3 -4.1 0.0 6.5

Ot1h1er Consumer Goods I. 1 98.1 23').1 A.0 5.5 4.9 0.2 8.2 2.0 8.2

Petroleum 508.2 994.0 1822.1 22.8 27.8 30.0 2.6 14.4 3.2 12.9

Intermediate Goods 624.8 1071.8 1778.3 28.0 30.0 29.8 3.1 11.4 4.4 10.7

Capital Goods 692.4/a 1098.4/a 1783.3 31.0 30.7 29.9 1.5/b 9.7/a 3.9/b 10.2

Total 2233.7 3576.7 5971.2 100.0 100.0 100.0 0.1 9.9 3.6 10.8

/a Includes military imports7T Excluding military imports the figures would be 3.4 (1980-85) and 4.8 (1985-90).

-34-

Table 13: SUMMARY NATIONAL ACCOUNTS PROJECTIONS980- 990

Value Composition Growth Rate

(million 1976 KL) (%) (%)1980 1985 1990 1980 1985 1990 1980-85 1985-90

GDP 1791.9 2183.5 2828.2 100.0 100.0 100.0 4.0 5.3

Terms of Trade, adjustment -26.0 -66.5 -80.0 -1.5 -3.0 -2.8 - -

GDY 1765.9 2117.0 2748.2 98.5 97a0 97.2 3.7 5.4

Imports, GNFS 591.2 614.0 746.0 33.0 28.1 26.4 0.8 4.0

Exports, GNFS 453.3 606.5 815.5 25.3 27.8 28.8 6.0 6.1

Exports, TOT adjusted 427.3 540.0 735.5 23.8 24.7 26.0 4.8 6.4

Available resources 1929.8 2191.0 2758.6 107.7 100.3 97.5 2.6 4.7

Consumption 1566.1 1742.6 2174.9 87.4 79.8 76.9 2.2 4.5

Investment 363.7 448.3 5983.7 20.3 20.5 20.6 4.3 5.4

-35-

Table 14: SUMMARY BALANCE OF PAYMENTS ACCOUNTS, 1980-1990(US$ million)

Preliminary Projected1980 1981 1982 1983 1,84 1 1990

Imports of Goods 2233.7 2382.5 2585.1 2877.4 3209.4 3576.6 5971.2Exports of Goods 1168.8 1315.6 1493.9 1718.5 1968.7 2252.5 4271.9

Trade Balance -1064.9 -1066.9 -1091.2 -1158.9 -1240.7 -1324.1 -1699.3

Nonfactor Services, net 368.3 428.6 500.6 577.9 663.7 758.9 1415.0

Investment Income, net -149.6 -157.1 -165.0 -181.5 -199.6 -219.6 -353.6

Other Factor Services, net -28.9 -64.8 -104.2 -126.5 -147.7 -176.0 -248.4

Invisibles Balance 189.8 206.7 231.4 269.9 316.4 363.3 813.0

Transfers 160.6 180.3 202.4 227.3 255.2 286.6 491.6

Current Account Balance -714.5 -679.9 -657.3 -661.8 -669.0 -674.7 -394.7

Private Long-Term Capital 95.8 122.4 134.6 148.2 163.0 179.3 288.8

Public Long-Term CaDital /a 451.2 607.5 582.7 573.6 578.9 576.6 230Disbursements (592.6) (802.9) (815.9) (873.0) (917.5) (1032.1) (1132.2)Amortization (-141.4) (-195.4) (-233.2) (-299.4) (-338.6) (-455.5) (-901.6)

Short-term capital -- -- -- -- -- --

Change in Reserves(- = increase) 167.4 -50.0 -60.0 -60.0 -72.9 -81.5 -124.7

Memorandum ItemsDebt Service Ratio 12.9 15.1 15.9 17=3 17.2 19.2 18.2Terms of Trade Index 91.3 86.1 83.2 82.9 83.0 83.3 84.9

/a Includes use of IMF resources

-36-

the growth of external debt should decelerate in the latter part of the1980s- Tt should, therefore, be possible to follow -d-all mo- expan-sionary policies and a growth rate of GDP approaching 6% per year should beattainable during the last years of the decade.

103. A feasible growth scenario would then be one in whIlch GDP increasesat a pace below that of population in the early years (1981-83) then gradu-ally accelerales, averaglng aloul 4.0'J per year during the first 'al" ofthe decade and about 5.3% per year during the second half. Given Kenya spopulation growth rate, this is not a bright picture. If total fertilityrates remain unchanged, population growth would average about 3.8% peryear. Per capita income would then be about 9% higher in 1990 than it wasin 1980.

External Capital Requirements

104. Despite the modest growth prospects for the period 1981-85 Kenya sexternal capital requirements will be substantial. Gross capital inflowsrequired to finance accumulated current account deficits and amortizationand to keep foreign exchange reserves at a level equivalent to two months-imports would be about US$5.2 billion. Financing of this magnitude wouldrequire an increase or roreign alrect investment or aDout iu0 a year ana anincrease in commitments on bilateral and multilateral aid of about 9% peryear in nominal terms (but with an acceleration of the pace of disburse-ments through improved aid administration and increased rapidly-disbursingnon-project assistance). Even with increased concessionary aid, Kenyawould have to rely on commercial borrowing for a third of its external cap-ital inflows. This implies a continual hardening of terms on external debtand the debt service ratio rising from just under 15% in 1981 to about 21%in 1987. After the first few years, perhaps beginning in 1982-83 net capi-tal requirements would stabilize in nominal terms. This would lead to atapering off and eventual decline in the debt service ratio which wouldreturn to the 18% range by 1990.

105. The Government will have to take difficult but crucial policy meas-ures over the next few years which will affect the course of economic andsocial charge for decades to come. The GovernmenL's (leevelopuet straL-g,as outlined in the Fourth Plan and reiterated in Sessional Papec N). 4 WT1980, is basically sound. While execution of the strategy through policyaction has been slow, appropriate policies have been identified. In orderto advance the strategy and carry out these policies Kenya will need con-tinued expansion of aid. Because of the financing gap in the balance ofpayments over the next few years, it would be helpful if lenders could, to

-37-

Table 15: EXTERNAL CAPITAL REQUIREMENTS AND THEIR FINANCING1981-85

US$ million %

Current Account Deficit 3,342 64Amortization 1;522 29Reserve Increase 325 6

Total 5.189 100

Private Direct Investment 748 14Bilateral Aid 1,138 22Multilateral Aid /a 1,615 31Suppliers Credits andFinan.ial Lsans /h 1;688 33

/a Includes IMF./h TprmQ!

(1) Suppliers - 10% interest, 5 yrs maturity, 1 yr grace(2) Financial - 12% interest, yrs maturity, 1 yr grace

the extent possible, temporarily shift their financing from project to pro-gram aid or well-conceived commodity assistance. In addition to this,assistance should be on as concessionary terms as possible to ensure that,wiL th.t-L cor.tinued neeAU for bUorrowing on commerciall terms, th Le debt structureand repayment schedule remains manageable. It would also be helpful iflenders would be as flexible as possible in terms of financing local costsand recurrent expenditures.

106. While balance of payments and fiscal constraints are bound to bethe most obvious factors limiting growth, technical and managerial problemsare likely to be important as well. Kenya faces a severe shortage of inno-vative management and technial pertis-e whic-h c-nild hamper trans1ation of

broad policy objectives into specific programs and which could retard theachievement of program goals. International lending agencies and bilateraldonors should, therefore, be sympathetic to requests for technical assis-LItance andUL training. Mlioreover, the agencies andU institutions involvedshould consider coordinating their activities to ensure that overlaps andgaps are avo ded.

- 38 - ANNEX

KENYA

GOTTNTRY ErnNOMTC MM(MORANDTTM

ANWNFTY A.RTr.TTT.TTTRAT. TqS SITF S

Table of Contents Page No~

<!_.. A1) A 1o l) -smtoo I..... .............................. L

I. Background . ............................................ 44

A. Introduction ......... ............................... 44D. Per mance ............................g4.. ..

II. Agricultural Policies and Achievement to Date Underthe Fourth Development Plan .......................... 50

A. The Fourth Development Plan ........... .............. 50B. Sessional Paper No. 4, 1980 ........... .............. 51C. Food Policy ........... ..................... 51

D. Achievements and Constraints .......... .............. 52

!II. Pricing and Marketing .................................. 53

A. Pricing . ...................................... D

B. Marketing Channels .................................. 55C. Case Studies of Marketing and Pricing Problems ...... 57D. Policies for Promoting Market Efficiency .... ........ 66

IV. Institutional Organization and Capability .... .......... 68

V. Population, Employment and Land Issues .... ............. 70

Bibliography .............................................. 73

ANNEX - 39-

Tablesc Page No.

1. Ken-a: Agricultural GDP, 1974-79 .....................

2. Volme Growth of Selected Agricultural Commodities1975/76 - 1979/80 ................................... 46

3. Growth of Value of Marketed Agricultural Production,1 arI/. 7') an 1 07) 7Q /. 7

4. omesti1c and AWrorl IB )ord.3er Price Comparisons 'or 'a'or*t £j ULtL.LL u dLI UL U .LU LU~. £ £L ~ UU L £0L~L L71d.jL

Agricultural Commodities: 1972-1978 .... ............ 54

. Index of Maize Prices, 1968-1977 .... .................. 59

6. Comparison of Indices for Food Prices and GazettedMeat PrLces Lor the Periou 1971-1979 in Nairobi ..... Di

-'40- A WTQVX

SUMMARY AND POLICY RECOMMENDATIONS

Performance

i. The annual growth rate of agricultural GDP in Kenya has fallen froman average 4.7% in 1964-1974 to 2.4% in 1974-1979. 1/ Adverse weather condi-

tions in some years, inappropriate policy decisions, and a growing constrainton land have contributed to poor performance. More importantly, per capitafood production has fallen, as growth rates for major food commodities havehben negative or 1Pls than 1% in this Deriod. significantly less than the

estimated population growth rate of 3.9%.

ii. Agriculture will continue to play an important role in Kenya'secomic Adeveopmen- in t-hIe next twoir, dcdes.c Contfinupd dpnpndpnrp on Pexnorts

of agricultural commodities to finance industrial development, the limitedcapacity of the secondar-y and tertiary sectors to absorb new labor force

entrants, the substantial growth of demand for food due to high populationgrowth, and the Aevelopment of domestic a-ro-indAu-stries p1 place henayu

demands on the sector to provide foreign exchange, employment, food and

LnLdustrial inputs. Thie poor perf7ormance of agriculture raises doubt.Ls as to

whether the sector can meet these demands, and sectoral issues and policies

needu to be re=examined andU adJujLusted1 in order to encourage andu sUs-ai adequat

levels of growth.

issues

iii. There is a significant level of Government intervention 'L(i the

marketing and pricing of domestically consumed goods. Controlled producer

prices for major agricultural commodities have introduced distortions anddisincentives, and affected production. In some cases, fiscal incentives for

food crops have been inadequate or unattractive compared to non-food crops.Insufficient margins between fixed producer and consumer prices have led tooperating losses for Government parastatals and marketing Doards. Market

controls and insufficient market development have inhibited the growth ofmarketed surpluses, caused imbalances in regional supply and demand, andhave led to irregularities. The pricing and distribution of inputs has also

contributed to production instability. Review of policy interventionin relation to the major food commodities of maize, beef and milk showsthat in most cases, Government marketing and pricing policies have not

succeeded in their goals of stabilizing supplies, guaranteeing prices, andbenefiting the lower income groups.

iv. Although the Government's strategy for agricultural developmentas contained in the Fourth Development Plan is generally sound, few of thePlan's policies have been implemented so far. Policy implementation is

hampered by institutional constraints. Policy formulation and decisionmaking in the Ministries of Agriculture and Livestock Development tends to

1/ Due to drought conditions, 1979 production was below trend level. 1981

production may compensate for this slow growth to some extent.

ANNEX -41-

downplav lono-tprm issues and planning in favor of resolving short-term

crises. Lack of policy coordination among the many official, parastatal,

and private organizations supplying innpits and services to the sector and

marketing output compounds the problem of effective policy formulation and

especially implementation4 A third institutiona1 constraint is the shortage

of qualified personnel in the areas of policy preparation and analysis, and

operations. Weak financial management and poor budget planning are also

constraints.

v. At the estimated current growth rate of 3.9%, Kenya-s populationWi L _ C U IL )( Lij IU L LLL LUL y. L LL- L.~ *Ck _

will. double by the end ofL this century. This has important implications for

agricultural development, in terms of food production, land use, and employ-

ment generation. Limited supplies of good quality arable land affect the

ability of the sector to absorb the population increase. While agricultural

production and employment can be Ucreaseud by investing in irrigation, shifting

to crops with greater labor input and intensifying land use, the inability of

these measures alone to solve the problem makes it necessary to address the

issue of land redistribution in the near future. Because small farms use more

labor than do large farms, land redistribution and the concomitant intensifi=

cation of land use could have a significant effect on output and employment.

Policy Recommendations

vi. The Government-s agricultural development strategy as contained in

the Fourth Development Plan is generally sound, and should continue to form

the basis of operations in the sector. The major shortcoming of planning

is the lack of a long-term focus to complement the medium-range planning of

the Fourth Development Plan. Long-term issues relating to direction and

nature of development in the areas of marketing, pricing, land use, food,

trade and development policy need to be addressed in order to furnish a

reference point for more detailed policies in these areas. Without such

guidance, problems of inappropriate policies will persist.

vii. The institutional capacity of operational Government ministries

needs to be strengthened so that development strategy is translated into

policy action and program implementation. In order to minimize duplication

of effort and to encourage interaction, an agricultural policy coordination

mechanism should be established at the Ministerial or Permanent Secretary

level. This body would provide a focus for the activities of the numerous

Government and parastatal bodies involved in regulating and providing services

to agriculture. There is also a continued need for support of staff training

and development, especially in the areas of management and policy analysis and

in the field. Decentralization of some Ministry of Agriculture activities

would contribute to the extension staff effectiveness. The financial

management of the Ministry of Agriculture needs to be reviewed and improved,

and the coordination between the Ministries of Finance and Agriculture

strengthened, to ensure that resources for agricultural development are

forthcoming and productively spent. This will require further examination of

the budget process and financial management systems of the Ministry of

Agriculture.

-42 ANNEX

viii. Designing appropriate policies for marketing and pricing requires

first, definition of the roles of the various market participants--Government,

parastatals, cooperatives, and the private sector--in both the distribution

of inputs and services and the marketing of output. The Plan advocates the

development of competitive markets. In such a situation, the role of the

Government should be to provide what are essentially public goods and

services which the private sector cannot or will not provide, and which

increase market efficiency and promote market development. Government inter-

vention could include such measures as marketing legislation, provision of

market services, investment in market infrastructure, food security reserves

and nlanning and limited Drice support intervention. Specific policies should

be directed towards correcting the source of market distortions.

ix. Because of the range of ecological and climatic conditions in Kenya

and the limited up to date knowledge of existing farming systems and produc-

tion techniques for different types of crops and farms, it is difficult to set

official producer prices which do not cause distortions of incentives in some

areas. Distortions caused by inadequate or excessive producer prices would be

reduced lf rovernment would intervene only minimally in domestic marketing,

ideally through setting floor and ceiling prices for a limited number of major

comodities, and serving as a buyer and seller of last resort. A flexible

system of floor and ceiling prices would allow domestic prices to fluctuate

seasonally adu regionaLly within a margin. This system would give come

protection to producers and consumers, while allowing market forces to balance

supply anrd demand, and lowering the costs of effective administration. Under

such a system, parastatals and marketing boards could still serve as guaranteed

buyers at a floor price, and suppliers to consumers ata ceiling price, while

concentrating most of their attention on other activities such as market

services and development and management of 'ood security stocks.

x. The question of whether or not to subsidize consomer food prices

ought to be analyzed taking into account the impact on the budget. Direct

subsidization would be easier to control and more efficient than the current

system of hidden subsidization, under which Government subsidizes consumers

through budgetary grants to cover parastatal losses, and producers subsidize

consumers through low prices. There are clearly costs inherent in market

regulation and intervention, and policy makers need to decide both how much

Government is willing and able to allocate to such activities, and how to use

the resources budgeted most effectively and efficiently to achieve policy

goals. To support such decisions, analysis of the economic and financial costs

of regulated prices and market channels needs to be done.

xi. In order to encourage private competition and improve market services

in rural areas, Government should gradually lift maize movement restrictions.

The National Cereals and Produce Board should operate its buying and selling

activities in direct competition with private traders. Allowing prices to

react to supply and demand, and removing the artificially low margins between

fixed producer and consumer prices, would encourage the private sector to

increase their investment in market infrastructure and improve market services.

Increased private involvement would be more efficient and beneficial to the

ANNEX -43-

rural population than the establishment of a monolithic official marketingorganization constrained by inadequate financial resources and high costoperations. Not only would overall economic efficiency increase, but also theresources which went toward administering fixed prices and market controlscould be better invested in other development programs.

xii. To support the development of competitive markets, Government shoulddirect investment toward improving market infrastructure. Government monitor-ing svstems of commoditv suDDly. demand and price should be established on acountry-wide basis. Government should also examine ways to provide technicalassistance and finance for the private sector to increase local storagecapacity, to improve processing and retailing facilities and to developndenuate nronrirement and transnort services.

tii.- Tt i8 imrinnrtnint tn future development of the agrirnltural sertor

that current land issues be addressed without further delay. The Nationaland Commission proposed by the Fourth Development Plan should ha established

and given a broad mandate to consider all issues relating to land. The mostimportant issues are land use anr.d planning; protection and conservation ofland resources; farm size and production systems; and adjudication and sub-division. The Plan also advocated th.e legalization of SUbdivi4i4n, -nd this4should be carried out. The process of adjudication should be accelerated toincrease farmers' zaccess to Credit. Itn adufdition to -- ..J.learing n he yfor lanAredistribution, this would also facilitate access to credit for somema.LLho.LUders b'y giLvLIng legaL L.ti.L.Le to Land whi c h.L has in fLat aLready bUeeLL

subdivided. Policies to expand land through irrigation and to intensify landuse should bU e Cex- am.n L -1ed Uj tudies on 'l.andL - -u-sRe, e s p e ;i-all y- fr_ meim size 'armsof 20 to 50 hectares, should be conducted to provide the necessary data forthe Land Commission's review of land policies. The Commission should alsowork with the Ministries of Planning and Agriculture in examining the issues

of food versus non-food crop production, and extension of farming into marginallands.

-44-_ ANNEX

I. BACKGROUND

A. Introduction

1. Kenya's agriculture is at a crucial point in its development. Thesiucrcssful nerformance of the sector between 1964 and 1974. when the annualgrowth rate of agricultural GDP averaged 4.7%, has been succeeded by a period

nf uneven nprformanre; with growth rates varying annually and among commodities

(Tables 1 and 2). Adverse weather conditions in some years, a growingconstraint on land iipply, and inapnrnnriatp nolicv decisions have affected

growth rates. Due to the poor performance of food crops in particular and tothe ra-pidl growingl nopasOtion, nar i-zit:a foonr nrAd,wt-lnn iR tlprlinincg.

Despite this, agriculture retains its importance for Kenyan development.

2. The two main agricultural exports, coffee and tea, continue to

contri'Dute substantially to foreign exchange earnings, accounting for 44% oftotal export earnings in 1979. Rising oil prices and an increasing need for

LJ1CL |rA .LUjJ.J C _ 41it tAL L. Ut .FLaA4 1. L. V _ ~J W fl* U.Le . L. _ frit 0 A x w LSo JL

balance of payments throughout the 1980's, and thus the economy will continueto dUepen.d on traditional agricultural exports to suppl-y t1h.e needed foreign

exchange. In addition, in these next two decades, high population growthrates adu tLh e iLL mLteU asrbspLiLv.e capacLitLy of. the Li t z service

sectors means agriculture will have to provide most of the new employmentopportunities fLor thLe rapidlUy iLncreasig laUor Lorce. "Mttea tie samiLme, food

production will have to keep pace with the growing population, and agriculture

will also have to increase the supply of inputs to --- ii--.

Thus, agriculture will have to provide foreign exchange, employment, food and

industrial inputs for the rest of the economy.

3. The performance of the sector in recent years raises doubts as to

whether agriculture will be able to meet these multiple demands, given the

current policy framework. Because of the critical contribution of agricuitureto Kenya's overall development, it is essential that current sectoral policies

and issues are re-examined and adjusted, in order to encourage and sustain

adequate levels of growth. This annex examines current agricultural perform-ance and focuses on four major issues: 1) Government-s agriculture develop-

ment strategy; 2) pricing and marketing policies; 3) institutional capability

to effect development programs; and 4) land use, employment and populationissues. While there are other constraints to agricultural growth in Kenya,

these four issues are not only the most important, but also the most amenable

to immediate policy changes.

B. Agricultural Performance

General

4. Agricultural performance has been highly variable since 1974. The

annual growth rate of agricultural GDP in 1972 constant prices averaged 3.5%

in the period 1955-1964, increasing to 4.7% in 1964-1974. Between 1974 and

ANNEX -45-

1979, however, the annual growth rate fluctuated between -1.0% and 9.2%(Tab-le 1). Ile average of 2.A4% was less than the rate of populationk.1aU±L I). L Li UJ.& 4-*?. LLZdI LLL LL UL jJjJLdLL

growth, which had risen to 3.9% by 1980.

Table 1: AGRICULTURAL GDP, 1974-79(1972 constant prices, KIE million)

Agricultural 4 Growth from Agriculture asYear GDP (KE million) Previous Year % of Total GDP

1974 240.09 - 32.51975 247.14 2.9 32.81976 244.77 -1.0 30.81977 267.29 9.2 30.91978 271.03 1.4 29.71979 1/ 269.68 -0.5 28.1

Annual Average Rate of Growth, 1974-79

1974-1979 2.4%

Source: Kenya, Statistical Abstract, 1979

1/ Mission estimate; this growth rate was calculated using end points; theleast squares growth rate was 2.7% by poor weather, indicating that 1979output was depressed below the trend level. Nevertheless, growth ofagriculture still appears to be below that of population.

5. The good performance of agriculture in the 1960's was attributableto a number of factors: the ranid growth of nreviouslv restricred artuv4tiri,such as coffee, tea and dairying, after independence; the rapid diffusionof high vieldinv maize: vyield inreaRPR for queral imnnortant crnns (coffeetea, maize and wheat); and the expansion of crop production in previouslyuinder-utilized high nnptntial areas. However, by the early 1970s, theimpetus to growth from these factors decreased. An increasing land constraintslowed expansionr of cropped area in the high and medium potential zones, whilegrowth of output lagged due to drought, inappropriate pricing policies fors-oe--- commodities (milk, beef), and a stagnation of subsistence production.

-46- ANNEX

Table 2: VOLUME GROWTH OF SELECTED AGRICULTURAL COMMODITIES, 1975/76-1979/80

ProAucl.on nc.reased Output Annual Average

('000 tons) 1975/76 -1979/80 Growth Rate (%)

Commodity 1975/76 1979O/8 ( OOO tons) 1975tI7'6-1979/80

Maize 1/ 2,200.0 1,620.0 =580.0 -7.3%

Wheat 176.3 138.2 -38.1 -6.0%

Sugarcane 2/ 1,653.7 2,855.1 1,201.4 14.7%

Cotton Lint 16.0 27.6 4/ 11.6 14.7%

Clean Coffee 2/ 73.3 78.6 5.3 1.8%

Tea 2/ 59.4 96.6 37.2 13.0%

Pyrethrum 14.3 10.4 -3.9 -7.5%(Dried Flowers)

Beef 142.5 3/ 147.0 4/ 4.5 5/ 0.8%

Milk (million liters) 1/ 1,024.0 3/ 939.0 4/ -85.0 5/ -2.0%

Source: Kenya, Statistical Abstract, 19/9, and Ministry of Agriculture

1/ Estimated production, as most output is not marketed through official

channels.

2/ Marketed production.

3/ 1975

4/ 1979

5/ 1975-1979

6. Growth of agricultural production fell to 0.5% in 1978/79, and the

estimate for 1980 is a zero, if not negative growth rate. The 1979 long rains

were less than average, and the 1979 short rains and 1980 long rains were so

poor that drought conditions prevailed in much of the country, with total crop

failures in some provinces. Overall performance in 1979 and 1980 has also

been affected by declining prices for the two main agricultural exports,

coffee and tea.

Performance of Major Food Commodities

7. brougnu ana low growth rates of major food commodities, coupled with

the high ponpliation growth rate of 3.9% have caused food shortages, which may

continue to be a problem throughout the 1980's. Maize production has fallen

from an est-imatpd 2.25 million tons in 1977/78 to 1.6 million tons in 1980/81.

Deliveries to the National Cereals and Produce Board (NCPB), the official

marketing agency, have fallen from 556,000 tons in 1975/76 to only 135,000

tons in 1979/80. Declining maize production is the result of poor weather and

TaLble 3. iGrowth of Value of Marketoad Agricultural Production, 1964-72 and 1972-78

Share of Increase

Vailue of Output at Constant Increased Output of T'otal Agri- Annual Average(1972 prices) (IL Million) (IG1 million) culture GDP (%) Grcwth Rate (X) >

19164 1972 1978 1/ 1964-72 1972-71B 1964-72 1972-78 1964-72 1972-78

Marketed Production

Wleat 3.4 4.2 4.4 0.8 0.2 1.3 0.3 2,4 0.8

Maize 2.7 7.3 4.6 4,.6 -2.7 7.4 -4.1 13.3 -7.5

Coffee! 16.2 24.2 32.8 8.0 8.6 12.8 13.1 51.1 5.3

Tea 6.1 16.0 28.1 9.9 12.1 15.9 18.4 12.8 9.9

Total Crops n.a. 70.4 92.1 n.a. 21., n.a. 33.0 n.a. 4,6

Beef 13.4 16.5 11.8 3.1 -4.7 5.0 -7.1 2.6 -5,3

Dairy 6.6 10.9 11.4 4.3 0.5 6.9 0.8 6.5 0.8

Total Livestock &

Related Products rk.a. 31.4 28.7 n. a. -2.7 n.a. -4.1 n.a. -1.5

Total Marketed Production ri.a. 105.9 123.6 n.a. 17.7 n.a. 26.9 n.a. 2.7

Sources: IBRD, Kenva: Country Economic Memotandum, 1979, and Kenya Statistical Ahstract, 1979

1/ Provisional

=48= ^NQEXA?TV

inconsistent policies. A reduction in the producer price in early 1979, the

lack of a guaranteed outlet for surplus production. and the withdrawal in 1979

of the seasonal credit scheme, the Guaranteed Minimum Return (GMR) scheme,

w o sufficient rpnlacement; led many farmers to decrease area planted to

maize. Low output and the export of 180,000 tons of maize in 1979 caused ashortfall in national cpinnlv in 1980, and 310 000 tons had to be imnorted.

Because national stocks are nearly depleted, and the projection for the1980/81 short rai.s crop is only average, additional mnize will have to be

imported. Current projections are 350,000 tons to be imported in 1981:

160,0nn tons for conAsumption and 190,000 tons as a reserve.

o. Wheat production has been declining since a record output of 24!,000

tons in 1967/68, in part due to the reduction in the number of large farms,

which are the maJor w4heat prodLlucers. Production since 1U975 h.as bDeen erratic.

The removal of the GMR scheme also caused acreage under wheat to drop sharplyLLU ± U' 1Ldz i ~IU JLU7/7 UU,.S. LILLL 1.L 9L.I d' /On. Ir Lrom 119,000 Lhectares iLn L987 o 66,000A heclares in 1998.Tere '-as

also been some shift towards barley production in the wheat-growing areas, asthe domestic breweries provdUe credit and iputs, andU barley prices are more

attractive. Domestic demand for wheat continues to exceed domestic supply,

105,000 tons of wheat were imported in 1980, ana 19708 imports are proJected at

165,000 tons.

9. Drought conditions in the latter half of 1979 and in 1980 have

adversely affected the livestock sub-sector. Milk intake by the Kenya Cooper-

ative Creameries (KCC), which handles nearly all milk marketed through formal

channels, fluctuated around 250 million liters for most of the aecade but fell

to 173 million liters in 1979/80. This decline is due both to drought and to

unattractive producer prices, which make it more profitable for producers to

sell directly to consumers. Although milk production has stagnated (Tables 2

and 3), domestic demand is rising rapidly. The introduction of the school

milk program in 1980 increased demand by 32 million liters. Shortfalls in

supply are being met by imports of milk powder, which were 12,000 tons in 1980and which are projected to be 13,000 tons in 1981. In order to stimulateproduction, Government increased producer prices 42% in September 1980 and

will introduce a dry season premium in 1982. Beef production has also beenaffected by drought and unattractive producer prices. The Kenya Meat Commis-

sion's (KMC) intake of cattle has dropped off sharply, and private traders now

supply the domestic market. Low producer prices have decreased the avail-ability of quality carcasses for export, while KMC's high operating costs have

affected the competitiveness 6f meat exports. Domestic demand for beef is

expected to grow more than 60% by 1990, due to both population and incomegrowth, but supply is expected to lag.

Performance of Non-Food Crops

10. On the whole, performance of cash crops has been good compared to

performance of food commodities although drought caused a fall in production

in 1980. Tea output increased from 86,291 tons in 1977 to 91,610 tons in

1979. However, due to weather and input supply problems, production fell to

ANNEX -49-

80,932 tons in 1980. The smallholder tea area expanded under the Kenya Tea

Development Authority (KTDA), which has recently completed a large plantingprogram. WvvorldU priLces fLor 'Lea feill in 1070, resulting iin lower export erigfrom tea, despite the increased volume, but prices rose an average of 17% in

i908o0) .Co iLee product'Lorn has declined since theI 1977 7boom - Irom 97,0665 tons

in 1977 to 84,300 tons in 1978 and 75,082 tons in 1979. This was due to poor

rainfall as well as to inadequate suppl'es and late deliveries of chemicals

and fertilizers. The 1980 coffee crop of 91,334 tons was significantly

higher, and thre 1981 crops may reach 100,000 tons. Prices have been falling

in the international market and this may trigger the quota set by the

International Coffee Organization. Cotton production increased signiricantlyfrom an average production level of 16,000 - 17,000 tons between 1971 and 1977

to 35,597 tons in 1978/79. The 1979/80 season was affected by drought and

late deliveries of inputs, but scope for increasing production is good if

productivity is improved. Pyrethrum production has fallen from 203.9 tons

extract in 1975 to 114 tons in 1979. The Pyrethrum Marketing Board has

increased producer prices which they hope will spur production.

11. Since 1975/76, average annual growth rates for food production have

been negative or less than 1% (Table 2). More importantly, per capita foodproduction has fallen at an even faster rate, as Kenya s rate of population

growth approached 4%. While food production has declined overall since 1972,

population has increased by nearly 30%. Continued high rates of population

growth will put pressure on food supplies, and unless agricultural growth

exceeds population growth, per capita food production will continue to decline.

Recent drought conditions have affected both food and cash crop production,

yet adverse weather conditions are not the sole cause of the present problem.

As food crop production declined in the 1970's, annual growth rates for

several major cash crops exceeded 10% (Table 2). The poor performance

of food commodities reflects inappropriate policies, and the limited

institutional capacity of the Government to effect its agricultural

development plans. In particular, production has been constrained by low and

geographically uniform producer and consumer prices for some commodities,excessive control of food marketing and pricing, credit problems, and poor

distribution of inputs. Government's lack of long-range planning and the

problems encountered in implementing the agricultural development strategy

contained in the Fourth Development Plan have contributed to low growth.

Because DoDulation growth is putting pressure on land supplies, the long-term

implications of farm size, land use, and employment generation need to be

confronted now and included in agricultural planning. These problems and

issues and their effects are discussed in the following sections.

-50- ANNEX

II. AGRICULTURAL POLICIES AND ACHIEVEMENTS TODATE UNDER THE FOURTH DEVELOPMENT PLAN

As The Fourth Development Plan

12. The Fourth Develonment Plan covering the period 1979-83, contains

the major statement of Kenya's agricultural development policy. The focus of

the Plan is on poverty alleviation, and to this end concentrates on expanding

income-earning opportunities. Thus agriculture, which employs over 80% of the

population, i6 accorded greater attention than in previous plans. Overall the

assessment of agricultural constraints shows an awareness of their impact on

development while the proposed policy strategy is sound in its recommendations

for removing obstacles to growth. However, Government efforts in implementing

the Pla hav fale shor ofisoJc , and th.us performance in achiev-

ing the targets set for the agricultural sector has been disappointing. 1/

Objectives and Strategies

13. The Plan's broad objectives for development of agriculture include

encouraging overall sector growth; improving the balance of payments by

meeting domestic food needs and expanding exports; increasing employment

opportunities for the rapidly increasing number of new labor force entrants;

raising rural incomes; and conserving natural resources. The general strate-

gies for development and for overcoming sectoral constraints are incorporated

into the Plan's broad policy framework for action, which is supplemented by

specific project proposals. In the area of marketing, the Plan calls for

increasing competition, minimizing government intervention, relaxing the

internal restrictions on maize movements, and developing market infrastruc-

ture, especially storage facilities. Pricing policy would seek to bring

domestic agricultural prices more in line with world prices, and the annual

price review would pay more attention to world prices and trends, parity

pricing, economic analysis and price inter-relationships. Research and tech-

nology would concentrate on encouraging intensive land use, developing arid

and semi-arid lands, smallholder production techniques, labor-intensive

production, and export promotion. As the bulk of population increases will be

in rural areas, and as industrial expansion will be insufficient to absorb the

required number of new workers, the agricultural sector must continue to

expand employment opportunities. This would be done through an emphasis on

labor-intensive crops (especially coffee, tea, pyrethrum and sugarcane), as

well as on yield increases, subdivision of large farms, and new settlements.

Land policy would be assessed by a new National Lands Commission, which will

consider such issues as tenure, subdivision, and land use. A food policy

would also be developed, to ensure adequate supplies of basic foods and to set

up a strategic food grain reserve. To accomplish the development programs,

the institutional framework would be strengthened, and an integrated approach

to crop development will be used. Services to the sector would also be

expanded, including research, agricultural education, extension, livestock

services and agricultural credit.

1 Reflecting the worsening economic situiation; the Government reassessed

and reduced its targets in Sessional Paper No. 4 of 1980.

ANNEX -51-

Targets

14. Target growth rates for the Plan period 1979-1983 are ambitious.The projected annual growth rate of the value of production is 4.7%, thesame growth rate achieved during the high growth years of 1964-1974. The

target growth rate for food production (4.3%) is also ambitious, given theerratic trends of maize and wheat production in recent years. The Plan seeksself-sufficiency in maize production, supplemented by a national grain storagenrogram to balance surnluses and deficits between seasons. Wheat and rice

production would expand, but shortfalls in supply to meet domestic demand areexpected. The target growth rates for the indnstrial crops - an averqgp 14% -

are also ambitious. Overall annual export growth is targeted at 4.2%, andwill he led hv an expannion of pineapple and pvrethrum exports, as well as an

increase in coffee yields and in tea area. Livestock sub-sector growth ist ar ge t edA a t 4. -6% .

B. Ses-jonal Paper. No. 4, 1980

15. Within z year of publication, it was necessary to adjustassumptions and targets of the Plan. Rising oil prices, worsening externalterms of trade and in.creased food imports strained thLe ba-lance ofI payments andadversely affected the budget. Reassessment of targets was done in Sessionalraper No. It of 190. Ihe DessLonal PIaper stresse two paramount goaLs Lor

agriculture: the short term goal of coping with the current food shortages,andu the 'Lorger term goa'l o0f iLncreas'Lng prouuctiLor, andIU employ-ment opportunLLtLes.

In particular, there was a new emphasis on developing a food policy, due todomestiLc shortages of maize, wheat, rice, and milk. Tne Sessional Paperemphasized that the fundamental long-term challenge for agriculture is toprovide adequate growth of domestic supplies of food, foreign exchange earnings,and employment opportunities. The Sessional Paper affirmed Government'scommitment to ensuring adequate resources to the sector, and to adjustments inpricing policies, review of land policies, introduction of a new creditscheme, increased attention to the development of semi-arid and arid lands,and greater use of market and price incentives.

C. Food Policy

16. The shortages of maize and other basic food commodities in 1979 and1980 led to a new concern over domestic food supplies. To this end, a separateFood Policy paper was drafted and submitted to Cabinet in late 1980. 1/ Theoverall objective of national food policy as outlined in the draft policypaper, is to maintain a position of broad self-sufficiency in the major foodswithout decreasing the export of agricultural commodities in order to avoidusing scarce foreign exchange on food imports. The approach to achievingthese objectives is similar to that of the Fourth Development Plan, i.e.giving a priority to public investment in agriculture, and especially tosubsistence food crops; improving the efficiency of production, merketing anddistribution; developing a well-defined land policy; and improving nationalstorage capacity, including the establishment of a national strategic grainreserve of four million bags (360,000 tons) maize.

1/ The paper was approved in early May 1981.

D. Achievement and Constraints

17. Progress in achieving the production targets and policy changes

proposed in the Plan has been disappointing. The growth of agricultural pro-

duction has fallen short of the Plan goal of 4.7%. Moreover, although the

Fourth Development Plan is cognizant of the policy problems in the sector,

and in general prescribes sound policy solutions, actual progress on achieving

these changes has been disappointing. The marketing policies proposed in the

Plan and again in Sessional Paper No. 4 and the Food Policy draft - increasing

competition, relaxing maize movement controls, and increasing private sector

involvement in marketing - have not been implemented. The recommendation that

the marketing system be reorganized is not new: both the Second and the

Third Development Plans proposed a lifting of maize marketing restrictions,

and there have been several studies of the costs and benefits of this (see the

discussion of Pricing and Marketing Policies below). Other policy changes,

especially in the area of land policy, have also not been forthcoming. The

National Lands Commission proposed by the FDP to review current land policies

has yet to be established.

18. The poor performance of the agriculture sector in several recent

vears, esnecially the low or negative growth rates of maize, can partially be

attributed to the drought of late 1979 and 1980. Yet inadequate performance

cannot solely be blamed on weather conditions. Other constraints have hamnered

growth as well. The high population growth rate is putting pressure on land

supplies, especially in the high notential areas, as well as on food produc-

tion. Further production increases will have to come through intensification

of land use, a slower and more complicated processa Despite the problems of

population growth, land supply and land use, Government has not formulated

policies to dUea'l with these constraints.

19. Agiutr als faeanmer o-f const-raint-s which are policy-.17 tIL±ri u±ture aOLso latces a nultu±ji IA ALOLJ.L I A.&a... * .J...

induced. Controlled producer prices for major agricultural commodities have

introducedu diLstort,Lo,is andU afLected growth. In some cases, financial incen-

tives to producers have been inadequate (maize, milk), often leading to

subust' ttULiI oU crops (such as sugarcane fLor maize in Western anANyanza

provinces). Insufficient margins between fixed producer and consumer prices

have led to operating losses for severaL maruketLing boards. VMarket co,trol's

and inadequate market development have inhibited the growth of marketed sur-

pluses, caused imbalances in regional supply and demand, and led to irregu=

larities. The pricing and distribution of inputs has also contributed to

production instability. Late fertilizer deliveries have affected crop yields,

while the removal of the Guaranteed Minimum Return scheme (seasonal credit)

without a viable replacement, contributed to the sharp drop in both maize and

wheat production in 1979.

1/ Total production figures, including on farm consumption make certain

assumptions about marketed versus non-marketed production and per capita

consumption in rural areas. These introduce some uncertainties about the

trend of maize production.

ANNEX -53-

20= Mnot of these constraints were identified in the Plan, Sessional Paper

No. 4 and the Food Policy paper, and appropriate programs and policies were

proposed to overcome thesc nrohlPms. For the most oart; the Government s

agricultural development strategy, as outlined in these documents, is sound.Tbe fiu to pro-m-ote grrntath in tho nnQt lipe not with the strategv itself.

.,.e .- u. p._ r __-- ;

but rather with the actual policies pursued by Government. The reasons for

this discrepancy between stated strategy and actual nolicy are varied The

limited institutional capacity of the Ministry of Agriculture and Governmentin general; the highly political nature of issues such as familv planning,

land use, and consumer prices; and the divorce of policy-making from support-

ing ana'lysiLs have coUntri o tUL.heU I d iscreaL.

III. PRICING AND MARKETING

A. Pricing

21. Government authority to intervene in Lte pricing o' agrLcuLtural

commodities stems from the Agricultural Act covering legislation from 1955-64,

which seeks to provide guaranteed prices and assured markets for scheduled

crops and animal products. Producer prices for major agricultural commodities

are set in the annual Price Review and announced in December. Tne Ministry of

Agriculture submits price recommendations, based on the analysis of domestic

and international cost, price, and supply trends. The prices are reviewed Dy

the Ministries of Finance and Economic Planning and then sent to Cabinet for a

final decision. The major commodities for which prices are set are maize,

wheat, rice, milk, beef, sugarcane, cotton, and pyrethrum. Government does

not set export prices or producer prices for coffee and tea, which follow

international market trends. Consumer prices are set by the Price Controller

in the Ministry of Finance with Cabinet approval and include both food commod-

ities (maize, milk, beef, wheatflour, sugar, coffee, tea and edible oils,

among others) and a wider range of consumer goods. Although the producer

price analysis done by the Ministry of Agriculture contains recommendations

for consumer prices, the setting of consumer prices appears largely related to

concerns of the effects of price changes on the urban consumer price index.

22. The Plan calls for bringing domestic producer prices more into line

with world prices. The Price Review includes examination of both domestic and

international production and pricing trends for major commodities, and prices

are linked to import and export parity. While domestic producer prices tended

to be lower than export parity prices in the period 1973-1975, they were set

closer to import parity prices after 1976 (Table 4). This was because in 1975

Government began using world market prices as a major criterion for establish-

ing domestic producer prices, and thus prices for some commodities were

significantly raised. High overhead charges for administrative, storage,

railway, port and factory costs in Kenya widen the margin between import and

export nprity nriees; and thus afford a certain degree of protection to

domestic producers. In the period 1972-79, for example, overhead charges as a

-54- ANNEX

Table 4. Domestic and World Border Price Comparisons for Major AgriculturalCommodities: 1972-1978

(in KSh per ton)

i972 i9713 i974 197/5 i97/6 1977 1978

MAIZEa. K-lenya - UGross rrodUucer PriLce 355 39 50 2 8 888 8vv

U, Kerya - Maize a.d ProduceBoard costs fob Mombasa 576 609 812 1,036 1,359 1,462 1,525

e. World - US No. 2 Yellow cifMombasa 529 883 1,143 1,147 1,080 898 895

WHEATa. Kenya - Gross Producer Price 506 566 808 1,046 1,202 1,332 1,332

Grade 2 1/2 average

b. Kenya - Wheat Board costscif Mombasa 712 779 1,062 1,336 1,537 1,665 1,788

c. World - US No. 2 Hard Red WinterWheat cif Mombasa 631 1,165 1,500 1,411 1,275 977 1,125

RICEa. KIenya - Gross Producer PrIce

basmati paddy(63% millina eqiuivalnt) 1 ,3 1,270 1 825 1 909 2,302 2,302 2 540

h. Kenya - Maize and Produce Boardcosts basmati fob Mombasa 1,980 2,460 3,558 3,486 4,566 4,613 4,637

c. World - Thai 5% brokenscif Mombasa 1,178 2,567 4,021 3,110 2,194 2,273 2,827

SUGARa. Kenya - Gross Producer Price

sugarcane, assuming 10:1milling equivalent 520 520 620 920 1,050 1,330 1,330

a. Kenya - Ex-factory price mil1-white sugar, excludingexcise duty etc. 1,080 1,080 1,230 1,860 2,300 2,800 2,800

b. Kenya - K.N.T.C. costs mill-

white sugar fob Mombasa 1,344 1,344 1,470 2,160 2,630 3,168 3,180

c. World - I.S.A. daily price rawsugar fob and stowedCaribbean ports 1,153 1,447 4,703 3,731 2,123 1,429 1,273

BEEFKenya - K.M.C. producer price

F.A.Q. for carcass 4.07 4.42 5.00 5.57 6.68 7.30 8.35

World = Botswana Meat Commission

Producer price F.A.Q.(grade 2) 4-64 6.21 8.07 6.93 7.23 7.55 NA

Source: Jennifer Sharpley, "Pricing Policies and Rural Incomes in Kenya" (1980) pp 17-18

ANNEX -55-

nercentage of the domestic border Drice f.o.b. Mombasa averaged 34% for maize.…23% for wheat, and 48% for rice. 1/

23. Although consideration of export and import parity prices is importantfor ensurina efficinncu in stah1bishing prire levels, integration of nrice

levels with overall agricultural policy planning, especially the considerationof long run production incentives, should be taken into acicunt me well. While

there may be general consensus in any one year to raise maize prices, for

example, due to domestic shortages, or an increase in the world price, theincentive effects and longrun supply increments are not always taken fullyinto account. tLthough the sLtuation LLas improved somehat in recent years,

the effect of this approach in previous years can be seen in fluctuating or- /...~~~~~ii..~ J1 - J

declining suppLies of some commoUuUtULes kmsL& andU U U LJ or sn suUstvtUtons

between crops (sugarcane for maize). As the Price Review does not appear togive much weight to relative incentives among crops, there is nO consLderationof substitution effects. More importantly, there is no analysis of thetrade-off between producing food crops and export crops. Although Governmentneither sets or stabilizes export prices, which move in line with internationalprices, the ettects ot export prices on the substitution of cash for food

crops, especially in view of the growing land constraint, needs to be con-sidered in sector planning.

24. The Price Review is supposed to consider both producer and consumerprices in establishing price levels, implying close coordination between theMinistry of Agriculture which recommends producer prices, and the PriceController's Office in the Ministry of Finance, which recommends consumerprices. However, at the decision-making level it appears that pressures tokeep consumer prices low have prevailed. While producer prices in recentyears have generally exceeded export parity prices (except for beef andmaize), consumer prices for such commodities as milk, bread, rice and beefhave been below world prices. 2/ The Government has found that the effect oflow consumer prices in many cases has been to reduce marketing margins to thepoint that they no longer cover costs for the parastatal marketing boards -resulting in the need for Government support to cover deficits. This iscontrary to parastatals objectives and causes serious problems for the Govern-ment budget. Low margins between producer and consumer prices are also a

disincentive for increased private sector involvement in marketing.

B. Market channels

25. Government regulation of the marketing system has a long traditionin Kenya and much of the present marketing and pricing legislation dates fromthe pre-Independence period. 3/ Statutory marketing boards with a range ofregulatory and marketing functions exist for all maior commodities. Somemarketing boards (Coffee, Tea, Pyrethrum, and Cotton Lint and Seed Boards),

I/ See Sharnlev (1980)- n. 19

2/ See Sharpley (1980), Tnhle 2

3/ ror a Aescription of the development of Kenya's marl-t syctem, see

"The Marketing System", chapter 10 in J. Heyer et. al. (1976)

-i6- AN N LA

which are mainly oriented towards cash crops, both market their respectivecommodities and provide quality control. In addition, they are involvedin crop development through licensing producers, supplying inputs, extensionservices and credit, and conducting research. The boards responsible forexport crops, notably for coffee and tea, have no price stabilization role,except insofar as they limit domestic production. Official prices are setfor cotton and pyrethrum.

26. The domestic marketing boards were originally set up to controlprices in the domestic market, rather than to improve market development.These include the National Cereals and Produce Board (NCPB). which wasestablished in 1979 with the merger of the Maize and Produce Board and theWheat Board, the Kenya Meat Commission (KMC) and the Kenya Dairy Board. Anumber of parastatals and private cooperative associations also have somedomestic marketing functions: the Kenya Sugar Authority. thp HortirciltuiirCrops Development Authority, Kenya Cooperative Creameries (KCC) and the KenyaFarmers Associatinn (KFA). Prodiirpr cronnrntiveR are the major rhqnnnplfor the processing and marketing of certain smallholder cash crops, especiallycoffee, pyrethrum and mlilk as well as for the ditrihbtion of inniut andcredit. Government involvement in the marketing of agricultural commoditieshas deliberately limited the private sector's role in marketing. Restrictionson interdistrict movements of maize, for example, have limited privatemarketing to the local levrel although snom illegal inter-rgonanol trade Aoe

occur. Many marketing boards do use licensed traders and agents to carry outtheir functions. Othe-r bards, scuh as the Kenya .Neat Co4ssion, are in

direct competition with the private sector.

27. The overall result of Government intervention in the marketingsystem hLas lbLeen tLhL.e creation rather than Lth'e removall of distortions andUinefficiencies. To identify areas for development and improvement, andto provLue Information on markLeting 'or policy makLers, a U1NDJPftU r'iarketing

Development Project was started in 1976. After considerable research, theproject identified the WaJUL cUsrLLaints in achieving market efficiencyin Kenya. 4/ These include:

1) Government intervention in the marketing and pricing ofagricultural output, with over-emphasis On monopolisticand official marketing and pricing;

2) existing policies which do not promote market servicesand iunctions to assist in the development of a competitive

free market system;

3) lack of a long-term development program for market structuresand services;

4) inadequately coordinated and integrated high level policyformulation and evaluation mechanisms;

4/ See "Issue Paper on Agricultural Aiarketin6 Development Policies andProgrammes" (1978).

ANNEX -57-

5) poor market transparency and free market arbitrage,especially in rural markets, as characterized by lack

of information and uniform weights and measures, and

low competition;

6) slow rates of investment by the private sector in market

facilities due to pricing effects;

7) limited long term financing for market facilities and

installations by cooperatives.

28. Although limited private investment and the underdevelopment of

markets contribute to inefficiencies, most of the constraints originate in

inappropriate Government policies. Despite the goal of the development of a

competitive and efficient marketing system, existing marketing and pricing

legislation does not promote services which would contribute to the develop-

ment of a competitive internal free market and nricing system. Numerous

studies on marketing, especially for maize, have documented the contribu-

tion of Government policies to market problems. Because Government regulates

primarily the marketing and pricing of domestically consumed foodstuffs, the

result has been constra-nts o the gr-eaowth of food nroduction, esnecialiv the

production of maize, beef and milk.

C. Case Studies of Marketing and Pricing Problems

Maize

29. Maize marketing is controlled by the National Cereals and Produce

Boarud. ILs LuIctLo.s include the regulation, control and improvement of

collection, storage, market distribution and supply of maize and wheat;

control of maize and wheat imports and exports; the maintenance of strategic

grain reserves; and the appointment of marketing agents. In addition to

maize and wheat, NCPB handles small amounts o' othier proUduce, mainly beans.

NCPB operates in the market both directly, by purchasing from large producers

and cooperatives, and indirectly through licensed agents, who serve mainly

the smallholders. Recently NCPB has sought to replace their licensed agents

by establishing a network of buying centers in the major grain producing areas

of the country to buy maize directly from the farmer at local market centers.

NCPB both purchases all maize offered to it at the official price, and regu-

lates the regional movements of maize. One function of the Board is to equate

demand and supply throughout the country by moving maize from surplus to

deficit areas. Most maize handled in rural markets, however, passes through

an informal marketing system through either local traders or direct sales from

producers. Ideally, the official and the informal systems should complement

each other, as each serves a different set of producers and consumers.

Intervention by the NCPB is more effective in handling sizeable direct sales

from large and medium scale commercial farmers and selling it to processors

for distribution in urban areas, while the informal system is designed to

handle sales and purchases by smallholders, which in most cases are small

(less than two bags per transaction), and spread out both temporally and

-58- ANNEtX

spatially. In practice, Government controls have restricted the operations of

the informal sector without introducing compensatory official marketing

services. The informal trade cannot equate regional supply and demand, due to

maize movement restrictions and the "unofficial" status of private traders.

Nor can the NCPB stabilize supplies, having only the resources and the author-

ity to move large supplies of maize between depots (para. 35).

30. In evaluating the effectiveness of Government intervention in the

marketing of maize, it is necessary to clarify the reasons for, and objectives

of, intervention. The rationale for market regulations relate both to the

imnortance of maize as the country's staple foodstuff and the underdeveloped

market conditions which prevent adequate delivery of supplies to consumers.

The obi-rt4ivps of intervention as usually interpreted by Government officials

include a) price stabilization; b) provision of a secure outlet for sales

and supply; c) supnlv stabilization for both deficit and surplus areas;

d) maintenance of strategic reserves; and e) prevention of the exploitation of

smallholders by unscrupulous p riv-aut-pe traderse Examinti4on of NCPB's

performance reveals a mixed record in achieving these goals.

31. The existence of an official producer price and market outlet for

maize has not resulted in the stabilization of producer prices throughout the

country. Analysis of official maize price trends between 1968 and 1977

reveals that producer prices rose consistently after 1971 (Table 5). nepite

the overall rise in official prices, however, there have been sharp seasonal

fluctuations in rural markets. The existence of local maize marketing channels

which operate parallel to the activities of the National Cereals and Produce

Board and the representation of NCPB in certain areas means that most maize

marketed in rural areas is not sold at the official price, but instead responds

to seasonal supply anu demand. For example, after the abundant crop of 1977,

producer prices in the parallel market were between 45 and 60 KSh/bag, comparedto the official price of 80 KSh/bag. Iln 1980 maize shortages in certain

regions caused producer prices on the parallel market to climb to between 250

and 400 KShibag. Evidence shows that most NCPB agents purchase maize at prices

well below the official price, which is legal, as agents may deduct transpoi-tcosts and a commission. 5/ There is evidence that local traders give better

prices than do NCPB or its agents, especially when maize supplies are short.

There are also reports of corruption at NCPB depots, where fLarmers must either

pay bribes to have NCPB accept maize or are forced to accept a lower price

because of alleged high moisture content or other quality defects.

32. Official consumer prices for maize have not risen as fast as pro-

ducer prices. In the period 1968 to 1977, the Maize and Produce Board (which

became the NCPB in 1979 when it merged with the Wheat Board) purchasing price

rose at an annual rate of 17%, while its selling price rose only 7% per annum.

This shrinking margin, combined with increases in operating costs, meant that

the NCPB was operating in a deficit and had to be supported by Governmentfunds.

5/ See Casley and Marchant (1979).

ANNEX -59-

Table 5. INDEX OF MAIZE PRICES, 1968-1977

Wholesale Prices (KSh/kg) Retail Prices (KShikg)

On-Farm 1/ NCPB 2! Pur- NCPB 2/ Selling Grain SiftedYear Price chasing Price Price Maize Meal

1968 100 100 100 100 100

1969 96.6 94.0 90.1 83.3 71.4

1970 96.6 94.3 82.5 83.3 71.4

1971 113.8 109.7 89.8 83.3 71.4

1972 134.1 120.9 95.5 89.4 90.9

1973 134.1 126.6 102.0 90.9 90.9

1974 160.0 167.9 126.4 113.6 123.4

1975 240.7 216.3 155.1 153.0 154.5

1976 264.1 235.5 168.5 177.3 207.8

1977 269.0 254.7 181.6 184.8 224.7

Rate of Annual Increase (%)

1968-72 7.61 4.85 -1.14 -2.76 6.22

1973-77 19.00 19.10 15.51 19.41 25.39

Source: Maize Marketing and Pricing in Kenya, UNDP/FAO Marketing DevelopmentProject (sEN 75-n05)

1/ For direct sales by producerso

_)/ "ationa" Cereals and Produce Board.

- 0 -NNEX

33. NCPB's success in stabilizing supplies has been variable. Recordlevels of production in 1976/77 and 1977/78 filled NCPB stores to capacity,and the Board could not obtain Government permission to export. Prices fellsharply as maize flooded the rural markets. It can be argued that NCPB-s

refusal to buy maize, given its monopoly position in the official marketingcircuit, was actually destabilizing. The sharp decline in prices this pro-voked, and the loss in confidence in the Board as a guaranteed outlet appears

to have contributed to farmers' decisions to reduce maize acreage in the

following year.

34. Except for this one period, however, NCPB has provided a securemarket outlet, at least for farmers who market their maize through the formal

system. For smallholder farmers, however, it is debatable as to whether this

outlet has been widely available. Evidence from one survey shows that up toone-third of smallholder producers have no access to a NCPB agent, and thus

have no guaranteed outlet at the official price. NCPB's inability to provideTn,rkpt ouit1Pts throughout rural areas also means that smallholder ronsumers

have no security of supply. Recent maize shortages, although caused bydrought, have also underlined the inahilitv of NCPB to stabilize supnlies in

rural areas through distribution of reserve stocks or imports, both becauseit is dependent on Government for prmTisson to imnort and because it does not

have the necessary distribution network throughout the rural areas.

35. The imposition of restrictions on the movement of maize betweenregions has also contributed to supply imbalances. Almost 50% of the marketedmaize comes from smallholders, who sell mainly through the informal channel.Smal'a older producers as a group are allso consumers of purchased maize, and an

estimated 55 to 60% of the crop marketed informally is purchased by small-L.olders. `h use- of ma'ze as a cash- reserve an' lorm of larter, and th-eII U±U L . 1I M Ub t UJ. iL~ ± ~ ~ ~L Li LU JU.W JJ. ucite, anL L

informal market's characteristic of a high number of small transactions would

requLre a 'large offiial market infrastructure at tLe local level lf the

informal sector were completely suppressed. This suggests that small private

traders would be more efficient in carrying out the marketing function.

Restrictions on the movement of maize, however, prevent this informal market-ing system from baaiancing supply andu duemanu between surplus and deficit

regions. If there were no marketing controls, traders from surplus regionscould move their stocks to deficit regions. 'Wnile NCPB can move maize betweenregional depots and storehouses, it does not have either the agents or the

marketing infrastructure to assure the distribution of that maize throughoutrural areas. The large number of market participants, the spatial distribu-tion of demand over a wide area, and the small amounts of grain involved in

each transaction make it more efficient for the informal marketing channel todistribute maize in rural areas. Maize movement restrictions also result in

higher transport costs, 6/ since only small amounts of maize can be trans-ported at a time.

6/ Schmidt, (March 1979) showed this in a regression analysis of the influ-

ence of vehicle size on transport costs. He estimated that if only 10%

of the traders used larger transport (small pickups instead of matatus,for example) total transport cost for maize marketing could be reduced by5% to 6%.

ANNEX -61-

36. Another argument for Government intervention in the marketing systemhas been the prevention of exploitation of producers and consumers by unscrupu-lous traders. Analysis of private traders activities has shown that they arenot exploitative, but rather that they tend to operate on fixed margins andnass costs un and down market channels. 7/ The fact that excess orofits worebeing made was in large part due to the system, especially the aovementrPstrirtions, which nrevented traders from hblancing regional supply and

demand and equilizing prices throughout markets, and the scope for corrup-tion at various level. The ditorrtions from mArket channels, mnoreover,

particularly affected rural consumers and smallholders, who relied on theinform1 channnel mrerp than didi other partlipantns-' in the inqrke1t -

the low-income section of the population which Government seeks to assist with

37 N*CPB s record inr<intaining national ma"e reserves has bn-,.por.-

Reserves have fallen rapidly since 1978, and are now at critically low levels.Mismanagement of reserves during the ma4ze --rl-s 1-44-n to granoses

£ito .taia6

[uC Lc u. L OC1 VC UL L.L16

L1~ flaLLC OLIjJ.& O~ CaULLL L' 6LCL.-L L.VoOUZ,

was exacerbated by the ill-timed and later widely criticized exports of iaaizeln 1070. AlthoUgh1 NCP5D hLad pressureA Government lo allow exports previous tothis, and thus cannot be faulted for the lateness of the exports, the boardshoulA have been- more -l-r to 4ndication ofC supl shragswhl-i d~ f'UU [Ia -C U l WU 111C a C1 C-L, ILLI - - CtC- ,LLC U)1 UVV) ' p 101 L b W11-ji-e IL WdS5

exporting, as one of its functions is monitoring the maize supply.

Beef

38. The Kenya Meat Commission (lKIC) and the Livestock Marketing Branch/ T\z\ _£ 1 A: _ _ff __ _£ T _ _ £_ _1 E __ _- -1 _ .*_ __ .- 1 .LMB) ofl thlfe Ministry of Lilvestock DeveuploienL are tne two maJor pUDlIC

intervenors in the livestock sector. KMC operates a marketing and slaughter-house operation, supplying both the domestic and the export markets. in i973,KMC-s monopoly control of the market was relaxed, primaarily so that KLiC couldconcentrate on exports, and competition from private slaughterhouses has grownto the point that KMC only supplies an insignificant portion of the Nairobimarket (the main commercial market). Exports, however, have fallen, and thusKMC's throughput has declined significantly, leading to operating costs wellin excess of both its domestic competitors, and comparable-size operations inthe UK and USA. Y1(IC is thus operating at a loss. Ranchers and large farraers,KMACs main customers, have decreased sales to KI-IC in the past, due to ILC½slow prices and long lag times for cash payments. As a result, it has beenincreasingly difficult for KiXC to obtain high quality animals for export, andbeef exports have declined.

39. The Livestock Marketing Branch was established under the WorldBank-financed First Livestock Development Project (Cr. 129-'KE) to providemarket facilities and organizational structure for the sales of immaturebreeder cattle to fattening operations. In addition to these marketingservices, LMB is also involved in a number of programs to improve livestockmarketing infrastructure, mainly in the northern arid regions. LMB purchasesimmatures, quarantines them, and provides both slaugher stock to KMC and

7/ Schmidt (March 1979).

-62- ANNEX

healthy feeder animals to ranches in the south. LMH currently faces diffi-culties in financing its market development and service functions out of the

insufficient margins it receives from its selling operations.

40. Government fixes beef prices indirectly at the producer level, by

fixing the prices that the Kenya Meat Commission can pay to producers.

These serve as floor prices for the industry, since most producers sell to

private traders and butchers, who tend to give better prices and immediate

payment. Wholesale prices are fixed by grade, with KMC allowed higher prices

than other slaughterhouses. At the retail level, price controls are either

circumvented, by substituting lower grades of meat or are ignored outright,

especially in the higher priced shops. Analysis of beef prices versus overall

food prices (Table 6) shows that even with the substantial increase at the

end of 1979; beef Drices have lagged behind prices for other food items.

41= Tow beef nrices annpear to be contributing to the livestock sector's

poor growth rate. Demand and supply projections for beef in the next decade

vary widely, bu t those done for a studv of the livestock industry commissionedby the Ministry of Livestock Development (the Chemonics Study) estimate beef

demand to increase from the current 135,000 tons per year to at least 197j000

tons in 1990. Supply of beef in 1990 is projected to fall from the present1400,00 tons to 114,000 tons with curren.t Government pricing policies, or to

increase to 181,000 tons with improved policies. This indicates that thereWil.l probably be a shortage of beef, and that beef exrts, hich have already

fallen, will cease. Low beef prices in the past decade have restricted

output ar.du UdiscouragedU investment. LLeriolus of Jdroughft, particularly in the

range areas, have decimated herds, while population growth has put limitations

on the use of hiLgLh andU medium potential 'landu fLor grazing.

42. Government therefore needs to review its policies in the livestock

sector. Beef prices should be freed, at least for the higher grades of beef,

as there may be strong pressure to maintain fixed prices in butcher shops

serving low-income groups. Not only would this be an incentive to increasing

production, but also it would dampen demand for beef, and help stimulatedemand for other meats, especially sheep, goats, poultry and pigs. In the faceof the land constraint, these smalistock offer a greater potential for increas=

ing meat supplies at lower costs than does beef production, especially in the

more arid areas of the country in the case of sheep and goats. Government

also needs to review the roles of the two statutory agencies, the Kenya Meat

Commission and the Livestock Marketing Branch, which are operating underconflicting goals: they are expected both to run viable commercial operations

(with inadequate margins) and to furnish market regulatory and development

services. KMC-s role in stabilizing beef prices is limited because it servesonly a small part of the retail market, although it does provide a floor

price. It is questionable, however, whether KMC's excessive operating costs

should continue to be subsidized when the private sector is providing adequate

services at lower costs. As meat exports are expected to cease in the face ofincreasing domestic demand, KMC should turn its attention towards regulation,supervision and provision of market services. As these activities are similar

Table 6. Comparison of Indices-/ for Food Prices and GazettedMeat Prices for the Period 1971-1979 in Nairobi.

Upper incomea Middle income Lower income Index for Internal parit:ies of beefindex ifood index food index food meat witlh 2/ 3/

prices prices prices bone prices; A7- B-(1) (2) (3) (4)

DeceTTber '71 91.6 94.9 95.8 96.7 1.028 1.014

'72 95.4 97.5 96.5 96.7 1.002 .997

'73 1L13. 0 107.6 107.7 106.6 .974 .99

'74 136.5 128.4 132.2 123.4 .932 .947

'75 1]60.:3 152.5 159.3 123.4 .784 .792

'76 174.2 161.3 166.6 123.4 .737 .75:3

June '77 197.6 180.1 190.0 138.3 .731 .747

"1 '78 215.:L 202.8 215.3 171.7 .813 .821L

December '79 236.7 225.4 238.3 216.7 .928 .935

Source: IBRD, Second Livestock Development Project (Credit 477-KE), Supervision Report

1/ Average of prices in December 1971, '72 and '73 is chosen as base.

2/ Calculated as 3 x (4)(1) + (2) + (3)

3/ Calculated as 2 x i(4)(2) + (3)

-64- ANNEX

to those of LMB, Government should consider combining the livestock regulationand market development activities of KMC and LMB within one institution,thereby decreasing costs and the possibility of duplication of effort. Thenew institution could continue to provide market development and supportoperations throughout the country, but should receive Government funding forits service operations. Marketing activities in the arid and semi-aridregions could also be the responsibility of the new institution or of aself-financing marketing organization.

Milk

43. Milk is marketed through both an informal and a formal channel. Anestimated 60% of total production is retained at the farm, while of the 40%that is marketed, 60% passes through the dairy industries. The remainder ismarketed informally through direct sales by smallholders. The dairy industryis regulated by the Kenya Dairy Board, but Kenya Cooperative Creameries (KCC),a private producer cooperative, has a virtual monopoly of milk supplies, andreceived 90-95% of milk marketed in the formal sector. KCC receives most ofits milk from large farmers and cooperatives, and is only a residual buyerfrom smallholders, who supply KCC only after local demand is met at KCC's pricelevel. Milk intake by KCC has been fluctuating around a declining trend. Itranged between 219 and 273 million liters between 1974/75 and 1978/79, whileprojections for 1980/81 indicate an intake level of only 220 million liters.Drought periods have been partially responsible for these fluctuations, butanother important factor has been milk pricing.

44. In 1971/72 KCC introduced a uniform system of Dricine throu2hout thecountry. This had two effects. First, it hid transport costs, encouraging amisallocation of resources by promoting milk production in areas removed frommajor consumption centers. Uniformity of temporal prices led to supplyfuiirtuations: official nrices were too low to cover nrndiuction costs in thedry season, yet too high to curb surpluses in the wet season. 8/ Officialproducer prices have nlco lagged hphind tho food and con odnit nprirc inAices,

and more importantly behind the price index of agricultural inputs. In aneffort tn stimu,latp milk nroduirrion, GovPrnmPnt inrrpn,CPd nrirc-P by 42% in

September 1980, from KSh 1/30 to KSh 1/85 per liter. In December 1980, a dryseason premium of KSh -/30 per liter was announced, which will begin inJanuary 1982, and be in effect from January to April annually. These priceincer.tives should stimulate milk production anA increase delivezies to KCC.

Ir.put Distribution

45. Problems in input distributi'on, epecially the titmely delvery offertilizers and pesticides and the availability of credit, have affectedcrop y e'D £CLs .F ertilizer use I I Ias VUeeiLLg iL KeLlyd, uue In parL to

8/ A study of milk pricing done at the Institute for Development Studiesshowed tne introduction of uniform pricing led to an increase in theseasonality of milk supplied to KCC. See Hopcraft and Ruigu, (1976).

the widespread adoption of hybrid maize, and in part to an expansion of

investment in cash crops. Fertilizer imports are licensed by Government.

The Fertilizer Advisory and Monitoring Committee estimates total demand and

sets import quotas, which are ailocated among numerous importers and distri-

butors. Since the estimated demand is based on rough projections of culti-

vated land, there is no assurance that imports will be sufficient. In addi-

tion, the allocation of quotas among many importers results in a small average

size of shipments which raises costs. in some cases, quotas have been so

small that importers did not import. Fertilizer is distributed through

private traders and cooperative organizations as well as through crop produc-

tion and marketing boards, the MoA and producer cooperatives.

46. Prices are set by the Government, with ceilings on margins to

importers and distributors. At present fertilizer is not subsidized although

a subsidy has been proposed. However, there is little information on the

marginal productivity of fertilizer use and farmer demand to guide policy

makers in setting appropirate subsidy levels. The major complaint by farmers

is late deliveries of fertilizers, which affects yields. While large farmers

or farmers involved in specific crop production programs appear to have fairly

good access to distribution networks, smallholders have more difficulty. As

intensification of land use becomes more important, Government will need to

improve the fertilizer distribution network, both to expand it, and to ensure

that adequate quantities are available in time for each growing season.

47. Intensification of and the introduction of improved crop production

techniques will require more efficient and widespread distribution of credit.

There are four main sources of credit to the agricultural sector in Kenya.

The marketing boards (Tea, Pyrethrum, Coffee and Cotton) provide seasonal and

medium term credit for farmers involved in their crop specific campaigns.

Input suppliers, such as the Kenya Farmers Association and Kenya Breweries,

provide seasonal credit to customers of good standing for the purchase of

inputs. Commercial banks are now required to direct credits to the agri-

cultural sector eqnivalent to 17% of their total annual lending. However,

these banks supply mainly short term loans to medium and large scale farmers,

farming com-_nies and agro-indlistries. The main agricultural lending insti-

tutions are the Agriculture Finance Corporation (AFC), a statutory body owned

by the Kenyar. Government , and the nonperative Bank of Kenya (CBK). Both the

AFC and CBK serve as the credit channel for many Government projects. CBK

finances loans to cooperative union.s and snrcities, who on-lend to small-

holders. The AFC provides long, medium and short-term credit to both small

andu large=scale fLarmers. Long-term loans aepirlyfrlanA acquiisitionn

medium-term loans for on-farm development, and short-term loans for seasonal

crop inputs. AFC has also been the channel for Government seasonal input

credit schemes: the now defunct Guaranteed Minimum Return Scheme, and its

replacement, the new seasona± creuiLt sc.eme.

48. The poor quality of information on credit in Kenya and its fL Uni

bility make it difficult to analyze its effectiveness. The major problem

seems to be the limited access of smallholders to credit, especially those who

do not have title to their land or are not participating in crop-specificproduction programs. In these programs, credit is extended on the basis ofthe crop as security and loan repayments are deducted from the output marketedthrough the crop authorities and cooperatives. As land secures loans in othercases, farmers have difficulty in obtaining credit in areas where landadjudication has not been completed or where de facto subdivision has not beenlegalized. Thus, accelerated land adjudication and legalization of sub-division would increase access to credit and facilitate expansion ofsmallholder production.

49. The sudden suspension of the GMR scheme in 1979 affected farmersgrowing more than 15 acres of a crop, leaving them without a source of seasonalcredit. Although a new scheme has been introduced, regulations, standards,

and payback terms have not been decided. Unless the credit scheme is finalizedbefore the nlanting seaRon, this may have serioiis repnercssinns nn the 19M1

food supply, as maize and wheat producers are among the major beneficiaries ofGovernment seasonal credit programs= Inadequate levels of credit also mean adecline in yields, as farmers find it difficult to finance fertilizers andother crop Inputs essentIal to high-xyIeldIng maIze varieties.

50. Another major problem in creddit programs has been a very poorpayback rate by farmers, not only for AFC credit, (which is partially a resultof C Ats institutior.al 'limitations, ar,d its inability to adequately monitor

its large lending program), but also for credit from other sources. This willa'lso affect the suppjLy ofL credit to t,L.e sector, anu will put strains onGovernment's financing of seasonal credit, unless administration is improvedanu more rLigorous penatit'Les Lor nonLrepayment are 'LnstLtuteu.

D. Policies for Promoting Market Efficiency

51. The underdevelopment and imperfections of the market system in Kenyahave been the major justification for Government regulation of marketing.Market underdevelopment, notably the lack of uniform weights and measures, andquality standards, poor market infrastructure, and limited market transparency,makes competition difficult. However, Government policies have often intro-duced new problems rather than removing constraints to market efficiency. Foreffective remedy of market distortions, Government will have to assess thecauses of those distortions and direct marketing policies to remove them.

52. Designing appropriate intervention policies requires definition ofthe roles the various market participants - Government, parastatals, coopera-tives, and the private sector - will play in both the distribution of inputsand the marketing of output. The Fourth Development Plan, as well as the twopreceding development plans, advocates the development of the private sectorand competitive markets. In practice, however, the public sector continuesto predominate. In a competitive market situation, the role of Governmentshould be to provide what are essentially public goods and services whichthe private sector cannot (or will not) provide, and which increase marketefficiency and promote market development. Government intervention couldinclude such measures as marketing legislation (free trade acts, sanitarycodes, weights and measures standards); provision of market services

(price and supply information, inspection services); investment in market

infrastructure; food security reserves and planning; and liaited price support

intervention.

53. While the goals of Government control of commodity prices have been

to guarantee fair prices to both producers and consumers, and to stabilize

supplies, in practice price intervention has contributed to market distortions.

Because of the range of ecological and climatic conditions in Kenya, and the

limited up-to-date knowledge of existing farming systems and production

techniques for different types of crops and farms, actual production costs

are not used as a basis for setting prices. Moreover, despite the variation

in farming conditions, producer prices are uniform both seasonally and geo-

graphically. Geographically uniform and incorrectly set price levels create

distortions in the economy, including misallocation of resources and transfer

of producer and consumer surpluses. Available evidence 9/ shows that official

prices in Kenya for maize and wheat have tended to benefit large producers,

who market mainly through official channels. Evidence from other commodity

studies indicates that, at least within the last decade, smallholder producers

of milk, maize and beef would have benefitted more from a system of floor

prices and the cost to Government would have been less. It appears, moreover,

that pricing policies have not primarily benefitted smallholders; coupled

with distortions introduced by marketing controls, these policies seem to have

taxed, not assisted, the rural sector. In light of these problems, policy

restructuring is essential for equity and efficiency.

54. Policies should therefore be directed towards correcting sources of

distortions, including lifting maize movement controls, as well as improving

market infrastructures. Distortions caused by inadequate or excessive pro-

ducer prices would be reduced if Government would intervene only minimally in

domestic marketing, ideally through setting floor and ceiling prices, and

serving as a buyer and seller of last resort for major commodities. A flexi-

ble system of floor and ceiling prices would allow domestic prices to fluctuate

seasonally and regionally within a margin. This system would give some protec-

tion to producers and consumers while allowing market forces to balance supply

and demand. A floor price system minimizes the inefficiencies inherent in

establishing a single price throughout Kenya-s diverse agricultural regions,

as yields; nroduction costs, and harvest dates vary widely. In addition, the

system is easier to establish, administer and control than a fixed price

system. Under such a system, Darastatals and marketing boards could still

serve as guaranteed buyers at the floor price and suppliers to consumers at

the ceiling price, while concentrating their attention on other activities

such as market services, market intervention, and managing food security

stocks.

55. In the past, one major role of the parastatals has been to sunnly

food to urban areas at stable prices. Under a free market system, the NCPB

could still guarantee supplies to urban consumers by purchasing maize nn

9/ Sharpley (1980).

-68- ANNEX

the open market and selling it wholesale to the mills as it does now. The

onfly Uilierence would be that NICPB operations wou.LdU be in competition with the

private sector and at a variable (within a margin), rather than a fixed price.

To increase security ol supplies, the NCPB could enter into contracts with

large scale growers, as well as conduct buying operations in major rural

markets. Government could decide directly how much (if at all) to subsidize

consumer prices. Direct subsidization would be easier to control and less

inefficient than the current system of hidden subsiaization, under wnich

Government subsidizes consumers through budgetary grants to cover NCPB defi-

cits, and producers subsidize consumers through inadequate prices, or vice

versa, depending on the level of fixed prices in relation to the costs of

production. As indicted in paragraph 24, the Government recognizes that there

are costs inherent in market regulation and intervention, and that policy

makers need to decide both how much the Government is willing to allocate to

such activities and how to use the resources budgeted most effectively and

efficiently to achieve the policy goals.

56. Market development would assist the private sector in improving

market services and increasing their investment in market infrastructure.

Such a policy is more efficient and less costly than trying to establish and

subsidize monolithic official marketing agencies throughout the country. The

rural sector would also benefit: not only would market efficiency increase

lowering costs, but also the resources which went toward administering and

enforcing fixed prices and market controls could be better invested in rural

development programs. Certainly Kenya's economy, and specifically its agri-

cultural sector, is sophisticated enough to warrant increased emphasis.on

allocating Governmen talent and resources to tasks with higher priority than

administering controls.

IV. INSTITUTIONAL ORGANIZATION AND CAPABILITY

57. Institutional organization and capability affect policy performance

in the agricultuiral sector. In the Ministry of Agriculture and Ministry of

Livestock Development, as well as in other Government agencies, policy imple-

mentation is hampered bv the short-term focus of policy formulation and

decision making. Although the Plan provides the framework for long-term

planning, long-term issues, as well as the medium-term goals of the Plan, tend

to be subordinated in the need to respond to immediate problems. The current

food deficit situation is an examnple of Government concentration on-the

short-term need to increase food supplies, while losing sight of the causes of

the crisis, and the long-term implications of a noli!v of domestic food

self-sufficiency. The more difficult long-term structural issues relating

to food and agricultural policy include-

(1) M the clari ation of tIh role of Government,

parastatals, cooperatives and the private sector in theA4 di-sr-ut-on of agricultural inputs and marketing of-output;U.L DLL ~uULI JL 'JJ. 05&…- 0

A ?,ThTVV

(2) Pricing: the nature and extent of Government price control,the costs and benefits of intervention in this area, and thelevels and relation of producer to consumer prices;

(3) Land Policy: the promotion of small or large firms, sub-division, the future of settlement schemes and group farms,redistribution, and land use regulation;

(4) Trade Policy: the trade-off between production of agriculturalcommodities for export and food for domestic consumption, inview of scarce supplies of land;

(5) Agricultural Development: the role of agriculture in economicdevelopment, the place of food policy in overall agriculturalpolicy and the long-run rural/urban distribution of population.

Lack of clear direction on these issues, as well as poor integration betweenthe Ministry of Agriculture-s planning and operations divisions, delays actionon important policies.

58. Another major problem is the lack of policy coordination in a numberof areas affecting agricultural production. The large number of official,

parastatal and private organizations supplying inputs and services to thesector and marketing outputs compounds the problems of effective policyformulation and implementation. Recognizing this problem, the draft Food

Policy paper proposed the establishment of five task forces to define anddevelop programs in the areas of increasing food supply and to assess long-

term policy issues. Membership of the task forces would include all relevantministries and parastatals. A proposal from the UNDP/FAO Market DevelopmentProject for improving inter-institutional coordination of agricultural andfood marketing and pricing policies. and related programs of action is alsounder discussion. This proposal calls for a high level National Council ofCommodity and Food Marketing. suDDorted by advisory committees and an inter-institutional Commodity and Food Marketing Development Center, to decidePolicipe and nrograms related to commodities and food marketing developmentand pricing, including food security schemes. One benefit of such an institu-

tLion would be to nrouide a fociiq for food nolicv actions- and the necessarylonger term view of agricultural development issues. However, unless thecouncil iscreated at a high enough level, nreferablv at the ministerial or

permanent secretary level, it runs the risk of being another short-termsolution of a pressing polm

59. A 14-A 4-,r-4-tu-ional constraint 4 c th-e shnrt-age* of qunlifieh,d

personnel in the areas of policy preparation and analysis, and in operations.Tn orAer to overcome tlhe const-ra int of weak policy analysis, Government

requested assistance from a group of international donors, including the WorldBank, in 1976. T Lhe resuLt was thLe Technical Asistance Pool (TP which

provided a number of expatriate staff to strengthen the Planning Division ofthe Ministry of Agriculture. Tle impact of thLe staff lhas been limited,

-70- ANNEX

however, due to the limited access of TAP advisors to high level policy

makers, the deployment of TAP personnel on operational matters rather than on

policy advice and analysis, and the lack of counterpart training by the TAP

participants. There are also shortages of well-trained personnel in the areas

of management, policy preparation and analysis and in operations, specificallyeconomists, analysts and field staff, in part due to competition from the

private sector.

60. The operations divisions, especially the extension services, also

suffer from staff problems, notably the generally poor qualifications of many

extension agents and their lack of motivation to the organization of the

Ministry of Agriculture and its incentive structure. The World Bank financed

Integrated Agricultural Development Projects (IADP) - (Cr. 650-KE/Ln. 1303-KE)

and IADP II (Cr. 959-KE) - have contributed to improving the extension system,

but it will continue to need support, especially as it expands to meet the

needs of more smallholders. Programs to raise agricultural production and

increase land use intensity will require improvements in the Ministry of

Agriculture's extension capacity and operating efficiency. Staff performance

in this area, as well as throughout the Ministry, needs to be strengthened and

productivity increased.

61. The Ministry of Agriculture-s operational efficiency has beenaffected by budgetary and financial management weaknesses. In the past few

years, the Ministry has experienced problems in spending its budgetary

allocations on time, due in part to institutional problems, with the result

that allocations are cancelled and reduced in subsequent years. In the last

round of budget cuts necessitated by the worsening economic situation, there

appears to have been little coordination between the Ministry of Agriculture

and the Ministrv of Finance in determining which Drograms to cut. An ongoing

problem is the reduction in the recurrent budget, most notably for transport,

which is vital for the effectiveness of the extension service. These cuts will

directly affect the implementation of many projects. More planning is needed

in the budgeting exercise hoth to consider the effect of current development

expenditure on future recurrent budgets for agriculture, and to assess theimpact of budigeot reaurt1ons on the programs of the Ministries of Agriculture

and Livestock Development.

V. POPULATION, EMPLOYMENT AND LAND ISSUTS

62. At the estimated current growth rate of 3.9%, Kenya's population will

double by the end of this century. This has three implications for agricultural

development. First, agricultural development, and especially food production,

must achieve a growth rate exceeding th.at of population growth. Secondly,

because of the limited absorptive capacity of other sectors in the economy,

agriculture will Ihave to proviUe employmer.t opportunities for most of the new

labor force entrants. Thirdly, Kenya's already limited supplies of good

quality arable land will come under i'Lnreasirng pressure, and a definitive land

policy will be essential for continued agricultural growth.

ANNEX -71-

63. Growth of food production has not kept up with population growth inthe 1970s; 11Ading to dprlinin, npr ranit2i food oitpnit= The intrnoduit4o- of

hybrid maize and the expansion of production in the high and medium potentialanroea allnwged foodA production to keep pace with population growth unti'l 1072,k' - - - - - - - -- -- - -LI k1.L* &tSULU L I S.

when growth of production began to lag. The widespread adoption of hybridmaize delayed the impact of high population growth on food supplies; even aslate as 1978, Kenya considered the possibility of being a net exporter ofmaize. Milk, beef and wheat p-Ao--4,-o, howeve 14r, 1 -- w a--a t 4in t-h

first part of the decade, have not increased nearly as rapidly as domesticAemanA. Because the supply of arable lanA is limitedA In Kenya, f.urthL!ierproduction increases will depend on increasing the intensity of land use,whi4ch is more difficult than simply expandXng cultivated area.

LLLI /. A _ .3. 1.L _ I _ J ._U±tJ. I L1 . _L 4. t _d _ .

uLt. Lt; t;,Lru±Lura L pLrUUoL±uLI o 1IIlU and epoymentL aLnL aL IIcrLebUe U X three

ways: (a) by expanding cropped area; (b) by shifting to crops with greatervalue and greater labor input; and (c) by intensifying land use. Availableland for cultivation is rapidly approaching its limits in Kenya. While thereare some limited possibilities of increasing the supply of arable land throughirrigation, this method is costly (between US$7,000 and US$10,000 per hectare)and there can be technological problems. Land pressures have led to clearingof forests, but further reduction in forest area may lead to environmentalproblems, as well as reducing the availability of forest resources for otheruses. Although a good source of employment, shifts in cropping patterns arerestricted by considerations of the food/non-food crop balance, comparativeadvantage, and the importance of agricultural exports to the economy. Intensi-fication of land use offers the greatest opportunity in the short run forincreasing production and employment, but will not be adequate to absorb allthe projected new entrants to the labor force. Therefore, all three meanswill have to contribute to increasing production and employment, yet it wouldbe infeasible to depend on these measures alone. Large and even medium-sizefarms will have to be subdivided and land redistributed.

65. Population growth and increasing pressure on land supply will causethe issue of land redistribution to emerge again. The debate centers aroundthe production benefits of large farms versus the employment benefits of smallfarms. This issue has been debated intensively in the past, especially duringthe post-Independence period when many large European farms either were brokenup and sold to smallholders or became group farms under Government settlementschemes. Proponents of large farm benefits claim that large farms are thebackbone of the Kenyan economy, providing most of the marketable surplus,foreign exchange, and improved agricultural technology for the rest of theeconomy. Opponents claim that smallholdings would produce the same amount ofoutnut; while providing substantially more employment and improving incomedistribution. After the land distribution and settlement programs of the1960s, Government has been reluctant to make a clear nolicv decision on thisissue. Although land registration and adjudication programs have proceeded,G.overnment has not vet leg21ized subdivision of land holdings.

66. Surveys of Qsttlempnt farms uindPrtakPn in the 1960s showed thatgross output per acre was strongly inversely correlated with holding size,that employment per acre was strongly associated with holding size (decreasing

-72- ANNEX

as the size of holding increased), and that settlement farms were more effi-cipnt in the use of innits than were large farm. These findlngs should hp

interpreted cautiously, as land quality may have produced some bias in thesurvey. Ilowever, data From Tnteurated Rural Survey I (IPS-I) show that at the

national level, output and employment are closely linked to size of holding:on holdings under 0.5 hectares, output per hectare is 19 times greater andemployment 30 times greater than on holdings over 8 hectares. l4hile landquality affects this somewhat, statistical analysis showed t hat holdingL size

consistently explained over 90% of the variation in employment per hectare,anA in most agro-ecologi.al zones holA4ding sizeexp4laCin4 tw or U Lf

the variation in output per hectare. The conclusions which can be drawn areLtLat LLL cLp-arison wit Llarge fiarms: (1 s 4 La f4 arsu on average proAuce a,

least as much output per acre; (2) small farms generate more employment; and(-J) s-LaL[ I'arms are at 'Least as efficient in totaLL resource use. nowever,there is also evidence that some activities, such as production of wheat, seedmaize, coffee, breeding livestock and sisal, anrd ranching, ale more efficienton large farms. But the implications of these results for land policy are

.. . , . .. , ., . .. . . - - - - - - - --,-.-, , . .- Ithat first, land redistribution could have a signiricanL effect on outpuL andemployment; second, that the intensification of production will help offsetsome of the effects of population growth; and third, that subdivision shouldbe allowed, even on small farms.

67. Kenya must consider the effects of expanding domestic food cropproduction on its export earnings. The FDP and Food Policy paper call forbroad self-sufficiency in domestic food production, without sacrificing exportcrop production and foreign exchange earnings. Limited prospects for rapidincrease in manufactured exports means that the economy will continue to relyon the traditional export commodities for foreign exchange throughout thedecade. A study of comparative advantage in Kenya agriculture 10/ indicatesthat the present structure of production is close to what it should be in mostregions of the country. However, when Government policies distort marketsignals, through pricing or other incentives, development along the lines ofcomparative advantage may also be distorted. In the case of Kenya, thecurrent efforts to expand national food supplies may come into conflict withthe linked policies of maximizing comparative advantage and export earnings.In more simple terms, it may be more efficient and less costly to the economyfor Kenya to grow some export crops and import some food commodities in whichthe country has comparative advantage in the long-term. Moreover, for certainfood crops, such as wheat and rice, domestic production is restricted by theavailability of suitable land, and cannot meet domestic demand. Thus, anyattempts to expand local production would be quite costly, and some importswould still be required to at least partially satisfy local demand. Theproblem of food and non-food crop production requires consideration of thedirection in which the long-run development of the agricultural sector shouldbe heading, as well as short-term policies to increase production. Unfortu-nately, the land constraint in Kenya means that these questions will have tobe resolved much sooner than in many other African countries.

10/ See IMcLoughlin Associates, Ltd. (1977).

ANNEX-

BIBLIOGRAPIIY

Aldington, T. J. "Domestic Resource Cost." Republic of Kenya, viinistryof Agriculture, 1979.

. "The Moioin fPrfr - in Agricu'lture rl-ar`ets ain-ILL IL' ULIL-LLULJI 'J6 ~L M4. LLUW.1LIL %C LLL Ltr, L&LU~r1L~bdiU

Its Control." Price and Marketing Controls in Kenya, J. T. ?lukui (editor).IDS Occasional raper No. 2, 'L , UnivesLbty of Nairobi, 1979.

Bate, Mialcolm D. and Ernst Lutz. Price Distortions in Agriculture and LheirEffects: An International Comparison. World Bank Staff Workinb Paper,No. 359, October 1979.

Casley, D.J. and Marchant, T. J. "Smailholder Marketing in Kenya." ProjectWorking Document, UNDP/FAO Marketing Development ProJect (KEN 75/005),May 1979.

"Fertilizer Marketing in Kenya." Technical Report, UNIDP/FAO Marketin, Develop-ment Project (KEN 75/005), Phase I, September 1978.

Gsaenger, Hans G. and Schmidt, Guenter. "Decontrolling the Iiaize AarketingSystem in Kenya," Discussion Paper No. 254 (Revised Version), IDS,University of Nairobi, March 1977.

Heyer, J.; J. K. Maitha and W. Ai. Senga. Agricultural Development in Kenya:An Economic Assessment. Nairobi: Oxford University Press, 1976.

Hopcraft, Peter. "Milk Pricing in Kenya. The Case of a bulky, PerishableCommodity with Seasonally Varying Production Costs." IDS DiscussionPaper No. 266, IDS, University of Nairobi, July 1978.

and Ruigu, George. "Dairy larketing and Pricing in Kenya:

Are Milk Shortages the Consequence of Drought or Pricing Policies?" IDSDiscussion Paper No. 237, IDS, University of Nairobi, June 1976.

"Institutional Coordination and Technical Support for Food and BasicCommodities Marketing Development in Kenya," UNDP/FAO Marketing Develop-ment Project (KEN 75/005), March 1978.

"Issue Paper on Agricultural Marketing Development Policies and Pro-rammes.UNDP/FAO Marketing Development Project (KEN 75/005), February 1978.

Jansen, Doris J. Agricultural Pricing Policy in Sub-Saharan Africa in the1970's. Study prepared for IBRD, December 1980.

Kersten, Lutz. "Sugar Narketing in Kenya: Development and Possible PolicyAdiustments." Development Project (KEN 75/005), Phase I, February 1979.

"Maize Harketing and Pricing in Kenya." Preliminary Draft, UNDP/FAO MarketingDevelopment Project (KEN 75/005), undated

-74- ANNEX

Matthes, M.C. "Livestock Marketing in Kenya." UNDP/FAO Marketing DevelopmentProject (REN 75/05, M^ .N ay- 1979.

Mbaja, G. O. and de Graaff, J. "MLlk Marketing and Pricing in Kenya: TheRole of Cooperatives." UNDP/FAO Marketing Development Project (KEN75/005), Ministry of Cooperative Development, August 1978.

McArthur, I.D. and Smith, C. "Price and Marketing Policies on Meat and Eggs.Price and Marketing Controls in Kenya, J. T. Mukui (editor). IDS Occa-sional Paper No. 32, !DS, University of Nairobi, 1979.

Peter McLoughlin Associates Ltd. Kenya: Prices and Subsidies Case Study.Final Report (2 volumes). Study prepared for IBRD, June 1977.

"Meat Wholesale Mar-ting in Nairobi." UNDP/FAO Marketing Development Project(KEN 78-006), Phase.II, January 1980.

Mukui, J. T. Price and Marketing Controls in Kenya. IDS Occasional Paper No.32. IDS, University of Nairobi, 1979.

"Policy Issues for Livestock Marketing." Discussion Paper, UNDP/FAO MarketingDevelopment Project (KEN-78/006), Phase II, November 1979.

Ruigu, George. "Marketing and Pricing Policies in the Kenya Dairy Industry."Price and Marketing Controls in Kenya, J. T. Mukui (editor). IDS Occa-sional Paper No. 32. IDS, University of Nairobi, 1979.

Schmidt, Guenter. "Effectiveness of Maize Marketing Control in Kenya." Paperprepared for the Seminar on Price and Marketing Control in Kenya at IDS,University of Nairobi, 26-29 March 1979.

. "Maize and Beans in Kenya: The Interaction and Effective-ness of the Informal and Formal Marketing Systems." TDS Orrainn1 PaperNo. 31. IDS, University of Nairobi, 1979.

Sharpley, Jennifer. "Pricing Policies and Rural Incomes in Kenya." DERAPWorking Panpr A-174- The Chr. Mirhpl1pn TnRtit,tp. Rpropn! Anril l9Rf.

Smith; L. D. "Low Tncome Smallholdpr Marketing and Consumption Patterns -

Analysis and Improvement Policies and Programmes." UNDP/FAO MarketingDevelopment Proiprt (KEN 75/005), pntepmhpr 1978.

Tidrirfk Gene= "Issues in Agricltu-,, nl Delonnment" Study prepared for…enya BasicEconomic…R.ep..or…, I-BRD forthcomin

Kenya Basic Economic Report, IBRD, forthcoming.

.75= STATISTTCAL APPENDIX

~~~~f lttt.lfl vl _, AtNflIfllR wTfl *f~ff A . wni mTh

STATISTICAL APPENUIX

Table No. Contents

POPULATION, EMPLOYMENT AND WAGES

1.1 Population Distribution, Arable Land Area and Density by Provinces,

1969 and 19761.2 Urban Population, by Province1.3 Economically Active Population by Age and Sex, 1960 and 1970

1.4 Total Wage Employment by Industry1.5 Wage Employment by Private and Public Sector1.6 Average Wage Earnings Per Employee1.7 Average Real Wage Index

NATIONAL ACCOUNTS

2.1 Gross Domestic Product by Industrial Origin (at current prices)

2.2 Gross Domestic Product by Industrial Origin (at constant 1972 prices)

2.3 Use of Resources (at current prices)2.4 Use of Resources (at constant 1972 prices)

2.5 Capital Formation by Industry (at current prices)2.6 Capital Formation by Industry (at constant 1976 prices)

2.7 Gross National Product and National Disposable Income

BALANCE OF PAYMENTS AND FOREIGN TRADE

3.1 Balance of Payments Summary3.2 Balance of Trade3.3 Exports by Destination3.4 Imports by Country of Origin3.5 Total Exports by Broad Economic Category3.6 Total Imports by Broad Economic Category3.7 Export and Import Price Indices3.8 Export and Import Quantum Indices

3.9 Value, Volume and Prices of Main Exports

External Debt

4.1 External Public Debt Outstanding Including Undisbursed as of

December 31, 19794.2 Service Payments, Commitments, Disbursements and Outstanding

Amounts of External Public Debt4.3 Terms of Loans Outstanding (Including Undisbursed) at Year End

4.4 Interest Structure of Loans Outstanding (Including Undisbursed)

at Year End4.5 Maturity Structure of Loans Outstanding (Including Undisbursed)

at Year End

4.6 Average Interest Rates and Maturity on Government Loans Outstandingat Year End

STATISTICAL APPENDIX =76=

PUBLIC FINANCE

5.1 Central Government Accounts

5.2 Central Government Current Revenue5.3 Functional Classification of Central Government Recurrent Expenditure

5.4 Functional Classification of Central Government Development Expenditure

MONEY, BANKING AND PRICES

6.1 Summary Accounts of the Banking System6.2 Consumer Price Indices6.3 Principal Interest Rates

6.4 Effective Exchange Rates6.5 Relative Consumer Price Index

AGRICULTURE

7.1 Gross Marketed Production (At Current Prices)

7.2 Gross Marketed Production (At Constant 1976 Prices)

7.3 Principal Crops, Production for Sale7.4 Average Gross Commodity Prices to Farmers

7.5 Gross Marketed Production from Large and Small Farms7.6 Agricultural Marketed Production Indices

7.7 Agricultural Quantum and Price Input Indices

7.8 Terms of Trade for Agriculture7.9 Agricultural Staples, Movements in Prices7.10 Dairy Production

7.11 Livestock - Purchases for Slaughter by Parastatal Bodies7.12 Large Farms, Hectares under Principal Crops

7.13 Large Farms, Land Utilization7.14 Distribution, Size of Holdings7.15 New Agricultural Credit Issued by Type of Farmer

INDUSTRY

8.1 Large Scale Manufacturing Firms and Establishments: Number of Firms

8.2 Large Scale Manufacturing Firms and Establishments: Number of

Persons Engaged8.3 Large Scale Manufacturing Firms and Establishments: Labor Costs

8.4 Large Scale Manufacturing Firms and Establishments: Gross Product

8.5 Large Scale Manufacturing Firms and Establishments: Input Costs

8.6 Large Scale Manufacturing Firms and Establishments: Value of Output

8.7 Quantity Index of Manufacturing Production

TABLE 1.1

KENYA: POPULATION DISTRIBUTION. ARABLE ]LAND AREA AN) DENSITY BY PROVINCES, 1969 AND 1976

Total Population Area (Sq. km.) Density per sq. km.

1969 1976 Total Land Area Aralble Land Total Land Area Arable Land

(000) 1969 1976 1969 19I76

Kenya: 10943 13828 569249 99050 19 24 103-' 140-'

Nairobi 509 735 684 - 745 1C75 - -

Central Province 16.76 2085 l317:3 9240 127 158 181 226

Coast Province 944 1199 8304:L 1.1480 11 14 61-/ 104 -'

Eastern Province 190)7 2342 15454() 26920 12 15 71 87

Northeastern Province 246 263 126902 - 2 2 - -

Nyanza Province 2122 2732 :L2525 12520 169 218 169 218

Rift Valley Province 2210 2751 70162 31480 31 39 70 87

Western, Province 1328 1722 822.3 7410 162 209 179 232

1/ Excludes Nairobi and Mombasa Municipalit:ies.

2/ Excludes Mombasa Municipality.

Source: Central Bureau of Statistics, 1969 Population Census, Volume IV - Analytica.l Report, H

and estimates derived from Ministry of ]Lands and Settlement, Human Settlements in Kenya - >

A Strat Uy JEor IJrban and Rural :Deve:lopent, 1977.

TABLE 1.2]KENY.A: URBAN POPULATION, BY PROVINCE- H

fln

No. ofTowns Urban Percent

Province (more than 2 ,000 pop.) Population Urban

Centra:L 6 451,855 2.,7

Coasta:L 7 36,579 5.2

Eastern 7 37,96'5 2.0

North-Eastern 0 0 0

Nyanza 4 4:3,829 2.1

Rift Valley 19 148,576 6.7 m

Western 2 10,645 0.8

'Total: 1962 342/ 743,00()

1969 482- l,080,0003

1/ Excluding Nairobi and Mombasa.

2/ Including Nairobi and Mombasa..

Source: Kenya. Population Censuses 1962 and 1969.

TABLE 1.3KENYA: ACTIVE POPULATION BY AGE AND SEX. 1960 AND 1970

(IN PERCENT)

I:TEM 1960 19 70

Tot:al Male Femiale Total Male Female

0 - 9 6;2 0.0 0.0 0.0 0.0 0.0 0.0

10 - 14 63 30.4 37.° 2?.0 26.8 ?2.2 21.4

15 - 19 64 62.8 83.7 42.0' 59.7 79.0 40.5

20 - 24 65 71.6 977 '.!o0 70.2 95.8 44.2

25 - 44 66 73.4 98.° 72.9 98.4 47.4 s

45 - 54 6 7 75.3 98.C, 2.1. 74.8 98.1 52.2

55 - 64 68 72.4 96.2 '2.0 71.8 94.8 50.5

65+ 69 49.7 73.' 2. 0 47.5 59.6 28.7

i TO1AL LABOR FORCE ,70 41.2 54.5 28.2 40.6 53.8 27.4

TOTAL. IN THOUSANDS 71 3340.0 :2179.0 1151.0 4570.0 3033.0 1536.0

SOURCE: ILO, L.ABOR FORCE PROJECTIONS 195C-2000, VOL. 2. 1977.

zt1-

En

'-4

TABLE 1. 4

KENYA: TOTAL WAGE EMPLOYMENT B INDUSTRY

(IN THCtUSANiDS r

ITEM 1972 1973 1974 1975 1976 1977 1978 1979

- _-- -- --------------------- - -- - - - -- - - - - -- - - - - - - - - - - - -- - - - - - - - - - - - -

AGIRICULTURE AND FORESTRY: 1 246 -9 265.4 261.1 240.6 243.0 210. 3 243.0 254.5

PRODUCTION IN LARGE FARMS 2 187.2 208.2 2Q0.9 184 5 1135 5 203.1 138 .4 1130.B

MINING AND ODJARRYING 3 3.2 3 1 3.9 3.5 3.9 3.4 2.5 2 6

MANUFACTURING, OF WHICH: 4 84 8 94.4 101.2 100.7 1 08.8 117.9 130.1 1:38.4

SPIRITS, BEER AND TOBACCO 5 3.2 3. 2 3.5 3.5 4.2 4.4 4. 1 4.7

TEXTILES 6 3.9 4.8 5.3 5.3 6.7 7.4 9.9 12 1

CORDAGE, ROPES AND TWINE 7 3.3 3.4 3.3 3.4 1.2 1.2 3.6 2.8

'WEARING APPAREL 8 3.8 3.8 4.4 4.3 4.8 4.9 5.0 5.3

5AWMILLS & OTHER WOOD MILL5 9 6.0 6.2 7.4 7.5 7.6 7.0 8.1 8.3

PRINTING AND PUBLISHING 10 3.9 4,1 4.4 4.4 4.5 4.0 3.9 4.2

RAILROAD EQUIPMENT 11 12.4 14.1 12.5 12.0 12.0 t3.3 12.9 12.7

ELECTRICITY AND wATER 12 5.1 5.4 5.7 7.7 8.6 9.7 9.3 9.9 0

CONSTRlJCTION 13 37-6 41.2 44.4 40.5 47.1 48.9 55.3 151.3

TRADE. RESTAURANTS & HOTELS 14 47.6 A6.6 57.0 53.7 60.2 62.6 62.6 i68.7

TRANSPORT AND COMMUNICATION 15 45.3 44.1 46.3 45.5 47 .7 48.1 50.9 54.8

FINANCE AND INSURANCE 16 17.5 20.3 21.9 24.1 25.4 29.7 32.0 35.7

COMMUNITY & OTHER SERVICESI CF 17 231.8 240.9 284.6 302.7 312.8 322.4 325.9 346.4

EDUCATION SERVICES 18 79.2 80.4 107.3 116.2 118.8 124.8 120.1 128.1

DOMESTIC SERV[CES 19 38.0 40.2 48.2 54.4 55.0 55.5 56.5 55.1

TOTAL WAGE EMPLOYMENT IN

FORMAL SECTOR 20 719.8 761.4 826.2 819.1 857.5 902.9 911.6 972.3

SOURCE: CENITRAL BUREAU O'F STATISTICS. STATISTICAL ABSTRPACTS.

TABLE 1.5KENYA: WAGE EMPLCIYMENT BY PRIVATE AND PIUBLIC SEC'TOR

(IIN THCIUSANIDS)

ITE M 1972 1973 1974 1975 1976 1977 1978 1979

PRIVATE. 21 432.8 4152.4 496.2 476.7 501.1 526.5 5:21.6 547.5

MINORITY SHAREHOLDING BY THEPUBLIC SECTOR 22 20.5 25.4 26.0 :27. 3 :30.8 :35.0 :38.4 42. 1

INCORPORATED COMPANIES 23 232.0 259.6 292.1 281 .7 272 .0 231. 1 483.2 505.4LOCAL. PUBLIC 24 0.0 0.0 0.0 0.0 :37. 2 41.9 47.1 50.6LOCAL. PRIVATE 25 0.0 0.0 0.0 0.0 162.4 168.9 172 8 176. 3FOREIGN PUBLIC 26 0.0 0.0 0.0 0.0 50.2 54.0 41.6 '51.1FOREIGN PRIVATE 27 0.0 0.0 0.0 0.0 22.2 26.3 27.3 39.8

COOPERATIVES 28 9.0 9.3 13.6 15.1 16.0 22.7 :22.9 24. 4

OTIHER PRIVATE SECTOR 29 171.3 158.1 154. 5 152. 6 12. 3. 177. 1 1651.5 1153.2 0

PUIBLIC 30 387.0 298.9 3:30. 1 342.4 356.4 376.4 390.0 424.7CENTRAL GOVERNMENT 31 1:36.7 1:39. 5 143.7 146. 1 157. 5 157.2 168.5 197.3PARASTATAL BODIES I/ 32 117.1 122.5 146.0 154. 6 161.6 170.0 1659.0 170.1MAJORITY CONTROL BY THE PUBL

SECT'OR 33 7.4 10.0 12.6 15.3 11.8 17.0 19.6 :23.4ILOCAL GOVERNMENT 34 :25.8 27.0 27.8 :26.2 :25.5 31.1 :32.8 :33.8OTHERS 2/ 35 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.1

TO'TAL 20 719.8 7651.4 826.2 819.1 8'57.5 902.9 911.6 972.3

- -- - -- --- -- - - - - - --- - - - - - - -=:z = n = = = I= =-- - - - - - --- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - --- - - - - - - - --- - - - - - - --- - - - - - - - - -- - -

1/ INCLUDES TEACHERS SERVICE COMMISSION. KENYA RAILW'AYS CORPORATION,KENYA PORTS AUTHORITY, KE'NYA POSTS AND TELECOMMUNICATIONS.KENYA AIRWAYS LTD., ETC.2/ E.A. DEVIELOPMENT IBANK AND IE.A. EXAMINATIONS COUNCIL.SOIJRCE: CENTRAL BUREAU OF' STATISTICS. STATISTICAL ABSTRACTS.

X

xA

TABLE 1 .6KENYA: AVERAGE WAGE EARNINGS PER EMPLOYEE

(KL)

ITEM 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979

PRIVATE SECTORAGRICULTURE AND FORESTRY 36 74.6 79.6 94.0 93.4 95.9 115.6 135.6 134.7 159.8 175.3

MINING 37 321.4 357.1 259.3 333.3 322.6 401.3 419.4 333.3 315.8 330.1

MANUFACTURING 38 361.7 356.1 377.0 399.7 427.2 489.8 527.8 596.6 619.1 654.3

CONSTRUCTION 40 329.4 323.8 324.8 354.4 351.5 411.0 451.8 490.0 562.9 576.7

TRADE, RESTAURANTS & HOTEILS 41 448.4 453.6 469.6 489.9 501.8 575.D 604.4 660.0 743.3 836.4

TRANSPORT & COMMlJNICATION 42 418.2 417.2 458.6 463.9 636.4 619.1 638.9 769.2 801.0 897.4

FINANCE AND INSURANCE 43 691.3 702.7 858.1 801.2 866.3 962.5 1052.6 11136.4 11135.1 '1311.6

COMMUNIlY 8 OTHER SERVICES 52 192.6 184.8 198.7 229.3 255.5 265.4 312.6 328.1 344.4 406.3

TOTAL PRIVATE SECTOR 44 224.8 230.1 247.9 253.2 285.2 326.2 366.0 398.9 447.7 500.8__ ___ _- _--___--- --------- --------- --------- --- ----- --------- --------- --------- --------- C(

P'UBLIC SECTORCENTRAL GOVERNMENT 45 300.2 301.8 300.0 312.5 352.0 424.9 531.6 633.6 668.4 695.1

PARASTATAl EBODIES I/ 46 244.6 317.3 326.8 410.0 400.6 .391.7 502.6 565.9 629.2 682.5

MAJORITY CONTROL BY THEPUBLIC SECTOR 47 301.6 393.9 540.5 520.0 468.3 549.0 678.0 588.2 668.3 721.8

LOCAL GOVERNMENT 48 316.5 319.3 345.0 340.7 381.3 484.7 474.5 486.0 528.9 565.9

E.A. COMMUNITY 49 473.8 462.3 471.9 519.0 545.8 666.7 668.0 11000.0 0.0 '1397.0

TOTAL PlJBLIC SECTOR 50 320.2 339.0 346.7 381.7 402.3 457.9 550.7 588.3 639.7 681.0

lOTAL 51 261.4 272.1 287.3 303.7 332.0 381.3 442.7 477.8 529.8 579.5

I/ INCLUDING TEACHERS SERVICE COMMISSION.SOURCE: CENTRAL BUREAU OF STATISTICS, ECONOMIC SURVEYS.

TrABLE 1 7KENYA: AVERAGE REAL WAGE INDEX

('1970 -100)

I T EM 1970 1971 1972 1973 '1974 1975 'I976 1977 '1978 1979

AVERAGE WAGE INDEX (CURR. PRIC 54 100D. 0 104.1 109.9 116.1 127. 0 145.8 1 69. 3 1832.7 202.6 22 1. 6

% INCREASE 57 4.1 5.6 5.6 9.3 '14.8 '16.1 7.9 ~10.9 9.4

CONSUMER PRICE INDEX I/ 55 100.0 103.7 109.3 1:21.4 1 40. 6 1655.6 I182. 2 203.5 228. 5 2,47.7

% INCREASE 5B 3.7 5.4 f1.1 15.8 '17.8 '10.0 11.7 12.3 8.4

AVE-RAGE REAL WAGE INDEX 56 1100.0 100.3 100.5 95.6 930.3 838.0 92.9 839.8 838.7 139.5

% INCREASE 59 0.3 0.0 .-4.9 --5.6 --2.5 5.6 --3.3 -1.2 0.9

I/ COMPFOSITE WEI:GHTED INDEX OF LOWIER, MIDDLE AND UPPER I1NCOME INDICES

CA..CULATED AS ANl AVERAGE OF THE INIDICES FORI ALL 12 MONTHS.

SOIJRCE: CENTRAL BUREAU OF STATISTICS. ECONOMIC SURVEYS.

cUrA'PTrcTrAT AnDrEMuT -84-

TABLE 2.1KENYA: GROSS DOffESTIC PRODUCT BY INDUSTRIAL ORIGIN 1/

(KL KILLION AT CURRENT PRICES)

ITEM 1972 1973 1974 1975 1976 1977 1978

AGRICULTUREP FOR. I FISHING 16 242.5 280.0 332.1 361.4 484.5 688.3 664.3

MINING 17 2.2 3.0 2.1 3.4 3.4 3.8 3.8

MANUFACTURING 18 77.9 94.7 117.1 127.4 159.7 179,3 245.8

ELECTRICITY I HATER 19 13.9 14.5 15.7 20.0 23.1 31.1 37.3

BUILDING I CONSTRUCTION 20 46.5 51.6 58.2 63.8 68.1 80.2 90.9

TRADEP RESTAURANTS I HOTELS 21 66.3 80.6 115.9 121.9 144.5 199.5 239.0

TRANSPORT I COMMUNICATIONS 22 38.2 44.2 53.7 60.3 69.2 74.1 93.2

FINANCE I REAL ESTATE 23 31.4 34.5 46.8 54.7 68.0 83.0 96.2

OWNERSHIP OF DUELLINGS 24 39.2 47.6 56.6 67.7 79.3 96.4 118.3

OTHER SERVICES 25 19.8 23.5 26.6 30.6 35.7 41.3 46.9

GOVERNMENT SERVICES 26 110.6 120.6 136.7 162.1 184.7 215.4 258.0

LESS INP. BANK SERVICE CHARGE 27 -13.1 -11.3 -18.1 -20.4 -23.9 -31.8 -37.3

GDP AT FACTOR COST 28 675.4 783.3 943.3 1052.6 1296.1 1680,5 1856.2

1! 1978 DATA ARE PROU!SrnQTAISOURCE: CENTRAL BUREAU OF STATISIICS, ECOhNOIC SURVEYS AND NATIONAL ACCOUNTSCOMPANINT VOLUNUE !979 EDITION.

-85- STATISTICAL APPENDIX

TABLE 2.2KENYA: GROSS DOMESTIC PRODUCT BY INDUSTRIAL ORIGIN 1/

(KL MILLION AT CONSTANT 1972 PRICES)

ITEM 1972 1973 1974 1975 1976 1977 1978

AGRICULTURE, FOR I FISHING 1 242.5 248.4 251.0 258.1 256.2 279.4 283.5

MINING 2 2.2 3.0 2.7 3.1 3.4 3.5 3.5

MANUFACTURING 3 77.9 89.2 94.5 94.3 111.9 129.7 148.4

ELECTRICITY I WATER 4 13.9 14.3 15.3 16.5 18.4 19.8 21.5

BUILDING I CONSTRUCTION 5 46.5 46.6 43.3 42.4 41.3 44.5 47.1

TRAfE, RFSTAURANTS I HOTELS 6 66.3 74.0 71.7 66.2 7!7 79.7 84.A

TRANSPnRT I CONIIIICATInNS 7 38.2 42.4 41.9 40.7 44.9 46.1 48.7

FINANCF I REAL FSTATF A 31.4 11.0 38.0 40.! .? A 2 9 9 53A

UNmERSHIP OF DUELLINGS 9 39.2 41.5 44.7 45.5 48.2 50.4 53.1

nTHER SERUICES 10 19.8 20.3 23.0 25.0 26.4 28.9 30.7

GWUERNKENT FRUT.C-ES 11 110. 6 117.5 12. 6 !6 3l 143 .4 15n8 158.3

LESI TKP BAK SE.RVCEE CHARGE 12 -131. -0,9 -A',! -!',7 -!5,A -10, -20.0

UOP AT FACTOR COOST 13 675.4 718.3 737.0 753.7 795;6 i642 9!3;8======== === --- =Z== ===__ =_==== ========_ =_====== =====

1/ 1978 DATA AREP DOMITCSIOAl

SOURCE: CENTRAL BUREAU OF STATISTICS, ECONOMIC SURVEYS AND NATIONALACCOUNTS C-QHPANION VO!UHEI . 1979 FDTtTf*.

STATTSTICAT. APPEnDT -86-Y

TABLE 2.3KENYA: USE OF RESOURCES 1/

(KL MILLION AT CURRENT PRICES)

ITEM 1972 1973 1974 1975 1976 1977 i978

NP AT FACTOR COST 28 675.4 783.3 943.3 1052.6 1296.1 1680.5 1856.2

* INDIRECT TAXES 47 65.1 91.1 123.7 140.5 176.3 219.8 268.5- SUBSIDIES 48 -1.3 -2,3 -1.8 -0.8 -0.8 -0.6 -0.5

WP AT MARKET PRICES 49 739.2 872.2 1065.2 1192.3 1471.6 1899.8 2124.3

+ IPORTS OF GOODS AND NFS 50 216.2 251.8 433.8 413.0 461.6 580.4 787.4- EXPORTS OF G60DS AND NFS 51 200.1 240.6 357.2 356.9 471.7 648.7 566.8

TDTML AVAILABLE RESOURCES 52 755.2 883.4 1141.8 1248,4 1461,5 1831.5 2344.9

1INESTENT 53 168.0 226.7 273.2 217.1 294.3 441.2 597.3

RWSM FIXED CAPITAL FORMATION 54 163.8 179.6 202.8 241.9 290.4 390.0 508.7C4NGES IN STOCKS 55 4.2 47,1 70.4 -24.8 3.8 51.2 88.6

CONSUMPTION 56 587.3 656.7 868.6 1031.3 1167.3 1390.2 1747,8

PUBLIC CONSUMPTION 57 132.7 144.5 180.7 219.3 253.8 322.1 407.0PRIVATE CONSUMPTION 58 454.5 512.2 687.9 812.0 913.5 1068.2 1340.6

5RflM DnfNSTIT 5AUINGS 59 151.9 215.5 196.6 161.0 304.3 509.6 376.5GROSS NATIONAL SAVINGS 60 138.9 179.3 161.2 133.2 242.4 465.4 344.6

1/ 1978 DATA ARE PROVISIONAL.cnDrE! rCENTRAI WiREi OF STATSTICTTr. FrnunIKTr S1RUEY5 ANn NWATIOnA

ACCOUNTS COMPANION VOLUME, 1979.

-87- STATISTICAL. APPN.TY

TABLE 2.4vr vA: lar'r Mr n rM'tulmBr. 4 1ICM "I Ulm Ur I% LOUtMLL LI


--- -- -- -- -- ---ITE- - - - -- ------ - -- - - -- - - -- - -I - - -- --f- - - -- - -

iTEn ir;2 i973 i974 193i i976 i977 1978

DP AT FACTOR COST 13 675.4 718.3 737.0 753.7 795.6 864.2 913.8

t INDIRECT TAXES 31 65.1 80.7 88.8 84.6 85.9 96.8 112.0- SUBSIDIES 32 -1.3 -ii -1.6 -0,9 -i.7 -0.4 -0.4

6W AT MARKET PRiCES 33 739.2 797.8 824.2 837.4 879.8 960.6 1025,5

+ IMPORTS OF GOODS AND NFS 34 216.6 213.9 258.3 201,6 201.0 220*8 299,7- EXPORTS OF 600DS AND NFS 35 200.1 214.9 269.0 244.4 266.6 278.6 275.7

TOTAL AVAILABLE RESOURCES 36 755.7 796.8 813.5 794.6 814.2 902.8 1049.5======== ======== L======= ======== ======== =_====== ========

INVESTMENT 37 168,0 199.5 192.3 131,2 147,9 200.3 249,7

6ROSS FIXED CAPITAL FORMATION 38 163.8 157.0 145.6 142,5 143.9 173,3 210.5CHANGES IN STOCKS 39 4,2 42.5 46.8 -11,4 4.0 27.0 39,3

CONSUMPTION 40 587,7 597.3 621,2 663,4 666.3 702.6 790.8

PUBLIC CONSUMPTION 41 132.7 138,0 149.8 168.1 180,0 200.0 218,6PRIVATE CONSUMPTION 42 455.0 459.3 471,4 495.3 486,3 502.6 581.1

1/ 1978 DATA ARE PROVISIONAL.SOURCE: CENTRAL BUREAU OF STATISTICS, ECONOMIC SURVEYS AND NATIONALACCOUNTS COMPANION VOLUME, 1979 EDITION,

-88-STATISTICAL APPENDIX

TABLE 2.5KENYA: CAPITAL FORMATION BY INDUSTRY 1/


ITEM 1972 1973 1974 1975 1976 1977 1978

AGRICULTURE AND FORESTRY 63 13.5 12.8 20.4 22.7 25.2 43.6 51.1

MINING AND QUARRYING 64 1.7 1.5 3.6 1.5 1.6 1.9 5.0

MNUFACTURING 65 28.2 31.8 29.9 31.2 46.0 A3.3 85.9

ELECTRICITY AND LATER 66 8.5 12.2 10.0 17.2 33.2 33.7 50.9

TILDINW ANfl rnNSTRUCTIN 67 R.5 9.1 7.0 7.8 9.7 15 C 3 9

TRADW. RFITMUMPANTR I I4OTFIS 68 8.2 8.9 10.2 1A.5 20.6 21 . 23.2

TRANSPORT AND rnlNIINTCATInN 69 22.5 28.0 35.5 50.4 50.4 79.4 110.7

FINANrCE AND REAL ESTATE 70 2i1 2.0 4.0 4.8 3.5 4i4 7?8

RSIRDcuTD nF 'ErLL!NrGC 71 1020 , 30 IC: A Al50 Ai I 5A L 8 0

OTHER SER'!CES 72 7.6 B79 Dig 7,2 11.6 17,3 21.3

nlCUHrURuT cRDti!rrCe 73 71 3S4 A 70J. Ai . AD 5 8. 0 LA 7

TnlTA L rAOTTAI rnDmATTrnJ 7A 111 0 4170, I 'A' 0 '14AI 0 'I A, A 703A A CM 0Y1OTAL CAFPITAL FORMATION 74 i 1638 179.6 V 202.8 a 2:. 907V' 370. V i0t

1/ DaTA ARE PROVISIONAL,SOURCE: CENTRAL BUREAU OF STATISTICSt ECONOMIC SURVEYS AND NATIONALACCOUNTS COnPAMION VOLUi-L 197Y9 DiTIOUN.

-89- STATSTICAL APPENDIX

TABLE 2.6KENYA: CAPITAL FORMATION BY INDUSTRY 1/


ITEM 1972 1973 1974 1975 1976 1977 1978

AGRICULTURE AND FORESTRY 76 13.5 11.3 15.7 14.0 13.0 19.7 22.0

MINING AND OUARRYING 77 1.7 1.3 2,5 0.9 0.7 0.8 1.9

MANUFACTURING 78 28.2 27.7 20.9 17.7 20.9 25.3 33.8

ELECTRICITY AND WATER 79 8.5 10.4 7.2 10.3 16.8 16.4 23.1

BUILDING AND CONSTRUCTION 80 8.5 7.9 5.0 4.4 4.3 6.2 12.9

TRADE, RESTAURANTS I HOTELS 81 8.2 7.7 7.2 8.2 9.3 8.8 9.2

TRANSPORT AND COMMUNICATION 82 22.5 24.5 25.3 28.6 25.4 35.1 44.3

FINANCE AND REAL ESTATE 83 2.1 1.8 2.8 2.8 1.6 1.9 3.2

OWNERSHIP OF DWELLINGS 84 29.9 25.6 26.0 27.0 21.9 24.4 24.2

OTHER SERVICES 85 7.6 7.9 5.9 4.2 5.5 7.6 8.7

6 MERNMENT SERVICES 86 33.1 30.8 27.2 24.6 24.4 27.2 27.3

TOTAL CAPITAL FORMATION 87 163.8 157.0 145.6 142.5 143.9 173.3 210.5

1/ 1978 DATA ARE PROVISIONAL.SOLEE: C-ENTRAI BUREAU OF STATISTICS: ECONOMIC CSU-'EYS AND NATIQnACCOUNTS COMPANION VOLWIE, 1979 EDITION.

STATISTICAL APPENDIX

TABLE 2.7GROSS NATIONAL PRODUCT AND NATIONAL DISPOSABLE INCOME


ITEM 1972 1973 1974 1975 1976 1977 1978

COMPENSATION OF EMPLOYEES 93 308.7 339.8 397.8 452.4 524.6 608.5 718.4

TRADITIONAL ECONOMY 89 0.8 1.0 0.9 0.9 1.1 1.2 1.5ENTERPRISES 90 192.9 212.7 253.8 281.9 329.8 382.0 449.1PRIVATE HOUSEHOLDS 91 5.1 6.2 7.3 8.9 10.9 13.4 15.6PRODUCERS OF GOV. SERVICES 92 109.9 119.9 135.8 160.7 182.8 211.8 252.3

OPERATING SURPLUS (INC.DEPREC. 97 366.8 443,6 545.6 600.2 771.6 1072.1 1137.8

TRADITIONAL ECONOMY 94 33.0 38.2 43.8 58.1 68.8 82.6 94.8RENTAL SURPLUS 95 26.2 31.8 37,8 42.3 49.8 60.7 75.1OTHER OPERATING SURPLUS 96 307.6 373.5 464.0 499.8 652.9 928.8 967.9

TOTAL FACTOR INOMES= 6DP AT FC 28 675.4 783.3 943.3 1052.6 1296.1 1680.5 1856.2

INDIRECT TAXES 47 65.1 91.1 123.7 140.5 176.3 219.8 268.5LESS: SUBSIDIES 48 -1.3 -2.3 -1.8 -0.8 -0.8 -0.6 -0.5

6DP AT MARKET PRICES 49 739.2 872.2 1065.2 1192.3 1471.6 1899.8 2124.3

FACTOR INCOMES FROM ABROAD 98 12,9 10.2 15,6 21.4 14.3 19.6 22.1LESS: FACTOR INCOMES PAID ABRO 99 34,6 54.2 57.9 67.7 82.4 93.3 93.8

GROSS NATIONAL PRODUCT 100 717.5 828.2 1022.9 1146.0 1403.5 1826.1 2052.6

CURRENT TRANSFERS FROM ABROAD 101 19.3 19.8 24.2 36.1 29.8 41.0 52.8CURRENT TRANSFERS PAID ABROAD 102 10.6 12.0 17.3 17.6 23.7 11.5 13.0

6ROSS NAT. DISPOSABLE INCOME 103 726.2 836.0 1029.8 1164.5 1409.6 1855.6 2092.4

1/ 1978 DATA ARE PROVISINJAL.SOURCE: CENTRAL BREAU OF STATISTICSP NATIONAL ACCOUNTS COMPANION

UrSE!IMF. 1979 FTItTTTrN.

TABLE 3.1KENYA: SUMMARY BALANCE OF PAYMIENTS

(KL MILLION)

ITEM 1972 1973 1974 1975 1976 1977 1978 1979

MERCHANDISE EXPORTS (FOB) 187 120.5 164.5 226.1 232.4 311.2 468.0 366.5 380.3

MERCHANDISE IMPORTS (CIF) 188 186.4 2!19.2 3184.8 361.0 407.9 529.3 723.3 665.0

TRADE BALANCE 189 -65.9 -54.7 -158.7 -128.6 -96.7 -61.3 -356.8 -284.7

SERVICES (NET) 190 28.0 0.1 39.8 26.2 48.3 45.2 64.5 69.0

FFIEIGHT AND INSURANCE 191 11.6 11.4 18.5 7.5 22.9 27.0 26.6 27.8

OTHER TRANSPORTATION 192 11.8 14.3 44.6 33.9 47.9 49.3 57.1 52.3

FOREIGN TRAVEL 193 17.4 13.3 13.9 28.7 29.9 43.2 48.5 50.6

INTERNATIONAL INVESTMENT INCOMI94 -12.2 -35.7 -36.1 -35.4 -47.6 -65.5 -55.0 -49.2

GOVERNMENT TRANSACTIONS, NES 195 -5.7 -5.3 -2.9 -9.4 -3.1 -9.2 -7.6 -7.7

OTHER SERVICES 196 5.1 2.1 1.8 0.9 -1.7 0.4 -5.1 -4.8

TRANSFERS (NET) 197 13.6 7.8 6.9 18.5 13.5 27.5 39.8 37.4

PFRIVATE 198 0.4 0.3 0.8 -0.4 -2.1 1.4 7.5 9.0

GOVERNMENT 199 13.2 7.5 6.1 18.9 15.6 26.1 32.3 28.3

CURRENT ACCOUNT BALANCE 200 -24.3 -46.8 -112.0 -83.9 -34.9 11.4 -252.5 -178.3

CtAPITAL MOVEMENTS

PRIVATE LONG-TERM 2i1 15.3 31.3 41.6 14.7 25.1 48.0 76.4 80.7

GOVERNMENT LONG-TERM 202 15.1 16.8 21.8 30.4 34.9 36.4 84.0 103.8

GOVERNMENT CORPORATIONS 203 0.2 0.0 8.3 10.8 5.0 -0.5 -3.0 -3.5

SHORT-TERM 204 3.7 5.0 14.1 13.0 8.0 18.5 13.6 69.9

TOTAL 205 34.3 53.1 85.8 68.9 71.0 102.4 171.0 250.9

MONETARY MOVEMENTS

TRANSACTIONS WITH IMF 206 0.0 -0.2 25.4 18.1 8.3 -22.7 3.0 -3.9

OTHER CHANGES IN ASSETS ANDLIABILITIES 207 -10.5 -10.7 5.0 -1.2 -44.0 -90.0 74.6 -66.7

TOTAL 208 *-10.5 - 10.9 30.4 16.9 -35.7 -112.7 77.6 -70.6 '

__..___ .... __ . _ _ _--_--- -- -- -- - ------ - --------- -------- -------- --------- ,_

ERRORS AND OMISSIONS 209 0.5 4.6 -4.2 -1.9 -0.4 -1.1 3.9 -2.0

SOlURCE: CENTRAL BUREAU OF STATISTICS. ECONOMIC SURVEYS.

TABLE 3.2 c

KENYA: BALANCE OF TRADIEH(KL. MILLION AT CUJRRENIT PRICES)

- - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - -- - - - -

ITEM 1972 19I73 I1974 1975 1976 1977 1978 1979r--- -- -- -- --- -- -- --- -- -- -- -- - - - - - - - - - I - - - - - - - - - - - - - - - -- - - - - - - - - - - --- - - - - - - --- - - - - - - - - - - - - - - - -- - - - - -

IMPORTSFROiM OUTSIDE E. AFRICA 22 i 841.0 2 15E.2 369. 4 352.1 393.8 529.2 658.8 618.8

GOVERNMENT 24 17.3-- 18.4--- 1-----1 -- 2.6- 29.7--- 35.9--- 30.0--- 45.2---

COMJMERCIAL 23 16i. 7 196. 8 350. 3 319.5 364.1 493.3 628.8 573.6

FRCOM UGANDA & TAiNZANIA 25 1 3. 9 13:. 3 141.5 10i.4 13.1 2 .2 2.3 0.9

TOT'AL IMPORT'S 26 1971. 9 228.6 383. 9 362.6 407.0 531.4 661.1 619.7

EXPCIRTSDOMIESTIC EXPORTS I/ 27 90.6 122.6 1613. 0 169i.0 268.8 428.9 336 .6 351.9

RE-EXPORTS 28 4i.8 6. 2 7. 1 7'.5 i. 7 11.0 17.9 19.1

TO UGANDA & TANZANIA 29 37. 3 51.8 55. 6 61.5 66. 6 6i.9 41.2 41.8

TOT'AL EXPORT'S 30 132.7 180. 7 235.7 238.0 345. 1 501.8 395 .7 412.8

BALAiNCE OF TRZADEWIT'H EXTERNAL MARKETS I/ 31 -881.6 -86. 4 -199. 4 - 175i.7 -115E. 3 -89. 3 -304.3 - 247. 8

WIT'H UGANDA & TANZANIIA 32 23 .4 381.4 51.1 51.1 51. 5 591.7 38. 9 40. 9

TOTAL 33 -65. 2 -481.0 -1i48l.2 - 124. 6 -61.8 -291.6 -265.4 -206.9

I/ EXCLUDING UGANDA AND TANZANIA.SOURtCE: CENTRIAL BUREAUJ OF STATISTICS. ECONOMIC SUJRVEYS.

TABI_E 3.3KENYA: EXPORTS BY DESTINATION 1/

(PERCENTAGE)

ITEM 197:2 197:3 1974 1975 1976 1977 1978 1979

AFRICAN COUNTRIESUGANDA 34 12.9 13.4 16.13 13.8 9.6i 10.t 9.7 9.1

TANZANIA 35 12.7 10.2 11.0 12.0 9.7 2.0 0.7 1.0

ZAMBIA 36 3.9 4.3 4.15 3.5 2.16 1.S 1.4 1.4

RWANDA 37 1.0 0.9 1.4 2.2 1.9 1.:2 1.1 0.0

ZAIRE 38 0.9 0.15 0.5 0.!3 0.7 0.6 0.1; 0.0

l:NDUSTRIALISED COUNTRIESUNITED KINGDOM 39 15.9 12.3 7.9 9!5 10.!5 12.7 14.4 14.2

WEST GERMANY 40 7.4 8.1 7.6 8.1 12.2 17.1 14.4 14.7

USA 41 4.3 4.5 34 3*5 5.3 5.5 4.7 4.1

ITALY 42 2.3 2.2 1.9 2.4 4.0 2.7 4.13 5.13

NETHERLANDS 43 5.5 4.8 4.9 3.1 4.9 10.2 6.2 4.:3

FRANCE 44 0.6 0.9 0.8 0.16 1.0 1.2 1.4 1.2

JAPAN 45 1.6 3.0 2.3 2.7 1.3 1.0D 1.0D 1.:2

OTHERIRAN 46 0.5 0.4 0.1 0.4 0.3 0.4 0.4 0.0D

INDIA 47 1.9 0.9 1.2 1.2 0.7 0.3 0.4 0.5

TOTAL EXPORTS 48 100.0 100.0 100.0 100.0 100.0D 100.0D 100.0 100.0D

wafz,SCuu .u: aaoma =s !:aaa =nsa s.-a =.z====. ... c..... .=...s== == ,s=.==

1/ EXCLUDING GiOLD AND CURRENCY BUT INCLUDING RE-EXPORTS.

SOURCE: CIENTRAL BUREAU OF STATISTICS, ECONOMIC SURVEYS AND

IMF. DIRECTION OF TRADE.

CA

TABLE 3.4KENYA: IMPORTS BY COUNTRIY OF ORIGIN

(PIERCENITAGE)

ITEM 1972 13973 1974 11975 15976 1977 19T78 1979

AFRICAN COUNTrRIESUGAkNDA 49 14.1 i 2.2 1,0 0.4 0.2 0.11 0.3 C).lITANJZANIA 50 :3.0 :3,6 :2. 8 2. 5 31.0 0.3 0.1 0.0ZAM1BIA 51 0-2 0.3 0.5 0.2 0.2 0.2 0-2 0.2RWANDA 52 0.0 0.0 0.1 0.0 0.2 0.2 0.4 0.0ZAIRE 53 0.4 0.2 0.11 0.1 0.1 I 0.1 0.1 C0.0

INDUSTRIALISED COUNTRIESUNITED KINGDOM 54 206.4 23.5 18E. 5 20.9 1 E. 9 17. 9 22. 1 22. 8WEST GERMANYI 55 83.8 9. 10. 0 i1.3 10.I 10. 9 13. 3 Ill.1IUSAk 56 05.3 13.2 5. 6 7F.0 5i-8 i. 7 6. 2 5i.6.1 TALY 57 4.1I 1. 8 3. 4 3.7 3.~2 41.1 5.I j.8aNET'HERLANDS 59 2. 5 3. 7 13.8 120 2. 4 12.1 2. 3 2.3FRAiNCE 59 3. 7 3.0 3. 3 2. 7 2.~7 5i.0 41.7 2. 9JAPIAN 60 9.3 118- 10.9 El.7 11.1 12a. 3 IC).3 El.I

OTHE'RI RAiN 61 7F.-3 70 9).5 149. 2 1 6.5 a 8.6 6. 8 4. 2INDIIA 62 12..1 1.9 11.8 I1.5a 1.9 2. 2 2. 4 1.6

TOTAL IMPORTS 63 100.0 100.0 100C. 0 100.0 .100.0 100.0 1I00. 0 1 00. 0

Source: Central. Bureau of Statistics, Economic Sur-veys; ancdIMF, Direction of Trade.

TABLE 3.5

KENYA: TOTAL EXPORTS BY BROAID ECONOMIC CATEGORYe 1/

(K~L THOUSANDS AT CUIRRENT PRICES)

IIFEM 1972 19731 1974 1975 1976 1977 1978 1979

FOOD ALND SERVICES 64 62679. 0 7 498 3. CI 830D28.0C 824 17. 0 1 59586.0' 315102.0 2 171388.0O 2 16643.0C'

PIRIMARY 65 4895 1.0C 59912.0 67 328.0C 671576.0C 13513730-C 289158.0' 198:338.0C 186:248.0O

FOR I'NDUSTRY 66 26906.0 C 37 3 10.0C 405320- 36728.0 95926. 0 206258.0C 1260D25.0 116!555. C'

FOR HOUSEHOLD) CONSUMPTION 6 7 2 2045S.0C 22,602.0C 26 796,0C 31 398. 0 39,947.0o 82901 .0C 7 2:3 13.0O 691593. 0

PROCESSED 68 13728.0C 15071I.0C 15 700.0O 1474 1.0O 237 13. 0 2 59343. 0 1 9350.0 C 303 94.0C

FOR INDUSTRY 69 1051 .0 1970.0C 2 275. 0 2395.0C 28~050C 2 117.0 711.0 86 73.0O

FOR HOUSEHOLD CONSUMPTILON 70 i2677.0 13101 .0 13425. 0 12346.0 20,908.0o 238926. 0 181639.0 C 21V721 .0C

INDUSTFRIAL SUPPLlES (NON-FOOD) 71' 329 19.0C 5665 1. C) 75415. C) 651J96.0C 78480.0 64 790.0 C85973.0C 73793. C)

PRIMAkRY 72 14952.0C 28630.0 36888.0 30617.0 34836 -C 27'9 11. C 301i82.0 C31278.0

PROCESSED 7 3 17967.C)0 28021 .0 38527. C) 34579.C) 43644.0 36879.0C 35792.0 42 5 15.0C

FUELS & LUBRICANTS 74 19451.0 21673.0 46035 .C) 58957.0 697 30.0) 831i98.0C 68985.0) 77172.0

P RI MARY 75 69.CO 88.C) 98. C) 268.C) 323 C) 220.0C 215. 1 ) i4.0C

PROCESSED 76 19382.0 21i585.O 45937.0 58689.0 69407.0 82978.0 68771.0 77 158. 0

MACHINERY & CAPITAL EQUIPMENT 79 1930.0 3272.0 5390.() 5303.0 65 89.0 1228. C 1489.0 1 509.0 C

MACHINERY & CAPITAL EQUJIPMENT 80 1807.0 2934.0 4710.0 4398.0 5319.C) 1 162.0 C 1450 .C) 1286. C)

PARTS AND, ACCEzSSORIES 81 123.0 338.0 680.() 905.0 1270.0( 66.0C 39.0 223.0

TRANSPORT EQUIPMENT 82 1946.0 4026.0 4199.0 4190.0 4005.0 999 .C) 965.0 1079.C)

PASSENGER MOTOR VEHICLIES 8:3 50.C) 156.0 196.0 460.0 484.0 0.0 C 0.0 0.0C

OTHER MOTOR VIEHICLES 84 245.0 322.0 1057.0 1570.0 1283.0 492.0 448.() 631.0

PARTIS ANC ACCIESSOR'IES 87 1651.0 3548.0 2946.0 2160.0 2238.0 507.0 C 818.0 449.0 C

CONSUMAER GOQODS, N.E.S. 883 8732.0 13657.0 14473.0 14092.0 16712.0 14627.0 14615.0 15060.C0

DURAB3LE 89 264.0 582.0 595.0 528.0 762.0 346.0 510.0 601.0

SEMI-DURABLE 90 2932.0 4861(3 4400.0 3279.0 3925.0 4113.0 5414.0 4151.()

NON-DURABLE 91 5,536(0 8214.0 9479.0 10285.0 12025.0 10168.0 8691.0 10308(0:w

GOODS NOT ELSEWHERE SPECIFIED 9:2 190.0 157.0 223.0 200.( 293.0 314.0 250.0 272.0

TOTAL EXPOIRTS 93 127848.0 174420.0 228763.0 230356.0 335395.0 480259.0 369965.0 38-5528.0) F-I

1/ EXCLUDING RE-EXPORTS.SOURCIE: CENTRAL BUREAU OF ST'ATIS'TICS, ECONO0MIC SURVEYS.>

TABlE 3.6KENYA: TOTAL 'IMPORTS BY BROAD ECONOMIC CATEGORY E

(KL THOUSANDS AT CURRENT PRICES)

ITEM 1972 1973 1974 1975 1976i 1977 197T 1979

FOOD AND BEVERAGES 94 19494.0 21813.0 25395.C) 21393.0 26310.0 27459.C) 38503.0 32300.0

PRIMARY 95 4951.0 6932.0) 4675.0 6609.C) 2786.0C 4977.C) 11729.0 91368.0 I'FOR INDUSTRY 96 2455.0 4815.0 2654.C) 4712.C) 393.0 2B94.0C 7245.0C 3138.0 zFOR FHOUSEHOLD CONSUMPTION 97 2496.0 2117.0 2021..0 1879.C) 2393.0C 2083.C) 4484 .C0 6730.0 C

PROCESSED 98 14543.0 14881.0 20720.C) 14784.C) 23534.0C 22482.0 26774.0O 23031.0FOR INDUSTRY 99 3883.0 4692.(0 7806.C) 8925.C) 1379.0C 14575.0 16937.01 14:262.0FOR HOUSEHOLD CONSUMPTION 100 10660.0 10189.0 12914.C) 5859.0 12145.0C 7907.0C 9837.0O 8769.0

INDUSTRIAL SUPPLIES (NON-FOOD)10I 68506.0 88978.0C 153094.C) 105007.0 1240I11.0 160780. C 1791312.0O 1791349.0

PRIMARY 102 5114.0 5360.0 9281.C) 7734.0 11488.0O 13147.0 13:350.C 7731 .0PROCESSED 103 63392.0 83618.0 143813.C) 97273.0C 112!523.C1 1471S33.0C 166462.CI 172118.0

FIJELS AND LUBRICANTS 101 20903.0 22317.0 81565.C) 95805.0 1031384.0 117147.C1 117778.0 146798.0

PRIMARY I0o5 14816.0 16708.0 67465.C) 87242.0C 94159.0 101D07.0 93861.0 1209334.0IROCESSED 106 6087.0 5609.C) 14100.0 8563.0C 9725.0 16140.0 23917.0 25864.0

MACHINERY &, CAPITAL EQUIPMENT 107 37797.0 42728.0 43028.0 61660.0 75!521.0 103006.0 141074.0C 125036.0

MACHINERY & CAPITAL EQUIPMENT108 34500.C) 39580.0 38918.0 56307.0 63:259.0 91439.0 126052.C0 94151.0PARTS, AND ACCESSORIES 1O9) 3297 .C) 3148. C) 4110.0 5353.0 8:262. 0 1 1567.0 15022.0 301385.0

TRANSPORT EQUIPMENT 10C) 28290.C) 27641.C) 44373.0 46789.0C 44116.0 76054.0 126652.C 95688.0

PASSENGER MOTCIR VEIHICLE:S 1111 5967.C) 4760.C) 9495.01 6230.0 8410.0 12412.C 20182.C 11173.0OTHER MOTlOR VEHICLES 112, 9704.C) 9135.C) 12652.0 19072.C' 169355.0, 381502.0 63706.0 58666.0PARTS AND ACCESSORIES 113 12619.C) 13746.C) 22226.0C 21487.0 18751.0 25140.0 42764.0 251350.0

CONSUMER GOODS, N.E.S. 1141 21706 0 24617.0 35304.C0 31273.0 35:219-0 46:355.0 55:299.0 38786-0

DURABLE 115; 4571 .0 5385.0 7179.0C 5277.0 7009.0 9034.0 12:365.0 8313.0SEMI-DURAB3LE 116i 9D98.0 9924. C) 15657.0 12989.0 16578.0 21431.0 21:202.0 11956.0NON-DURABLE 1 17 8037.C) 9309.0C 12468.0 13007.0 11632.0 15890.0 21732.0 18517.0

GOODS NOT ELSEWHERE SPECIFIED 11E 1153.0 456.0 1116.0 6559.0 936.0 644.0 2007.0 647.0

TOTAL IMPORTS 1191 197851.CI 228552.0 3831375.0 362586.0 406997.0 531446.0 661125.0 619704.0

SOURCE: CENTRAL BUREAU OF STATISTICS. ECONOMIC SURVEYS.

TABLE ~3.7KENYA: EXPOIRT ANID IMPORT PRICE INDICES

(BASE YEARS 1972 ANID 1976)

ITEM I1972 1973 I1974 1 975 19S76 1 977 1978 1 979

1972 = 1-00 1976 := 100IMPORTS

FOOD) AND LIVE ANIMALS 1I20 10O0. 0 1 24. 0 1 26. 0 238. 0 238. 0 87'.0 86 .0 76 .0

BEVERAGES AND TOBACCO 121i 100. 0 108E. 0 116i. 0 147 .0 168. 0 11I5. 0 130. 0 1 25. 0

CRUDE MATERIAkLS. INEDIBLE '122 I OC). 0 101.0 1 09. 0 137'.0 178I.0 99i.0 123. 0 120. 0

MINERAL FUELS '123 10OC). 0 113.0 339.0 452.0 534. 0 108E. 0 106. 0 130. 0

ANIMAL & VEGETABLE O1ILS AND FA'124 100.0 11i5.0 158.0 212.-0 198.0 1 36.0 131.0 1 40. 0

CHEMICALS '125 10C).0 1341.0 208.0 276.0 342.0 100).0 101.0 1331.0

MANUJFACTURED GOODS '126 100. 0 12 2. 0 174. 0 192. 0 205.0 1 09. 0 1181.0 1 26. 0

MACHINERY AND TRANSPORZT EQUIPMi127 I1OC). 0 1 1 5.0 141.0 172.0 2 19 .0 1 14. 0 130l.0 1 44. 0

MISCELLANEOUS MANUFACTruRED ART 128 I1OC) .0 1 18.0 166. 0 189.0 195E. 0 1I1C). 0 122.0 1 23 .0

TOTAL IMPORTS '129 1OC0.0 119.0 178.0 225.0 261.0 108.0 114.0 132.0

NON--OIL IMPORZTS 130 100.0 120.0 158.0 1941.0 225.0 109.0 119.0 132.0 "

EXPORT S

FOOD) AND LIVE ANIMALS 131 1001.0 1101.0 1311.0 137. 0 224.0 167.0 12 3. 0 1171.0

BEVERAGES AND TOBACCO 132 1001.0 98. 0 90.0 116E. 0 145. 0 96. 0 1 14. 0 108E. 0

CRUDE MATERIALS. INEDIBLE 133 100.0 14'1.0 184.0 160).0 18C).0 1 112. 0 122.0 127j. 0

MINERAL FUELS 134 100.0 1 08. 0 230.0 32 2. 0 387. 0 11I2. 0 11i3.0 145.0

ANIMAAL & VEGETABLE OIL-S AND FA135 100.0 14t. 0 174. 0 227.0 262. 0 1 04. 0 127.0 135. 0

CHEMAICALS 136 1001.0 1 15. 0 126.0 163.0 205.0 105.0 96. 0 134. 0

MANUFACTURED GOODS 137 100.0 118.0 134.0 183.0 219.0 128.0 140.0 149.0

MACHINERY AN[D TRANSPORT EQUIPM138 100.0 1 1 4.0 131.0 166. 0 211.0 0.0 127.0 14,4.0

MISCELLANEOUS MANUFAcTURED ART139 100.0 129.0 150.0 148.0 208.0 124. 0 125.0 130).0

TOTAL EXPORTS 140 100.0 1 15. 0 15.2.0 175. 0 238.0 1 42. 0 120).0 128. 0

NON--OIL EXPORZTS 141 100.0 1 16.0 139.0 150. 0 214.0 150.0 12'3 .0 124. 0

SOURZCE: CENTRZAL BUREAIJ OF STATISTICS, ECONOMIC SLJRVEYS.

1-3

HTABLI: 3.8 ,-

KENYA: EXPORT AND IMPORT QUANTUM INDICES In(BASE YEARS 1972 AND 1976) >

_______._______--.-. -. -..-. -. -..-. - _------ ---------. -. -.--..-. -. -..-. -. -..-- -- -- -- -------- ------------------------------------ --------------- --..-. -. -..-.-. -..-. -.--..-. -. -..-. -. -..-. -.--..-. -. -..-. -. -..-. -. --..-. -. -..-. -. -..-. -.-. -..-. -. -. -. -. - 'D

ITEM 1972 1973 1974 1975 1976 1977 1978 1979______. _ _ _ _ _ _ _ _ . _ _ _ _____ - -.- -_ _ _ _ _ _ _ - . . - -_ _ _ _ _ _ _ -- - -_ _ _ _ _ _ _ - - - -_ _ _ _ _ _ _ . _ _ __ - - _ _ - - _ _ _ _ _ _ _ - -_ _ _ - - _ - - - - - - - - -- - --- ----- - - -

1972 = 100 19,76 = 100IMPORT'i 1-

.4

FOOtD AND LIVE ANIMALS 142 100.0 87.0 89.0 37.0 39.0 1 03.0 172.0 1:39.0BEVERAGES AND TOBACCO 143 100.0 82.0 137.0 95.0 139.0 58.0 99.0 107.0CRUJDE MATERIALS. INEDIBLE' 144 100.0 119.0 171.0 103.0 1 08.0 1150.0 1t03.0 94.0MINERAL FUELS 145 100.0 94.0 114.0 100.0 92.0 1 04.0 107.0 108.0ANIMAL & VEGETABLE OILS AND FA146 100.0 116.0 144.0 96.0 146.0 90.0 110.0 10D1.0CHEMICALS 147 100.0 100.0 129.0 71.0 62. 0 145.0 155.0 1.21.0MANUFACTURED GOODS 148 100.0 107.0 119.0 69.0 78.0 115.0 128.0 110.0MACHINERY AIND TRANSPORT EQUIPM149 100.0 92.0 94.0 97.0 81.0 1:36.0 176.0 1:26.0MISCELLANEOJS MANUFACTURED ART150 100.0 94.0 89.0 73.0 133.0 1t07.0 112.0 111.0

TOTAL IMPORTS 151 100.0 97.0 109.0 32.0 79.0 1:22.0 142.0 116.0

NON-OIL IMPORTS 152 100.0 98.0 108.0 78.0 76.0 1:26.0 1511.0 118.0

EXPORTS

FOOD ANID LIVE ANIMALS 153 100.0 117.0 102.0 100.0 116.0 116.0 112.0 115.0BEVERAGES AND TCIBACC1D 154 1DO.0 126.0 93.0 62.0 636.0 155.0 1:20.0 129.0CRIJDE MATERIALS. INEDIBLE 155 100.0 112.0 133.0 1:20.0 1:22.0 85.0 81.0 93.0MINERAL FUEILS 156 1.00.0 10D3.0 1 02.0 94.0 92.0 107.0 89.0 80.0ANIMAL & VEGETABLE OILS AND FA157 100.0 165.0 152.0 1:33.0 192.0 :25.0 13.0 18.0CHEMICALS 158 1.00.0 123.0 130.0 91.0 87.0 135.0 839.0 75.0MANUFACTURED GOCIDS 159 1.Do.0 121.0 1 05.0 103.0 102.0 74.0 6;8.0 66.0MACHINERY AND TRANSPORT E:OUIPM160 1D00.0 170.0 176.0 1-43.0 1-t7.0 53.0 46.0 41. 0MISCELLANEOIJS MANUFACTURED ART161 10DO.0 120.0 1 07.0 90.0 6;9.0 78.0 77.0 81.0

TOTAL EXPORTS 162 10D.0 117.0 111.0 101.0 107.0 104.0 96.0 94.0

NON-OIL EXPORTS 163 1D00 0 120.0 113.0 104.0 112.0 102.0 96.0 97.0

SOURCE: CENTRAL BUREAU OF STATISTICS, ECONCIMIC SURVEYS.

TabLe 3.9KENYA: VALUE? VOLUME AND PRICES OF MAIN EXPORTS 1/

(VALUE IN THOUSANDS OF DllOLLARS)

ITEM 1972 1973 1974 1975 1976 1977 1978 1979

VALIJE (IN THIOUSANDS OF DOlLLAR'S

COFIFEE, UNROASTE'D 164 69353.0 1022'02.0 107484.0 95982.0 2'23023.0 49;3749.0 322893.0 296336.0TEA 165 46084.0 48476.0 54265.0C 62558.0 75923.0 173467.0 163655.0 168425.0SISAL FIBER I TOIW 166 5801,0 13689.0 47479. 0 20265.0 10019.0 9939.0 10555.0 12970.0HIDIES AND SKINS, UNDRESSED 167 10570.0 14810.0 12436.0C 14922.0 20464.0 19384.0 25447.0 36905.0CANNED BEEF 168 7917.0 4487.0 6453.0C 7586.0 13195,0 9716.0 7048.0 7208.0PItINEAPPL-ES, CANNED, 169 2586.0 4239.0 3958.0 9775.0 16684.0 25399.0 24820.0 24967.0PETROLEUM PRODUCTS 2/ 170 54541.0 61105.0 127993.0 160239,0 1659909.0 177244.0 156219.0 182360.0OTHER MAfN. F'PRODUCTS 171 72859.0 100861.0 123876.0 109984.0 154967.,0 134934.0 138751,0 184480.0OTHER PRODUCTS 172 75688,0 1111 58,0 10764340 178052.0 117507.0 116474.0 108820.0 119565.0

VOLUME

COFFEE, UNRCIASTED (M,,TON) 173 63142.0 75317.0 71681.0 67672,0 77546.0 94344.0 85434.0 78759.0TEA (m.TON) 174 47297.0 51479.0 49599 , 0 52631 ,0 0 559267.0 70220.0 84968.0 94025.0SISAL F:EBER & TOW (MJ.TON) 175 37961.0 44903.0 72077.0 43800.0 29378.0 24925.0 26870.0 2.5959,0HIDIES AND SK;INSY UNDRlESSE'D (M.176 10516,0 8222.0 9082.0 12017,0 14158.0 11389.0 10893.0 13081.0CANNED BEEF (M.TON) 177 4316.0 2063.0 2599.0 3671.0 5778.0 9344.0 3033.0 2644.0PINEAPPLES, CANNED (M.TONI) 178 9775.0 13397.0 8678.0 20090.0 259907.0 453-290 42082.0 41048,0

PRICE (IN US DOLLARS)

COFFEE, UNRCIASTED (US$/T0lN) 179 1098.0 1357.0 1500. 0 1418.0 2'876.0 5233 0 3779.0 3763.0TEA (US$/TON) 180 976.0 942,0 1094.0 1189.0 1281.0 2470,0 1926.0 1791.0SISAL F:[BER I TOW (US$/T[lN) 181 153.0 3505.0 6559. 463.10 341.0 399.0 393.0 500.0HIDlES AN1D SK;;INS, UNDRESSE'D (US182 1005.0 1801.0 1:369.0 1242.0 1445.0 1702.0 2336.0 2821,0 >

CANNED BEEF (US$/TON) 183 1834.0 2175.0 2483.0 2067.0D 2 284.0 0.0 0.0 0H0PINEAPPLES, CANNED (IJS$/TON) 184 265.0 3516.0 456.0 487.0 558.0 560,0 590.0 608,0 3

1/ EXCLIJUIE RE-EXPORTS.2/ SITC 3SOURCE: EASIT AFRICAN CUSItOMS ANDl E XCISE DEP:ARTMENT, ANNIJAL TRADE

REPORTS FOR TANZANIA, LUGANDA AND KENYA; iANDI CENTRAL BUREAtUOF STATISIICS, ECONOMIC' SURVEYS.

TABLE 4.1 - KENYAcA

EXTERNAL PUBLIC DEBT OIJTSTANDINGi INCLUDING UNIDISBAJRSED AS OF DEC. 31. 1979 FD'-4

INCLUDES ONLY DEBT COMMITTEO JAN. 1, 1900 - DEC. 31i 1979 tA01BT REPAYABLE IN FOREIGN CURRENCY AND GOODS H

(INI THOUJSANDS OF U.S. DOLlARS) |DTYPE 01- CREDITOR D E 13 T O U T S T A N D I N GCREDITOR COUNTRY ------ -- -

TYPE OF FINANCING DISBURSED UNDISBURSED: TOTAL Z2--- -.- -- I- - - - - - - - - - -- - - - - - - - - - - - - - - - - -

IBRD 1-CONCESSIONAL 4 190 28,387 32.577NON-CONCESSIONAL 269.503 382.544 652.047

TOTAL IBRD 273.693 410,931 684,624

IDACONCESSIONAL 148.945 141.367 290.3112

TOTAL IDA 148,945 141 ,36-7 290,3112

IMF TRUST FUNDCONCESSIONAL 45 ,367 - 45.367

TOTAL IMF TRUST FUND 45,367 - 45.367

OPEC SPECIAL FUND FCONCESSIONAL 5.000 8.300 13. 300 0

TOTAL OPEC SPECIAL FUND 5.000 8,300 13,300 I

SAFA (SP AR FlJND AF)CONCESSIONAL 3,600 - 3.6C0

TOTAL SAFA (SF AR FUND AF) 3,600 - 3,600TOTAL MULTILATERAL LOANS 538,797 651.592 1 190 3819

BILATERAL LOANSBELGIUM

CONCESSIONAL 2,820 2,424 5,244TOTAL BELGIUM 2.820 2,424 5244

CANADACONCESSIONAL 16,216 67,412 133 628

TOTAl. CANADA 1i6, 216 67,412 13 628

DENMARKCONCESSIONAL 20,332 16,025 :36 357NON-CONCESSIONAL 812 - 812

TOTAL. DENMARK 21.144 16,025 :37,169

FRANCECONCESSIONAL. 2,255 10.183 12 438

TOTAL. FRANCE 2.255 10,183 12,438

GERMANY, FED.REP. OFCONCESSIONAL 132!899 6t 047 1933946

TABLE 4. 1 -- KENYA

EXI'ERNAL PUBLIC DEBT OUTSTANDING INCLUDING UNDISBURSED AS OF DEC. 31, '1979

(cont' d)

TYPE OF CREDITOR D E B O U T S T A N D I N GCRE:DITOR COLINTRY -------------------------------------

T'YPE OF FINANCING DISBURSED :UNDISBURSEO: l'OTAL

NON-CONCESSIONAL 9,610 - 9,610TOT'AL GERMANY, FED.REP. OF 142,509 61,047 203.556

INDtIANON-CIONCESSIONAL 1,885 2,530 4.415

TOT'AL IINDIA 1,885 2,530 4,415

ITALYCONCESSIONAL 2,947 - 2,947

TOI'AL ITALY 2,947 - 2,947

JAPANCONCESSIONAL 46.434 10,439 56.873NON-CONCESSIONAL 3,142 - 3,142 ,-

TOTAL JAPAN 49.57 6 10,439 60.015 o

NETHERLANDSCONCESSIONAL 39,386 61.728 101,114NON-CONCESSIONAL 1,920 - 1.920

TOTAL NETHERLANDS 41.306 61,72S 103.034

SALIDI AIRABIAACONCESSIONAL - 25.929 25.929

TOTAL SAUDI ARABIA - 25.929 25.929

UNITED KINGDOMCONCE'SSIONIAL 24.564 234 24.798NON-CONCESSIONAL 54,3:26 34,049 88.375

TOTAL UNITEDI KINGDOM 78.890 34.283 113,173 CA

UNITED 'STATESCONCE'SSIONIAL 46.512 47.154 93.666NON-CONCESSIONAL 24.839 .. 319 28,158 ',

TOTAL UNITEDO STATES 71,351 50,473 121.824TOTAL BILATERAL LOANS 430.899 342.473 773.372

TOTAL EXTERNAL PUBLIC DEBT 1,427.493 1.2611.040 2,688,533

NOTES: ( I) ONILY DEBTS WITH AN ORIGINIAL OR EXTENDED) MATURITY OF OVER ONE YEAR ARE INCLLIDED IN THIS TABLE. t

(2) DE13T OUTSTANDINGi INCILUDES PRINCIPAL IN ARREARS EIUT EXCLUDES INTEREST IIN ARREARS.

XSource: IBED, External Debt. Division

TABLE 4. 2 - KENYA

SERV]CE PAYMENTS. COMMITMENTS. DISBURSEMENTS AND OUTSTANDING AMOUNTS, OF EXTERNAL PUBLIC DEB3T

INCLUDES ONL-Y DEBT COMMITTED JAN. 1, 1900 - DEC. 31, 1979DEEBT REPAYAEiLE IN FOREIGN CURFIENCY AND GOODS C)

(IN THOUSANDS OF U.S. DOLLARS)TOTAL

YEAR DEBT OUTSTANDING AT T R A N S A C T I 0 N S ID U R I N G P E R I 0 D OTHER CHANGESBEGINNING OF FPERIOD

DISBURSED INCLUDING COMMIT- DISBURSE- S E R V I C E P A Y 1t E NI T S CANCEL- ADJUST-ONLY UNDISBURSED MENTS MENTS ------------ ----------- ----------- LATIONS MIENT H

PFRINCIPAL INTEREST TOTAL: ( 1) (2) (3) (4) (5) (6) (7) (8) (9)

1973 373,807 555, 985 96,954 80.471 12,959I 16.771 29,7:30 1,942 8,7201974 445,917 646,75E1 175,018 74,684 144.999 19,270 34.2159 :3,539 18,3361975 517, 1 13 821,574 445,284 105,735 115,500 20,655 36, 155 216,805 -51,7171976 570,266 1, 172,83ti 210,619 180,355 25.446 23.935 49,3S1 85 -26,7561977 700, 505 11,331,168 356,651 231,572 24, 930 32.403 57, 3:33 32.129 69,6501978 917,095 t ,700,41C) 537,142 286,421 63,474 44,586 108,0160 130.876 99,3121979 1 085,147 2,142.514 566,196 369.957 43,.965, 60.205 104.1-70 7,754 31,5421980 1.42-7,493 2.688,5331

* * * * - * THE FOLLOWING F'IGURES ARE PRDOJECTED * * * * * C

1980 1,427,493 2.688.533 - 325.493 811,165 77,809 158,974 - 81981 i,671,829 2,607,376i - 326.607 111,622 95,703 207,3:25 - -1982 1.886,808 2,495,754 - 232,473 128, 191 113,356 241.547 - -71983 1,991,082 2,367,556i - 160,616 129,848 111.165 241,013 - 51984 2.0211t851 2,237,713 - 99.537 13:3,697 106,078 239.775 - 31985 1,987.695 2,104,019 - 57,060 150. 940 100,261 251,201 - 31986 11.893.816 1,953,082 - 33,453 14:3,731 91,174 234,905 - -10

1987 1,781,528 1,809,3411 - 15.977 140,.091 81,575 221,66i6 - 81988 1.659.423 1.669,25EI - 6.941 1315,323 71,693 208,016 - -101989 1 530 03 1 1.532,925 - 2, 40)6 131,567 62,266 193,8:33 - II

1990 l.400C881 1,401,369 - 472 121,658 53,516 175.1 74 - -121991 1,279,683 1,279,69S) - 16 121,266 45.172 166,4:38 - 21992 1,1158,435 1,158,435 - - 9!5,324 37,736 133,060 - -9

1993 1,063,102 1,063,102 - - 91o,50C 32.847 124.347 - -4

1994 971.598 971,59EI - - 816.655 28,146 114,801 3

1995 884,946 884,946 - - 77,426 23.631 101.057 - 4

1996 807,524 807,524 - - 77, 872 19,638 97.510 - -1

1997 729.651 729.6511 - - 74,544 15.616 90. 160 - -I1998 655.106 655.106 - - 63,099 11,956 811,055 - -4

1999 586,003 586.00 3 - - 59!,626 8,749 68,375 - 5

* THIS COLIJMN SHOWS THE AMOUINT OF ARITHMET'IC IMBALANCE IN THE AMOUNT OUTSTANDING INCLUDING UNDISBURSED FROM ONEYEAR TO THE NEXT. THE' MOST COMMON CAUSES OF IMBALANCIES ARE CHANGES IN EXCHANGE FRATES AND TRANSFER OF DEBTSFROM ONE CATEGORY TO ANOTHER IN THE TABL.E.

Source: IBRD, External Debt Division

Table 4.3: KENYA - Terms of Loans Outstanding (Including Undisbursed)At Year End

1967 19 70 1973 :1976 1979

Average Interest Rate (x) 3.6 3.6 4.1 5.2 5.6

Average Original Maturity (Yrs.) 27.'5 29.7 213.9 '26.3 25.2

Average Original Grace Period (Yrs.) 9.3 9.2 13.0 6.8 6.3

Average Grant Element (Y.) 45.5 47.8 44.3 :36.3 34.2

_

Source: IBRD, External Debt Division

I-a

Z

1-4

xU

'-I'In

Table 4.4: Kenya: Interest Structure olE Loans Outstandi:n (Inclundisubursed)

At Year End(Thousands of US Dollars) d

1967 1971) 1973 1976 1979 ig

Value of loans with interest of:

O - 3% 14 1,897 185,976 278,075 471,388 968,119

3 - 6% 131,071 120,360 141,309 176,994 197,267

6 - 9% 79,343 112,502 225,422 641,476 1,269,175

Over 9% 269 2,119 1,952 37,028 253,972

Tot:al 352,580 420,957 646,758 1,326,886 2,688,533Source _ IBi-, External Debt Division

Source: IBRD, E:xternal Debl: Division

Table 4.5: Kenya: Maturity Structure of Loans Outstanding O:ncluding Undisbursed)At Year End

(Thousands of US Dollars)

1967 1970 1973 1976 19719

By Original Maturity:

O - 5 years 194 - 3,577 810 201

5 - 10 years 1,607 2,583 24,826 152,907 214,059

10 - 15 years 31,490 24,159 38,032 144,020 698,539

Over 15 years 319,289 394,215 580,323 1,029,149 1,775,734

Unknown - -Lfl

Total 352,580 420,957 6,758 1,326,886 2,688,533

Source: IBRD, External. Debt Division

cn

cjx

t3

Table 4.6: KENYA - Average Interest Rates and Maturity on Govtsrnment Loans Outstanding at Year End

1967 1970 1973 1976 1979 HInterest Maturity Interest Maturity Interest Maturity Interest Maturity Interest Maturitvc'

Donor Governments Rate (%) (Yrs.) Rate (%) (Yrs.) Rate (%) (Yrs.) Rate (%) (Yrs.) Rate (%) (Yrs.) ¢

Belgium - - - - - - 1.0 29.3 0.3 30.0 ¢

Canada - - 0.0 49.4 0.0 49.5 0.0 49.4 0.0 50.1 3Denmark - - ().0 24.8 0.9 28.7 0.5 27.2 0.2 31.0 xFrance - - - - - - - - 3.0 30.8

Germany, Fed. Rep. of 3.4 17.7 :3.2 21.3 2.7 25.4 2.9 265.3 1.8B 37.9Finland - - - - - 0.8 315.4 - -Ind:ia - - - - - 9.0 9.6 8.7 10.3Israel - - 6.0 9.3 6.0 9.5 6.0 10.8 - -Italy 4.5 15.0 4.5 15.0 4.5 15.0 4.5 15.0 4.5 15.0Japan - - 5.8 17.5 5.0 21.7 4.6 2'2.7 4.3 23.5Netherla,nds - - - - 2.5 30.6 2.6 28.9 2.5 30.1Norway - - ().8 49.8 - - - - -Saudi Arabia - - - - - - - - 3.0 19.2 s

Sweden - - 1.4 41.1 2.9 43.0 2.7 4:3.7 - -Switzerland - - - - 2.0 24.8 2.0 24.8 - -United Kingdom 3.6 27.2 3.7 27.1 4.2 26.1 4.3 24.4 7.:3 17.2United States 2.1 30.0 2.6 29.9 3.4 27.6 4.2 32.3 3.13 33.9USSit 2.5 12.8 2.'5 12.8 1.4 13.8 1.0 14.2 - -

Average Total 3.5 26.4 3.4 27.0 3.6 28.1 3.4 29.0 3.0 32.0

Source: IBR]D, External Debt Division

TABLE 5.tKENYA: CEN'TRAL GOVERZNMENIT ACCOUNTS

(KL MILLIODN)

ITEM FY73 FY74 FY75 FY76 FY77 FY78 FY79 FY80

CURRENT REVENUE 1 149.0 190.4 226.3 269.2 314.1 471.4 490.1 590.5CURRENT EXPENDITURE 2 139.6 162.7 207.4 246.8 285.1 400.1 467.3 522.0CURRENT SUJRPLUS 3 9.4 27.7 18.9 22.4 29.10 7i.3 22. 8 68.5

CDEVELOPMENIT PRO-JECIr EARNINGS 4 0.61 0.3 0 0I 0-0 I 6.-4 0.81 0.5 0.3FOREIGN GRIANTS 5 0.5 3. 2 8.2 7.0 10.5 9.04 13.3 18l.1SURPLIJS AVAILABLE FORFINANYCINGi CAPITAL EXPEINDITUORE 16 10. 5 31.5 27.4 29.4 45.93 81.1 36.65 86. 9I

CAPITAL EXPENDITURE 14 61.53 67.43 94.2 126.3 124.7 190.24 220.3 252.58 0DEVELOPMENT EX1PENDITURE 7 42 .6 48.2 62.0 74.2 86.0 115.11 142.7 181.6INVESTMENT EXPIENDITURE 83 19.2" 19. 2 32.2 52.1 38.7 75.11 77. 6 711.2

OVERAL-L DEFICIT 9 -5 1.3 -35.9 -66.8E -96.91 -78.7 -109.11 -183.7J -165.9

FINANCING OF THiE DEFiciT:

EXTERNAL LOANS 10 24. 7 14.5E 20.1 43. 7 29.BE 43.2 8 1.8E 96.6EDOMErSTIC L-T BORROWING; II 2 1.3 18.8E 15.5E 52.8H 25.0C 66.93 89.6E 36.6EDOMESTIC S-T BORROWING 12Al 6.81 2.91 12.7 32.5. 29.7 -29.3 68.5, 16. 8

CHANIGES IN CAiSH BALANCES r( INC:REASIE - ) 13 1.5 5.6 118.4 32.0 5.8 --28.3 55.3 15.9

SOURCE: CEN4TRAL, BURIEAU OIF STATISTICS, ECONOMIC SURVEYS.

X-

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9Y VO LOO O Yo iO 9iO 810 Leo Vo !Z lirAI 3iViS3°'° 0°' 0'0 0*0 0'0 0'0 5'T E'E 8'1 OZ XVI VWMOSN3d 31Vrws 1-1St vt! S't01 a'8e 9e,t Z'YS 2'os O'St 61 XVI 3103NIS'S91 8a15t, O'Et N O'80T Z'Ob Z'LL 518S z"ts sVt 8t S3XVI 133Na1

Z'96 B'61t 8'66E VS9Z 6'8ZZ !'L61 S'091 1't11 B'LOI £1 3lfl3N XVI

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(NOI11 1N1)/t 3lN3J3Af IN3Wfl3 IN3WWU3fl09 IVYlN33 :VAN3)

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TABILE 5.3KENYA: FUNCTIONAL. CLASSIFICATION OF CENTRAL GOVERNMENT RECURRENT

EXPENOITURE 1/(KL MILLION)

ITEM FY7E5 FY7'i FY77 FY78 FY79 FY80

ADMINISTRATION 35 37.3 45.9 47.2 67.1 82.5 96.2

DEFENSE 36 17.7 19.4 41.1 73 7 96.9 105.7

SOCIAL SERVICES 37 81 .4 95. 4 105. 1 127.4 146 8 170.6

EDUCATION 38 58. 5 68.9 76.5 89.1l 101.5 123.0HEALTH 39 16.9 19.5 21.3 29.2 34.2 35.0SOCIAL SECURITT & WELFARE 40 0.6 5.-7 6. 1 7. 4 9.5 2.0HOUSING & COMMUNITY WELFARE 41 5. 4 1.3 1. 2 1,7 1 . 10.7

ECONOMIC SERVICES 42 38.6 46.1 47.8E 62.4A 70.6i 78.4

AGRIClJLTURE, FORESTRY & FISHIN 43 13.6 20.5 19.1 22.3- 20. E 22.8EMINING, MANUFACTURING & CONSTR 44 5.4 5.6 5. 6i 8.1 10. 2 11. tiELECTRICITY & WATER 4 5 2.6 3. 7 4.6 5.5 7- 1 6.8ROADS 46 7.4 8.4 8 El 9.7 I1.C) 12.3TRANSFPORT & COMMUNICATION 47 1.7 1.6 1. SI 5. C) 5. 2 5 9OTHER ECONOMIC SERVICES 4EI 7. E8 6.3 7. El 11.9 16. 3 19.1

OTHER SERVICES 4S9 34.C) 41.8E 45.8E 71.6 72.91 88.E

PUBLIC DEBT 50 24.C) 31.1 36.3 71.6 72.9 88.E5TRANSFERS 51 5.19 6.4 5.C0 0.C 0.C 0.0C)OTHER PURPOSES 52 4.1 4.4 4.-S 0.0 0.0C 0.0

TOTAL 53 209. 0 248.6 .287. C 402.3' .469.7 !524.7

i/ FIGURES DIFFER SLIGHTLY FROM TABLE 5.1 DUE TO DIFFERE NT DATASOURCE .

SOURCE: CENTRAL. BUREAU CIF STATISTICS. H

Cl)

TABLE 5.4~~~~~~~~~~~~~~~~~~~~~~~~~~~~C

KEtJA: FNCTONALCLASIFIATIN OFCE1TRALGOVRNMET DVELOMEN

DEFENSE 57 1.4~~~~ABL 5.4 f i.7 l 9Ei

SOCIL SRVKENY:FNTOA CLSsIFICATIO OF CENRA GOVERNMENT5DEVELOPMENT-- -- -- -- ---- -E - --PENDITURE- -- - -- --

ADMINIOMCSTRATIONS 563 76.92 27.02 15. 28.1 194.8 326.8

SORCIALTISE FRVI ESTR FSIN6 15.34 211. 1.5 2 5.003 7 3 2.03 46.92EDUCAT MAUFACUION OST 59 51.3 3I.3 1.7 5.4 7.4 16.2

SOECTIA SCURITY & WELAER61 0.0 12.16 11.4 3.12 34.1 6 9.0

HOUNSINGT & COMMUNITYAWLFAR 62 61.1 14.8 14.2 2.7 5 6.6 14.9

OHRECONOMIC SERVICES 63 66.20 78.2 81. 92.4 154.8 146,8

TOAGRCLTIR. OETR71FS 64 20.4 215 1 24. 022 328.71 317.3 470.21C

MINING.RlMANUIFACTRSINGH&TCONSRO 653L 1.3 1.5E T 1.7F5E5E4.9D4.5ELECRICEIT AE 6 60 1. 12 3. 06 2.

SOROADS 67E18.8L17.9R20.6 24.3T32.4T37.6

TABLE 6. 1KENYA: SUMMARY ACCOUNTS OF THE BANKING SYSTEM

(MILLIONS OF KENYA SHILL-INGS)

ITiEM 1972 1973 1974 1975 1976 1977 1978 1979

NET FOIREIGNI ASSETS 1 1338.0 1549.0 980.0 662.0 1449.0 3625.0 2129.0 3588.0

NET DOIMESTIC CREDIT 2 3018.0 3858.0 4954.0 6162.0 7353.0 9079.0 12272.0 13835.0GOVERNMENT 3 739.0 853.0 1098.0 2014.0 2461.0 2566.0 3371.0 4061.0PRIVATE 4 2279.0 3005.0 3856.0 4148.0 4892.0 6513.0 8901.0 9774.0

OTHER' ITEMS- 5 -61.0 -51.0 -115.0 -10.0 -347.0 -291.0 -283.0 -1027.0

MONEY AND QiUASI MONEY 6 4295.0 5356.0 5819.0 6814.0 8455.0 12413.0 14118.0 16396.0

ME MORANYDUM F-.MONE'Y AND, QUA'SI MOINEY AS% OF NOMINAL GODP 7 29.1 30.7 27.3 28.6 21.6 33.4 34.3 36.3

ANNUAL PERCENTAGE CHANGE (%)

NET FOREIGN ASSEzTS 8 0.0 15.8 -32.4 118.9 150.2 -41.3 0.0l 0.0

NET DOMAESTIC CREzDIT 9 0.0 27.8 28.4 24.4 19.3 23.5 35.2 12.9GOVERNMENIT 10 0.0 15.4 28.7 83.4 22.2 4.3 31.4 20.5PRIVoNTE 11 0.0 31.9 28.3 7.6 17.9 33.1 36.7 9.8

MONEY ANND QUASI MONEY 12 0.0 24.7 8.6 17.1 24.1 46.8 13.7 16.1

SOURCE: CENTRAL BANK< OF K(ENYA, AN1NUAL REPORZTS.

cjn

14>

Im

32:

C,,

-3-VA)I-3j-

KENYA: TABLE 6.2 ICSiKEY;CONSUMER PRIICE INDICS1(JANUARY-dUNE '1975 - 100)

ITEM 1972 19373 1974 1 975 19E76 I1977 I1978 1979 1980o

UPPER INCOME INDEX 40 73. 9 85.1i 93. 3 109.3 17'.7 134. 8 145i.1 1621. 7 182.0

% INICREASE 41 0.0 15. 2 9.6 171.1 7'.7 14.5 7.6 12.8 11.2

MIDDPLE INCOME INDEX 42 70.8 79.5 911.3 105. 1 114,9 130. 4 141.0 1 55. 7 170. 9

%INICREASE 43 0.0 12. 3 14.8 15.1I 91.3 13.5 8.1 C0. 4 9.8I

LOWER INCOME INDEX 44 70. 6 82.-2 91.4 108I.2 118.0 142. 8 162.3 177.1 198.6

% INICREASE 45 0).0 1 6.4 11.2 18E. 4 9.1 21.0 13.7 9.1 12.1

1/ FOR NAIROBI.SOURCE: CENTRAL BIUREAUI OF STATISTICS, ECONOMIC SuIRVEYS.

TAEBLE 6.3KENYA: PRINCIPAL INTERE:ST RATES

(PE:R CENT)

Junie

ITEM 1973 1974 1975 1976 1977 1978 1979 1980

CENTRAL BANK OF KENYAREDISCOUNT FOR TREAS. BILLS 49 5.5 6.0 6.0 4.4 1.5 7.0 7.0 7.0

ADVANCES AGAINST TREAS. BILL 50 5.3 7.0 7.0 6.5 6.5 7.5 7.5 6.5

BILLS & NOTES UNDER CROP

FINANCE SCHEMEDISCOUNTS 51 6.0 7.0 6.5 6.0 6.0 7.0 7.0 7.5

ADVANCES 52 6.0 7.0 6.5 6.0 6.0 6.0 6.0 7.0

OTHER BILLS & NOTESDISCOUNTS 53 5.5 7.0 7.0 6.5 6.5 7.5 7.5 7.5

ADVANCES 54 6.5 7.0 7.0 6.5 6.5 7.5 7.5 7.5

ADVANCES AGAINST KENYAGOVERNMENT SECURITIES 55 6.5 7.0 7.0 6.5 6.5 7.5 7.5 7.5

KENYA COMMERC:[AL BANKSTIME DEPOSITSMINIMUM 30 DAYS 56 3.0 5.1 5.1 5.1 5.1 5.1 5.1 5.1

3--6 MONTHS 57 3.5 5.1 5.1 5.1 5.1 5.1 5.1 5.1

6--9 MONTHS 58 3.8 5.4 5.4 5.4 5.4 5.4 5.4 5.4

9--12 MONTHS 59 4.0 5.6 5.6 5.6 5.6 5.6 5.6 5.6 1

12 MOS.(K.;H.100000-250000) 6;0 4.5 5.9 5.9 5.9 5.9 5.9 5.9 5.9

SAVINGS DEPOSITS 6t1 3.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0

LOANS & ADVANCES (MINIMUM)1/ 62 7.5 8.0 8.0 . , .. .. ..

LOANS & ADVANCES (MAXIMUM)1i,06 .. .. . .. .. 10.0 10.0 11.0

OTHER FINANCIAL INSTITUTIONSKENYA POST OFFICE SAVINGS 63 3.0 3.0 5.0 5.0 5.0 5.0 5.0 5.0

AGRICULTURAL FINANCE CORP-LO 64 7.5 8.0 8.0 9.0 9.0 9.0 9.0 9.5

HIRE-PURCHASE COMPANIES ANDMERCHANT BANKS:DEPOSITS (TIME) 65 3- 7. 5 5- 7. 5 5- 7.5 5- 8B.0 5- 8.0 5- 8.0 5- 8.0 5- 8. 75LOANS 66 7-12'.0 8-12.0 8-12.0 10-12.0 10-12.0 10-12.0 10-12.0 10-12.0BUILDING SOCIETIESDEPOSITS 67 5.5-16.5 '5.5-16.5 5.5-6.5 6- 8.5 6- 8.5 6- 8.5 6- 8.LOANS 68 7.5-:L0 7.5-11 7.5-11 8-12.0 8-12.0 8-12.0 8-12. 8 J91.90

1/ UNTIL 1977,, THE COMMERCIAL BANK RATES FOR LOANS AND ADVANCES -^

WERE SUBJECT IrO MAXIMUM AND MINIMUM RATES SET BY THE CENTRAL H

IBANK. THE MINIMUM RATIE IS NO LONGER IMPOSED.

SOURCE: CENTRAL BANK 01 KENYA, ANNUAL REFORTS.

STATISTICAL APPE;N1DIX -114-

TABLE 6.4KiENY TrrLLI'vL EXCHANGE RAIES

ITEM 1970 1971 1972 1973 1974 1975 1976 1977 1978 157q

UNITED KINGDOM 70 132.9 134.8 138.5 135.8 129.5 123.0 100.0 96.6 106.3 117.5jA AM ,j4 nfA A,r Ad 7 4A6A 4A rffl 'JAPAN /I O8, OltJ 708 .3 IUO,7 ±.i7 991.9 L00, 0 110.4 140.9 135.3GERNANY 72 68.8 72.1 79.0 94.2 97,1 102.3 100.0 108.5 125.4 137.4IdTE STATES 7 AA3 IAA,A IA,A IAA.A IAA A A 100.0 1OO.0 iOO.0 i

,JIfIL, IJIVV*U OATc v v v A 4AA ±vu iv, v ±'vu. u. v, 0,ITALY 74 133.2 134.3 142.7 142.8 128.0 127.5 100.0 94.3 98.1 100,2rn A unrrRANCEn 75 86.1 86.3 94.8 107.3 99.4 111.5 100.0 97.3 105.-9 112.3NETHERLANDS 76 73.0 75.5 82.4 94.6 98.3 104.5 100.0 107,7 122.2 131.8DELGiUfn 77 77.2 79.0 87.7 99.0 99.1 iO5.0 100.0 107.7 122.9 131.7INDIA 78 119.5 119.5 118,0 115.7 110.6 107.0 100.0 102.5 109.4 110.3

TOTAL

TOTAL IMPORTSPERCENT COVEREu

IMPORTSP EXCLUDING OIL-EXPORTING MIDDLE EAST

PERCENT COVERED

WEIGHTED AVERAGE OF PARTNERS'RATES 82 101i7 103.6 109.6 115.2 111.2 110.5 100.0 102.6 116.5 110.3

KENYA'S EXCHANGE RATE(USS FER K. SH.p INDEX) 83 117.1 117.1 11,. 119.5 117.1 113.9 100.0 101.1 108.3 111.9

KENYA'S EXCHANGE RATE RELATIVEPARTNERS' (EFFECTIVE EXCHANGRATE, INDEX) 84 115.1 113.0 106.8 103.7 105.3 103.1 100.0 9E.5 93.0 91.4

KENYA'S EXCHANGE RATE (SDR PERINDEX) 85 135.2 124.6 124.6 116,1 110*5 100.0 100.0 100.0 100l 0 100,0

SOURCE: IMF, INTERNATIONAL FINANCE STATISTICS AND DIRECTION OF TRADE.

TABLE 6.5KENYA: RELATIVE CONSUMER FPRICE INDEX

(1976j = 100)

I'TEM 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979

UNITED KINGDOM 88 46.5 50.9 54. 5 59. 5 69.0 85.Et 100.0 115.9 125.5 142.3JAPAN 89 53::3 56.6 59. 66.3 81.4 91.2 100.C) 108.C) 112.1 116.2GERMANY 90 71.0 74.8 78. 9 84.4 90.3 95.7 100.C) 103.6i 106.5 110.9UNITED STATES 91 68.2 71.1 73. 5 78.0 86. Ei 94.5 100.C) 106.5 114.5 127.5ITALY 9:2 50.1 52.5 55.5 61. 5 73.2 85.6 I00.C) 117.C) 131.2 197.6FRANCE, 93 59. 9 63.2 67.1 72.0 81.9 91.6j 100.C) 109.41 119. 4 132.1NETHERLANDS 94 60.13 65.3 70.4 76.1 83.4 91.9 100.C) 106.41 100.8E 115.4BE LG I lJM 95 61.3 63.9 67.4 72. t 81. 2 91. E6 100. C) 107.1 111.9 116.8INDIA 96 62.9 64.8 68.9 80. i 102.5 108. El 100.C) 108. i 111.2 , 118.2

TOTALL,

WEIGHTED AVERAGE OF PARTNERS'PRICE INDEX 913 56.7 60.4 63.8 69. i 79.8 9.9 100.C) 110.1 117.C0 130.1

KENYA"S CONSUMIER PRICE INDEX 99 52.:3 54.3 57.4 62.8 73.9 88.1 100.C) 114.S9 134.3 145.1

KENYA"S RELATIVE CONSUME R PRICINDEX 100 92.:2 89. 9 90.C) 90.4 92.6i 96.S9 100.C) 104.4 114. El 111.5

SOURCE: IMF, INTERNATIONAL FINANCE STATISTICS AND DIRECTION OF TRADE.

U]1-3

cl)

H

TABLE 7. 1 KENYA: GROSS MARZKETED PRODUCTION

(KL THOUSANDS AT' CURRENT PRICES)

ITEM 1972 1973 1974 1975 1976 1977 1978 1979

CEIREALS, tX1WdHEAT' i 4160.0 3865.0 6925.0 8275.0 120,47.0 11877.0 11675.0 14886.0 IAA IZE 2 7252.0 8571.0 8482.0 17022.0 2 16:28 .0 188-43. 0 10501.0 9363.0 OTHER'S 3 1541.0 2033.0 2251.0 3626.0 5658.0 4807.0 5301.0 62:30. 0

TOTAL 4 12953.0 14491.0 17658.0 289:23.0 39333.0 355:27.0 274'77.0 30479.0

TEMAPORARY INDUSTRIAL CROP'SPDYRETHRUM 5 3662.0 3259.0 4 206. 0 455 1. 0 40139.0 3662.0 4106.0 5 156. 0SUGAR CANIE 6 3038.0 4453.0 5916.0 82:30. 0 9618.0 13364.0 17392.0 23302.0OTHERS 7 1609. 0 16650.0 2080.0 3041 .0 3670.0 5440.0 7941 .0 8769. 0

TOTAL 8 8 309. 0 9372 .0 12202.0 15822.0 173-77.0 22466.0 29439.0 37227.0

OTHiER TEMPORARY CROPS 9 42-49.0 35653.0 5356.0 7123.0 8626.0 7680.0 6640.0 7196.0

PERZMANENT CRZOPSCOFFEE 10 241655.0 32772. 0 353:26. 0 35345.0 1013,33.0 1929'19.0, 118822.0 106426.0SISAL ii 18652.0 7051.0 18 350. 0 70,38.0 3920.0 4800.0 4278.0 6578.0T'EA 12 160:34.0 16766. 0 19255. 0 22914.0 32757.0 92 72 9.0 73914.0 673413.0OTHERS 13 28:20.0 2817.0 3 177. 0 3 274. 0 34-77 .0 2945. 0 31i85. 0 3111.0

T'OTAL 1 4 448831.0 59406.0 76108.0 68571.0 141487.0 293393.0 200199.0 183458.0

T'OTAL CROPS 15 70392.0 868:32.0 111324.0 120439.0 206823.0 3579911.0 263755.0 258360.0

LIVESTOCK ANJD PRODUCT'SCATTLE AND CALVES 16 165'10.0 16353.0 176'10.0 19827.0 19056.0 2343j7.0, 34941.0 29525.0DIAIRY PRODUCTS 17 l0890.0 I11305. 0 10100.0 10781.0 12050.0 188'36. 0 19587.0 17465.0COTHERS 1 8 40:38.0 45'14.0 4747.0 5515.0 6003. 0 683 1 .0 7574 .0 77'30.0

TOTAL 19 314318.0 321-72.0 32457.0 36 123. 0 37 109. 0 491I04. 0 62 102. 0 54720.0

UNREC. MARKETED PRODUICTION 20 4100.0 4299.0 4668. 0 5404 .0 6115.0 7489.0 7532.0 7160.0

TOTAL 21 105931.0 12330)3.0 l48449.0 161966.0 :250047.0 414584.0 :333389.0 :320240.0

SOURCE: CENTRAL BUREAU OF STAT'ISTICS, ECONOMIC SURVEYS.

TABLE 7.2KENYA: GROSS MARKETED PRODUCTION

(Kl THOUSANDS AT CONSTANT 1976 PRICES)

ITEM 1975 1976 1977 1'978 1'979

WHEAT 24 9508.0 12047.0 10717'.0 10534.0 1246C).0MAIZE 25 18682.0 21628.0 16237.0 9048.0 925 7.0BARL EY 26 177 7.0 2625.0 2008.0 2168.0 273C).ORICE: PADDY 27 2198.0 2690.0 2834.0 2451.0 2564.0PINEAPPLES 28 881.0 1317.0 1698.0 1472.0 1321.0PYRETHRUM 29 5023.0 4089.0 5226.0 2807.0 2807.0SUGAR CANE 30 9629.0 9618.0 10988.0 13671.0 18318.0COTTON 31 16811.0 1648.0 1695.0 2836.0 2878.0COFFEE 32 83476.0 101333.0 122486.0 106412.0 94967.0SISAL 33 5098.0 392C).0 3761.0 4675.0 4259.0TEA 34 29980.0 32757.0 45602.0 49344.0 52611.0CASHEWNUTS 35 449.0 422.0 427.0 383.0 382.0LIVESTOCK AND PRODUCTS

CATT'LE AND CALVES 36 20122.0 19056.0 21138.0 27302.0 24128.0SHEEP AND GOATS 37 1759.0 1021.0 1124.0 1094.0 1406.0PIGS 38 887'.0 994.0 1047.0 1084.0 936.0POULTRY 39 1607.0 2142.0 2522.0 1578.0 1850.0WOOL. 40 370.0 370.0 331.0 322.0 342.0HIDES AND SKINS 41 1483.0 1476.0 1637.0 2114.0 1869.0DAIRY PRODUCT'S 42 13318.0 12050.0 14983.0 15581.0 13892.0

TOTAL 43 39546.0 37109.0 42782.0 49075 .0 44423.0

UNREC. MARKETED PRODUCTION 44 7547.0 6115.0 5040.0 6083.0 5913.0

TOTAL PRODUCTION 45 39546.0 .37109.0 42782.0 *49075.0 44423.0

SOURCE: CENTRAL BIJREALI OF STATISTICS. H

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TABLE 7.3

KENYA: PRINCIPAL CROPS. PRODUCTION FOR SALE(THOUSANDS OF METRIC TONS)

ITEM 1972 1973 1974 1975 1976 1977 197B 1979

WfHEAT 102 164.4 124.6 159.5 145.5 186.8~ 169.9 165.9 201 .0

MIAIZE I/ 103 205.7 373.0 440.8 365.4 487.8 564.7 424. 0 236.3

RICE PADDY 104 28. 5 33.8 36.1 33.2 32.1 39.3 41.4 35.8~

PIYRETHRUM EXTRACT 105 0.1 0.2 0.2 0.2 0.2 0.2 0.1 0.1

SUGAR CANE: 2/ 106 1451.2 1062.3 1545.1 '1719.1 1654 .6i 1652.6 1888.1 2,349. 2

SEED COTTON 107 14.0 17.0 16.2 15.0 16.1 15.8 16.3 27. 2

CLEAN COFFEE 108 58.3 62.0 71.2 70.1 66.2 80.3 97.1 84.3

SISAL 109 43.9 41.2 58.1 86.5 43.65 3 3.6 33. 2 31 .5

T'EA 110 41.1 53.3 56.6 53.4 56.7 62.0i 86.3 93. 4

1/ DELIVERIES TO THE MARKETING BOARD ONLY.

2/ ICUIGCN DELIVERED TO THE SUJGAR FACTORIES.

SOURCE: CENTRAL BUREAU OF STATISTICS, ECONOMIC SURVEYS.

TABLE 7.4KENYA: AVERAGE GiROSS COMMODITY PRICES TO FARMERS

(K.SH. PE R STATED UNIT)

ITEM 1972 1973 1'374 1'975 1'976 1977 1978 1979

COFIFEE (100 IKG.) 48 7793.0 921.0 10013.0 1069.0 2524.0 3975.0 2818.0 2835.0

TEA ( " ) 49 601.0 59:3.0 721.0 808.0 1057.'0 2149.0 1583.0 1357.0

SISAL ( " ) 50 90.0 191.0 44:3.0 32:3.0 234.0 398.0 272.0 361.0

PYRIETHRUM (EXTRACT EOULIV.) ( 51 39618.0 41536.0 43000.0 4465:3.0 492493.0 55870.0 7204'7.0 90679.0

SEED COTTON ( ) 52 115.0 12:2.0 155.0 19:2.0 209.0 288.0 315.0 328.0

MAI;ZE ( ) 53 39.0 39.0 46.0 70.0 7'7.0 89.0 89.0 77.0

SUGAR CANE (TON) 54 5.0 5.0 6.0 9.0 10.0 1:3.0 1:3.0 1:3.0

RICIE PADDY (100 KG.) 55 51.0 50.0 59.0 104.0 137.0 136.0 145.0 151.0

WHEAT ( ") 56 51.0 5'7.0 80.0 105.0 120.0 13:3.0 13:3.0 144.0

BEEI (TFIIRD GRADE) ( ) 57 30:2.0 346.0 41:3.0 474.0 479.0 519.0 676.0 689.0

MILK (100 LITERS) 58 7'7.0 77.0 7'7.0 85.0 105. 0 132.0 132.0 13:2.0

SOUIRCE: CENTIRAL BUREAU OF STATISTICS. ECONOMIC SlJRVEYS

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TABLE 7.5 ' zKENYA: GROSS MARKETED PRODUCTION F'ROM LARGE AND SMALL FARMS t(KL MILLION AND IN PERCENTAGE)

ITEM 1972 1973 1974 1975 1976 1977 1978 1979

LARGE FARMS 75 50.3 60.0 73.4 71.8 122.1 206.0 147.2 143. 3

ANNUAL PERCENTAGE CHANGE, % 76 19.4 19.2 22.3 -2.2 70.1 68.7 -28.5 -2.6

SMIALL FARMS 77 55.6 63.3 75.0 90.1 128.0 208.5 186.2 177.0

ANNUAL PERCENTAGE CFIANGE. % 78 24.8 13.8 18.5 20.1 42.1 62.9 -10.7 -4.9

TOTAL MARKETED PRODUCTION 79 105.9 123.3 148.4 162.0 250.0 414.6 333.4 320.2

ANNUAL PERCENTAGE CHANGE,% 80 22.2 16.4 20.4 9.2 54.3 65.8 -19.6 -4.0

PERCENTAGE SHARE OF SMALL FARM 81 52.5 51.4 50.6 55.6 51.2 50.3 55.8 55.3

SOURCE: CENITRAL BUREAU OF STATISTICS. STATISTICAL ABSTRACTS.

TABLE 7.6KENYA: AGRICULTURAL MARKETED PRODUCTION INDICES

(1976 = 100)

ITEM 1972 1973 1974 1975 1976 1977 1978 1979

QUANTUM INDICES

CEREALS 1/ 61 69.0 74.6 71.4 82.7 100.0 80.9 61.6 68.8

TEMPORAIRY INDUSTRIAL CROPS 62 79.9 86.3 98.7 106.1 100.0 106.0 125.7 153.4

PERMANENT CROPS 63 82.5 92.0 92.3 87.5 100.0 123.5 114.6 109.2

TOTAL CROPS 64 78.9 85.5 87.8 89.6 100.0 111.8 103.5 103.5

LIVESTOCK AND PRODUCTS 65 122.9 115.7 105.3 106.0 100.0 115.3 132.3 119.7

TOTAL GROSS MARKETED PRODIJCT 66 90.0 93.2 92.3 94.1 100.0 111.6 107.7 105.8

FRICE INDICESCEREALS 67 47 .7 49.4 62.9 88.9 100.0 111.6 113.3 112.7

TEMPORARY INDUSTRIAL CROPS 68 59.8 62.5 71.1 85.8 100.0 122.0 134.8 139.7

PERMANENT CROPS 69 38.4 45.6 58.3 55.4 100.0 168.0 123.5 118.8 1

TOTAL CROPS 70 43.2 49.1 61.3 65.0 100.0 154.9 123.2 120.7

LIVESTOCK AND PRODUCTS 71 69.0 74.9 83.0 91.8 100.0 114.8 139.8 123.2

TOTAL GiROSS MARKETED PRODIJCT 72 47.1 52.9 64.3 68.8 100.0 148.6 126.1 121.1

I/ BASED ON SALES TO MARKETING BOARDS ONLY.

SOURCE: CENTRAL BUREAU OF STATISTICS. ECONOMIC SURVEYS.

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TABLE 7.7KENYA: AGRICULTURAl, QUANTUM AND PRICE INPUT INDICES

(1976 = 1oo)

ITEM 1976 1977 1978 1979 d

2:l

QUANTUM INDICES H

FEIRTILISERS 84 100.0 143.6 155.6 136,1FUEL AND POWER 85 100.0 129.2 126.8 131.0BAGS 86 100.0 101.5 105.8 103.1

MANUFACTURED FEEDS 87 100.0 121.3 142.1 129.5PURCHASED SEEDS 88 100.0 135.9 94.9 92.5OTIHER MATERIAL INPUTS 89 100.0 123.7 153.5 140.5

TOTAL MATERIAL INPUTS 90 100.0 128.5 139.5 127.5

SERVICE INPUTS 91 100.0 99.8 106.7 104.0

TOTAL INPUTS 92 100.0 124.9 135.4 127.8

PRICE INDICES 1

FERTILISERS 93 100.0 99.2 98.3 102.6FUEL AND POWER 94 100.0 105.9 120.2 138.6BAGS 95 100.0 111.1 116.4 118.3MANUFACTURED FEEDS 96 100.0 117.3 132.5 138.3PURCHASED SEEDS 97 100.0 123.0 182.2 154.4OTHER MANUFACTURED INPUTS 98 100.0 117.3 118.1 123,0

TOTAL MATERIAL INPUTS 99 100.0 110.1 118.2 126.1

SERVICE- INPUTS 100 100.0 116.4 127.4 137.4

TOTAL INPUTS 101 100 0 110.7 119.1 124.2

SOURCE: - - - --- - - - - - - -CENTRAL -BUREAU OF- - - - - --- - - - - ----------- S E S -- - - - - - - - - I - - - - - --- - - - -=

SOURCE, CENTRAL BtJREAU OF STATISTIC';, ECONOMIC SURVEYS.

TAB3LE 7.8KENYA: TERMS OF TRADE FOR AGRICULTURE

(1976 = 100)

ITEM 1976 1977 1978 1979

PRICES RECEIVEDTOTAL CROPS 212 100.0 119.5 114 .4 119. 0

DOMESTIC 213 100.0 112.5 109 9 115.2EXPORT 214 100.0 153.3 118.4 122.3

LIVESTOCK AND PRODUCT-S 215 100.0 123.4 130.0 131.6

INDEX OF PRICES RECEIVED 216 100.0 120.1 116.7 131.0

PRICES PAIDPURCHASED INPUTS 217 100.0 114.4 110.9 118.6INDEX OF PURCHASED CONSUMER

GOODS (RURAL AREAS) 2'18 100.0 107.8 117.0 130.1INDEX OF PRICES PAID 219 100.0 109.4 115.5 127.3

AGRICULTURE SECTOR TERMS OF TR220 100.0 109.8 101.1 95.1

SOURCE: CENTRAL BUREAU OF STATISTICS, ECONOMIC SURVEYS.

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TABLE 7.9KENYA: AGRICULTURAL STAPLES, MOVEMENTS IN PRICES 1/

(K. SH. PER STATED UNIT)

ITEM 1973 1974 1975 1976 1977 1978 1979

MAIZE F'LOUR, UNSIFTED (KG.) 114 0.7 1.0 1.2 1.5 1.5 1.5 1.5

BREAD (WHITE) (500 GM.) 115 1.0 1.2 1.4 1.4 1.5 1.6 1.7

WHEAT FLOUR (KG.) 116 1.4 2.0 2.5 2.5 2.7 2.8 2.9

BEIEF, LOW GRADE (KG.) 117 6.4 6.4 7.4 7.4 8.2 10.1 10.5

BEEF, SIRLOIN (KG.) 118 12.3 12.6 13.3 15.1 15.3 19.5 19.7

MUTTON (A GRADE) (KG.) 119 13.0 16.0 16.5 18.5 17.7 20.3 20.7

EGGS (1 DOZEN) 120 4.2 5.5 6.1 7.3 6.4 7.4 8.0

SUGAR (KG.) 121 1.6 1.6 1.9 1.9 2.5 2.6 2.6

RICE (GRADE II) (KG.) 122 1.9 2.4 3.5 4.5 4.5 4.5 4.5

1/ NAIROBI CONSUMER PRICESSOIJRCE: CENTRAL BUREAU OF STATISTICS

TABLE 7.10KENYA: DAIRY PRODUCTION

ITEM 1972 1973 1974 1975 1976 1977 1978 1979

MILK PRODIJCTICIN 1/2/ ( '000 LI126 268-437.0 279558.O 249843.0 230607.0 208658.0 259450.0' 269796.0 240559.0

WHOLENIILK AND CREAM ('000 LIT. 127 124550.0 1481316.0C 160009.0 157956.0 150422.0 1571380.C 185557.0 212:255.0

BIJTTER AND GHEE ('000 LIT.) 12E 56596.C' 5543.0 4.457. C 4191.0' 3067.0 4:342.0 31371.0 3134.0

CHEESE (M. TONS;) 129 730.C' 388.0 !588.0 4S62.0 177.0 445.0 :253.0 :264.0

EVAPORATED MILK (M. TONS) 130 4S26.0 5129.0 3:249.0 16526.0 2099.0 1:321.0 489.0 188.0

DRIED WHOLEMILK: POWDER (M. TON131 2327.C 3697. C 2!592.0 2:289.0 3009.0 5:262.C 4:236.0 1439.0

DRIED SKIMNILK POWDER (NI. TONSI32 4080.0, 3814.0 3019.0 2772.0 1t89.0 3440.C 2956.0 1:218.0 C

OTHER PRODIJCTS (M. TONS) 133l :235.0 159.0 71.0 1.0 2.0 1.0 2956.0 1:218.0 n

1/ DELIVERIES OF MILK AND BUTTERFAT TO KENYA CO-OPERATIVE CREAMERIESAND OTHER SALES LICENSED BY THE KENYA DAIRY BOARD2/ WHOLEMIILK EOUIVALENT.SOURCE: CENTRAL BUREAU CIF STATISTICS, STATISTICAL ABSTRACTS.

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TABLE 7.11KENYA: LIVESTOCK - PURCHASES FOR SLAUGHTER BY PARASTATAL BODIESI/

(1-HOUSANDS OF HEAD)

ITEM 1972 1973 1974 1975 1976 1977 1978 1979

CATTLE AND CALVESi 136 199.1 155.0 159.5 134.1 223.5 158.1 68.0 67.7

SHEIEP AND LAIMBS 137 54.7 17.8 11.3 25.8 1:2.8 11.2 11.6 10D. 1

GOATS 138 46.5 17.7 6.5 7.2 4.6 6.1 10.4 2. 1

PIGS 139 45.2 44.1 38.3 40C.9 44.6 47.2 51.0 45.4

1/ KENYA MEAT COMMISSION (KMC), PIG INDUSTRY BOARD AND UPLANDSi BACDNFACTORY, LTD. A SMALL PORTION OF T'HE PURCHASES OF KMC ARE SOLODTO TANZANIA IOR EXPORTED LIVE.SOURCE: CENTRAL EiUREAU OF STATISTICS. STATISTICAL ABSTRACTS.

TABLE 7.12KENYA: LARGE FARMS,, HECTARES UNDER PFtINCIPAL CROPS

(IN '000 HECTARES AND PERCENT'AGE)

ITEM 1972 1973 1974 1975 1976 1977 1978 1979

SISAL 141 67.9 74.0 81.9 73.8 77.D 67.5 59.18 56.3TEA 142 23.8 25.5 26.,3 26.0 25.3 24.7 25.1 24.9SUGAR CANE 143 26.9 27.1 29.3 31.5 30.1 32..2 35 15 36.3COFFEE 144 29.4 28.16 28.5 28.3 29.8 30.0D 30.5 32.1WIATTLE 145 16.1 13.7 13.6 12.1 11.8 11 .7 14.3 11 .13PYRETHRUM 146 3.16 3.2 4.3 4.1 3.0 2.3 2.0 1.8WHEAT 147 89.2 83.15 89.:3 89.9 86.6 80.9 77.:2 75.83MIAIZE 14B 77.2 75.8 63.7 68.1 74.3 85.4 72.8 56.7

ANNUAL % CHANGE

SISAL 149 -17.0 9.0 11.0 -9.0 4.0 12.0 -11.0 -6.0TEA 150 0.0 7.0 3.0 -3.0 -3.0 -2.0 2.0 -1.0 QSUGAR CANE 151 -4.0 1.0 8.0 6.0 -4.0 7.0 11.0 3.0(COFFEE 15:2 4.0 -3.0 0.( -2.0 5.0 1.0 2.0 5.0(WATTLIE 153 -3.0 -15.0 -1.0 -10.0 -3.0 -1.0 22.0 -17.0PYRETHRUM 154 -3.0 -11.0 34.0 -5.0 -27.0 -23.0 -13.0 -10.01WHEAT 155 -4.0 -6,0 7.0 0.0 -4.0 -7.0 -5.0 -2.0MAIZE 156 16.0 -2.0 -16.0 6.0 9.0 15.C0 -15.0 -22.C)

SOURCE: CENTRAL BUREAU OF STATIsTrics. STATI-STICAL ABSTRACTS.

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TA13LE 7.13KENYA: LARGE FARMS, LAND UTLIZATION

('000 HECTARES.)

ITEM 1972 1973 1974 1975 1976G 1977 1 978 I1979g

TEMPORARY CROPS 159 302.1 29 1. 5 301.6 32 2. 4 344. 3 358. 6 350.2 346.7

TEMPORARY MEADOWS 1650 95.2 92.2 97 .3 94.0 79.5 85.0 83.0 89.7

TEMPORARY FALL-OW 1651 69.8 64.1 78.~,7 73.1 62.1 60.8 83.0 63.1

PERMANENT CROPS i162 146.3 149.3 158.4 150.0 154.7 144.5 141.4 136.4

UNCULTIVATED MAEADOWS ANqD PASTU1653 1755.7 1810.7 1792..7 1796.1 1 772. 4 1751.1 1649.8 1590.31

FOREST LAND 1634 149.7 135.5 126.7 1 26. 2 1 32. 4 138.8 130.4 107.8 co

ALL OTHER LAND 1655 169.6 114.4 118..3 111.0 114.7 1 22 .6 228.0 336. 7

SOURCE: CENTRAL BUREAU OF STATISTICS, STATISTICAL ABSTRACTS.

TABLE 7.14KENYA: DISTRIBUT'ION. SIZE OF IHOLDINGS

(NUMBER OF HOLDINGS)

ITEM 1972 1973 1'174 1975 19S76 1S77 1978 1979

SIZE OF HOLDING IN HECTARES

0-19 169 436.0 429.0 445.0 455.0 452.0 469.0 478.0 567.020-49 170 334.0 338.0 3341.0 355.0 361.0 363l.0 415.0 427.050-99 171 286.0 298.0 302.0 306.0 32C).0 321.0 341.0 377.0100-199 172 369.0 380.0 392.0 393.0 3841.0 390.0 416.0 429.0200--299 173 328.0 33-7.0 335.0 347.0 345.0 351.0 369S.0 365.0300--399 174 256.0 259.0 259.0 256. 0 258.0 255.0 257.0 260.0400--499 175 208.0 202.0 216.0 219.0 219.0 224.0 216.0 219.0500-999 176 490.0 489.0 498.0 490.0 492.0 492.0 497.0 486.0 1100C-1999 177 223.0 210.0 20i7.0 211.0 211.0 214.0 219.0 206.02000-3999 178 110.0 10,'7.0 113.0 114.0 111.0 109.0 10Ei.0 10-3.04000-19999 179 107.0 102. 0 102.0 105.0 107.0 106i.0 102.0 10-3.0 I

20000+ 180 13.0 14. 0 1 4.0 130 13.0 14.0 13.0 1-1.0

TOTAL 181 3166.0 3165.0 3217.0 3264.0 3273.0 3309.0 3433.0 3555.0

SOURCE: CENTRAL BUREAUJ OF STATISTICS, STATISTICAL ABSTRACT'S.

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TABLE 7 15KENYA: NEW AGRICULTURAL CREDIT ISSUED BY TYPE OF FARME'R

(-00o KL) 13

ITEM FY76 FY77 FY78 FY7' 9

SMALL SCALE FARMERSSHORT TERM LOANS 184 2137.0 1817.0 1013.0 2389.0

MEDIUM TERM l OANS 185 599.0 595.0 1905.0I 188.0 '

LONG TERM LOANS 18i; 50.0 29.0 135.O` 64.0

OTHER LOANS 187 26.0 21.0 66.0 34.0

TOTAL 1813 2812.0 2462.0 3119.0 2675.0

LARGE SCALE FARMERSSHORT TERM LOANS 18'9 846.0 93.0 7117.0 13.0,

MEDIUM TERM l_OANS 191D 30.0 0.0 0.0 0.0

LONG TERM LOANS 191 2321.0C 2294.0 5683.0 3020.0

OTHE-R LCANS 192 0.0 348.0 890.0 1534.0

TOTAL 194 3197.D 2735.0 13690.0 4567.0

COOPERATIVE SOCIETIESSHOIRT TERM LOANS 195 10926.0 7963.l0 7552.0 6926.0 w

MEDIUM T-ERM LOANS 196 4281 .0 1883. 0 3019. 0 3676.0 0

LONG TERM LOANS 197 21.0 0.0D 12.']D 0 ID

OTHER LOANS 198 0.0 0.0 0. tD 0.0

TOTAL 199 15228.0 9846.0 1 0583.0D 10602.ID

CITHER FARMERSSHORT TERMS 200 3421.0 5576.0 0.0 817.0

MEDIUM TERM LOANS 201 376.0 0.0 75.0 0.0

LONG TERM LOANS 202 0.0 338.0 0.0 267.0

TOTAL 203 '3797.0 '5914.0 75.0 '1084.0

ALL RECEIPTSSHORT TERM LOANS 204 17330.0 15451.0 1'5682.0 10144.0

MEDIUM TERM LOANS 205 5287.0 :2477.0 4999.0 3864.0

LONG TERM LOANS 206 2392.0 2661 0 '830.0 3351.0

OTHER LOANS 207 26.0 370.0 956.0 1569.0

TOTAL 208 2'5034.0 20957.0 27467.0 113928.0

SOURCE: CENTRAL 8UREAU OF STATISTICS, ECONOMIC SURVEYS.

TABLE 8.1KENYA: LARGE SCALE MANUFACTURING FIRMS AND ESTABLISHMENTS 1/:

NUMBER OF FIRIMS

I'TEM 1973 1974 1975 1976 1977

MIEAT AND DAIRY PROCDUCTS 1 5.0D 7./D 7.0 9.( 14.0

CANNED VEGiETABIES, OILS & FATS :2 9.0 11.0 13.0 12.0 16.0GRAIN MILL PRODUCTS :3 7.0 8.0D 9.0 12.0 12.0

BAKERY PRODUCTS 8.0 8. ID 9. D 8.0 t 9. D

SUGAR AND CONFECTIONERIIES 5 10.ID 9.ID 10.D 12.0 1 0. 041ISCELLANEOUS FOODS li 38.0 43.0 43.0 54.0 54.0

8EVERAGES AND TOBACCO '7 8.0 9.tD 8.0 8.0 10.0TEXTIILES S 31.0 33.0 34.0 26.0 36.0CLOTHING 9 28.0 30.0 32.10 32.0 35.0OLEATHER PRODUCTS & FOOTWEAR 10 5.0D 5.0 7.0 7.0 7.0WOOD AND CORK PRODUCTS 11 44.0 48.0 53.0 49.0 45.0FURNITURE AND IFIXTLIRES 1:2 13-0 150I 16.0D 13.0 19.0 C

P'APER AND PAPER PRODUCT'S 1'3 12.0 11 .D 12.0 10.0 12.0

P'RINTING AND PUEBLISHING 14 16.D 16.0D 18.0 21.0 18.0INDUSTRIAL. CHEMICALS 15 7.D 10.0D 14.1D 11.0 9.0

PETROLEUM S OTIHER CHEMICALS 145 20.D 23.0 23.0 22.0 30.D

R'UBBEIR PRCIDUCT'S 17 5.0 5 0 5. 0 5. 0 6. PLASTIC PRODUCTS 113 8.0 S.0I 9.0 9.0 11.0P'OTTEIRY & GLASS PRODUCTS 19 4. 0D 4. 0 4. D 4.0 4.0 d

NON-METALLIC MINERAL PRODUCTS 20 15HD 15. 0 17.0 16.D 15. 0

NIETAL PRODUCTS 21 28.0 31. D '2.0 35.0 .39.0

NON-ELECTRICAL MACHINERY 2:2 6.0 60 eD 0 5.0 6.0

ELECTIRICAL. MACHINERY 2:3 7.0 9 0 I . 10.0D 10.O

TRANSPORT EQUIPMENI 24 19.0 19.0 21 O 1 S. 0 22.D

MISCELLANEOUS MACHINERY 2S 6.0 , O 7 O 7.0 7.0

TOTAL NUMBER OF FIRMS 2b 359.ID 390.0) 114.0 425.0 45G6. 0J

_________.......................- _. __- - - - - - - - - - - - _- - - - - -.- -- - - - - - - -- - - - - - - - - - - - - - - - - - - - -.........- - - - - - -- - -- -- ---- -- ----------- F-

I/ ESTABLISHMENTS WITH '50 OR MORE EMP-LOYEES.SOURCE: CENTRAL BUREAU OF STATISTICS, STATISTICAL 66E3Tl"C:TS. H

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TABLE 8.2 H

KENYA: LARGE SCALE MANUFACTURING FIRMS AND ESTABLISHMENTS 1/: NUMBEIR OF >PERSONS ENGAGED

__________- I ----------------------- ------------------------------------------- '--d

ITEM 1973 1974 1975 1976 1977 z- - - - - - -_ - - - - -_ - - - - -- - - - - - _ - - - - -- - - - -- - - . - - - - - - - - - - - - - - - - -';

H

MEAT AND DAIRY PRODUCTS 28 4'137.0 4176.0 4206.0 6 317.0 5118.0 XCANNED VEGETABLES, OILS & FAT-S 29 2811.0 3302.0 3663.0 4501.0 7643.0GRAIN MILL PRODUCTS 30 2094.0 2166.0 2365.0 2974.0 1E195. 0BAKERY PRODUCTS 31 1424.0 1Ei18.0 1720.0 1294.0 1553.0SLIGAR AND CONFECTIONERIES 32 3749.0 3778.0 3831.0 4700.0 3190.0MISCELLANEOUS FOODS 33 5609.0 6127.0 6557.0 11367.0 17119.0BEVERAGSES AND TOBACCO 34 4403.0 5032.0 5354.0 5441.0 5963. 0TEXTILES 35 115 *39.0 11928.0 12232.0 13230.0 14967.0CLOTHING 36 21187.0 24-9 ) 3218.0 3222.0 3294.0LEATHER PRCIDUCTS & FOOTWEAR 37 1893.0 1983..) 2194.0 2199.0 2514.0WOOD AND CCIRK PRODUCTS 38 6350.0 6666.0 6862.0 7030.0 7C073.0FURNITIJRE AND FIXTURES 39 1493.0 1586.0 1527.0 1278.0 3405.0PAPER AND PAPER PRODUCTS 40 1 958.0 19_-6.0 2369.0 3040.0 3212.0 1PRINTING AND PUIBLISH1ING 41 2359.0 25Ei7.0 2762.0 3284.0 2890.0 H

INDUSTRIAL CHEMICALS 42 1584.0 2C)52.0 2086.0 2692.0 1706.0PETROLEUM 8, OTHER CHEMICALS 43 2646.0 3C)46.0 2990.0 3598.0 4321.0RUIBBER PROCDUCTS 44 1C)02.0 1164.0 1217.0 1182.0 1563.0PLASTIC PRCIDUCTS 45 980.0 E84 3.0 9104.0 1023.0 1330.0POTTERY & GLASS PRODUCTS 46 747.0 7 8.0 742.0 813.0 949.0NON-MErALLIC MIINERAL. PRODUCTS 47 2645.0 2933.0 3325.0 3450.0 3573.0METAL PRODUCTS 48 5587.0 6204.0 6413.0 6757.0 6611.0NON-ELECTRICAL MACHINERY 49 632.0 412.0 487.0 386.0 528.0ELECTRICAL MACHINERY 50 4234.0 4-396.0 4419.0 4368.0 5133.0TRANSPORT EOUIPMENT 51 18163.0 16522.0 15467.0 15444.0 16966.0MISCELIANECIUS MACHINERY 52 El55i.0 906.0 936.0 808.0 491.0

TOTAL NUMBER OF PERSONS ENGAGE 53 91131.0 94540.0 97882.0 110392.0 122987.0

I/ ESTABLISHMENTS WITH 50 OR MORE EMPLOYEES.SOURCE: CENTRAL BUREAU OF STATISTICS, STATISTICAL A13STRACTS.

TABLE 8. 3KENYA: LARGE SCALE MANUFACTURING FIRMS AIND ESTABLISHM'ENTS 1/: LABOR COSTS 2/

(THOUSANDS DF KL)

ITEM 1973 1974 1975 1976 1977

MEAT AND DAIRY PRODUCTS 56 2157.0 2509.0 2552.0 3032.0 3247-0

CANNED VEGETABLES,, OILS & FATS 57 831.0 1112.0 1646.0 2626.0 1709.0

GRAIN MILL PRODUCTS 58 856.0 931.0 1030.0 1331.0 1203.0

BAKERY PRODUCTS 59 555.0 624.0 666.0 755.0 738.0

SUGAR AND CONFECTI[ONERIES 60 1781.0 2360.0 2567.0 3350.0 4328.0

MISCELLANEOUS FOODS 61 1454.0 2872.0 3328.0 3569.0 4933.0

BEVERAGES AND TOBACCO 62 2920.0 4055.0 5104.0 6572.0 6056.0

TEXTILES 63 2892.0 2518.0 3998.0 4554.0 5696.0

CLOTHING 64 629.0 756.0 1051.0 1305.0 1330.0

LEATHER PRODUCTS & FOOTWEAR 65 596.0 695.0 814.0 989.0 1242.0

WOOD AND CORK PRODUCTS 66 1266.0 1376.0 1596.0 1731.0 2599.0

FURNITUREI AND FiXTURES 67 434.0 634.0 773.0 653.0 1319.0

PAPER AND PAPER PRODUCTS 68 1287.0 2419.0 1747.0 2391.0 2647.0

PRINTING AND PUBLISHING 69 1787.0 2179.0 341C'.0 2733.0 3022.0

INDUSTRIAL CHEMICALS 70 904.0 1504.0 2007.0 2249.0 1619.0

PETROLEUM & OTHER CHEMICALS 71 2343.0 3132.0 2961.0 3937.0 5538.0

RUBBER PRODUCTS 72 741.0 805.0 914.0 994.0 1221.0

PLASTIC PRODLICTS 73 405.0 500.0 558.0 680.0 860.0

POTIERY 1 GLASS PRODUCTS 74 312.0 358.0 409.0 463.0 474-0

NON-METALLIC MINIERAL PRODUCTS 75 1472.0 1919.0 2288.0 2688.0 2859.0

METAL PRIODUCI'S 76 2890.0 3503.0 3788.0 4417.0 9158.0

NON-ELECTRICAL MACHINERY 77 211.0 263.0 316.0 279.0 334.0

ELECTRICAL MACHINERY 78 2219 0 31tS1.0 3289.0 2665.0 4250 0

TRANSPORT EQUIPMENT 79 4948.0 4762.0 5317.0 5667.0 6423.0

MISCELLANEOUS MACHINERY 80 241.0 309.0 429.0 336.0 234.0

TOTAL LABOR COSTS 81 36131.0 46212.0 51459.0 60967.0 73039.0= =- .= =, =~ = = = m= =~ = = = _ == = = = _. = = = = = = = , = =

1/ ESTABLISHMENTS WITH 50 DR MORE EMPLOYEES.

2/ INCLUDE SALARIES AND WAGES PAID IN CASH AND FFRINGE BENEFITS.

SOURCE: CENTRAL BUREAU OF STATISTICS. ST'ATISTICAL ABSTRACTS. H

H

it

tTl

'-3TABl E 8.4 4

KENYA: LARGE SCALE MANUFACTlJRING FIRMS AND ESTAPLISHMENTS 1/: GROSS PRODUCT(THOUSANDS OF KL)

ITEM 1973 i974 1975 1976 1977

FJIEAT AND DAIRY PRO[)UCTS 84 4091.0, 4842 0 '3667.0i 3:2 65.0 4,G31 .0XCANNED) VEGETABLES, OIt S & FATS 85 2586.0 .154'10 C, 007. iD 11019.0D J7 3C. IDGRAIN MILL. PRODUCT'i 86 .2214.0 2381.0 282 1.0 3Z 002 -ID 3 2 4 9.Dt3AKERfY PRCODUCTS 87 tl165,0 Itl105.0 1 i22.0D 12 79.0 i -1325 40SUGAR AND CONFECTICONERIES 88 '3257.D 0 974.0 5742 -O 906 1 (D 1C0374, UDMlISCEI-LANEOUS FOOD'i 89 6270.0 100'1 . 0 12209.0D 27633 0) 3360 1 0BEVERANGES AND TOBAC.CO 90 10915S.0~ 21926.0 16061 MD 20996.0( 19,799H0TEXT I_ES 91 f;651 .,D 6786.~0 7165.0D 7693.0 11154HDCLOTHING 92 873. CI 1066.0 1647.0 2385.0 2567.o)LEATHI-R PRODUC'TS & FOOTWEAR 93 1 16 1.0 1466.0 1829,o 2145ND 21688.0,WOOD AND CORK IPRODUICTS 94 1 985.ID 209 1.I0 2626 N) 2753.0 4465,0FURNITURE AND F;IXTURES 95 655 -0 1113,10 1002.0 983.0 2568.0PAPER AND PAPER PRCIDUCTS 965 2531 .0i 3 8 5 9.0 3589.0 7251.0 8344.0PRINT:[NG AND PIJBLIE,HING 9 7 2822. ID 364 2. D 3267.0 3570.0 395,7 -0 lINDUSTRIAL CHEN1ICAL,S 98 1858. ID 3548,1D 4690.0 6210.0 6159.0 F-PETROl EUM & OTHiER CHEMICALS 9'3 S646. D 1064 5.0i 11969.0 13846.0 15799,( RUBBEER PRODUCT'; 1 OID 2920HD 4 35~8. D 1882.0 2878.0 5509.0PLAST:[C PRODuc-rS 101 1077. 0 1 32. 0 1617.0 1637.0 2385.0POTTERZY & GLAS'; PROiDUCT'; 10'2 876ND 71 B. 0 873.0 8B6.0 1070-0NON-METALLIC M.[NERAL PROJDUCTS 10:3 9148.0 50SB.o 6544.0 7913.0 8852.0METAL PRODUCTS 10.4 6982.0 925$.9~' 8112.0, 9491.0 192319.0NON-EI-ECTRICAL MACHIINERY't 105 333ND 369.~0 368.0 4 13.0 1052.0ELECTRZICAL MACHAINERY 1065 1699.0 598 1 .0 6953.0 5790.0 6423.0TRANSF'ORT EQ)UIPMENT 1 07 6466.0 8098.(D 9014.C) 9367 () 11000-0MISCEL-LANEOUS MACHINERY 108 379.0 4rt ICl, 592.0 466.0 502.0

TOTAL GROSS PRODUCT I 09 87091.(? 10,8530. 0 12 1368. 0 162360.C) 196444.0= === =~- = === = m==r - ======= === === == = = = ~=====

II/ ESI1ABLISHMENJT5 WITH ';O OR MORI: EMPLOYEES5.SODURCE: CENTRAt. BUREAU t1F STATISTICS, STATIrSTICAL ABSTRACTS.

TABLE 8.5KENYA: LARGE SCALE MANUFACTURING FIRMS AND ESTABLISHMENTS 1,/: INPUT COSTS

(Kl THOUSANDS)

ITiM 1973 1974 1975 1976 1977

MEAT AND DAIRY PRODUCTS 112 22485.0 22791.0 25047.0 36085.0 39457.0CANNED VEGETABLES, OILS & FATS113 7373.0 10824.0 16438.0 20772.0 29776.0GRAIN MILL PRODlJCTS 114 13209.0 19326.0 26689.0 35939.0 35462.0BAKERY PRODUCTS 115 4106.0 5106.0 7003.0 8215.0 8159.0SUGAR AND CONFECTIONERIES 116 5988.0 8502.0 11405.0 14236.0 23600.0MISCELIANEOUS FOODS 117 45617.0 55265.0 50056.0 147612.0 306534.0BEVERAGES AND TOBACCO 118 12488.0 18561.0 21312.0 25795.0 84936.0TEXTILES 119 11549.0 17403.0 17914.0 20082.0 31950.0CLOTHING 120 3963.0 4990.0 7179.0 8568.0 9727.0LEATHER PRODUCTS & FOOTWEAR 121 3561.0 4813.0 5935.0 6796.0 6864.0WOOD AND CORK PRODUCTS 122 3158.0 4521.0 5077.0 6236.0 9050.0FURNITURE AND FIXTURES 123 1582.0 3198.0 3495.0 3520.0 8062.0PAPER AND PAPER PRODUCTS 124 5353.0 9055.0 11645.0 14827.0 17794.0PRINTING AND PUBLISHING 125 4644.0 6475.0 8872.0 8322.0 8447.0INDUSTRIAL CHEMICALS 126 9326.0 17470.0 19680.,0 13529.0 12876.0 WPETROLEUM & OTHER CHEMICALS 127 27523.0 87015.0 106615.0 116356.0 143846.0RUBBER PRODUCTS 128 2807.0 3837.0 4514.0 5927.0 7750.0PLASTIC PRODUCTS 129 1782.0 3049.0 3533.0 4197.0 5889.0POTTERY & GLASS PRODUCTS 130 1176.0 1522.0 1836.0 1969.0 2628.0NON-METALLIC MINERAL PRODUCTS 131 6386.0 8684.0 10436.0 13347.0 15233.0METAL PRODUCTS 132 16331.0 25460.0 28154.0 32619.0 56570.0NON-ELECTRICAL MACHINERY 133 703.0 813.0 1143.0 1481.0 1113.0ELECTRICAL MACHINERY 134 6350.0 7615.0 11163.0 13354.0 23355.0TRANSPORT EQUIPMENT 135 4530.0 6876.0 7051.0 11069.0 11724.0MISCELLANEOUS MACHINERY 136 788.0 1308.0 19D06.0 1452.0 2412.0

TOTAL COSTS OF INPUTS 137 222778.0 354479.0 414098.0 572242.0 903214.0

1/ ESTABLISIHMENTS WITH 50 OR MORE EMPLOYEES. HSOIJRCE: CENTRAL BUREAU OF STATISTICS, STATISTICAL ABSTRACTS.

,FIFt

TABLE 8.6 HKENYA: LARGE SCALE MANUFACTURING FIRMS A1ND ESTABLISHMENTS 1/. VALUE OF OUTPUT

(KL THOUSANDS)

ITEM 1973 1974 19'75 1976 1977------------------------------------------------ ------------ *-------------------- C

MEAT AND DAIR'Y PRODUCT'S 140 26566.0 27633.0 28714.0 39350.0 44088.0 HCCANNIED VEGETAB3LES, OILS & FATSi41 9959.0 14373.0 22345.0 31791.0 39512.0GRAIN MILL PRODUCTS 142 15423.0 21707.0 29510.0 38941.0 38711.0BAKERY PR'ODUCTS 143 5271.0 6211.0 8124.0 9494.0 9484.0SUGAR AND CONF-ECTIONERIES 144 9245.0 12476.0 17147.0 23297.0 33974.0MISCELLANEOUS FOODS 1'45 51887.0 65276.0 62265.0 175245.0 340135.0BEVERAGES AND TOBACCO 146 23403.0 31487.0 37373.0 46791.0 104735.0TEXTILES 1-47 18200.0 24189.0 25079.0 27775.0 43104.0CLOTHING 148 4836.0 6056.0 8826.0 iO953.0 12294.0LEATHER PRODUCTS & FOOTWEAR 149 4722.0 6279.0 7764.0 8941.0 9552.0WOOD AND CORK PRODUCTS 150 5143.0 6612.0 7704.0 8953.0 13515.0FURNIETURE AND FIXTURES 151 2237.0 4311.0 4497.0 4503.0 10630.0PAPER AND PAPER PRODUCTS 152 7884.0 12914.0 15234.0 22078.0 26138.0PRINTING AND PUBLISHING 153 7466 0 10117.0 12139.0 12313.0 12404.0 1INDUSTRIAL CHEMICALS 154 11184.0 21018.0 24370.0 19739.0 19035.0PETROLEUM & OlFHER CHEMICALS 155 37169.0 97660.0 118584.0 130202.0 15'9641.0RUBBER PRODUCTS 156 5727.0 8235.0 6396.0 B085.0 1:3259.0 1PLASlTIC PRODUCTS 157 2859.0 4181.0 5150.0 5834.0 IB274.0POTTERY & GLASS PRODUCTS 158 2052.0 2240.0 2709.0 2855.0 '3698.0NON-METALLIC MINERAL PRODUCTS 159 11534.0 13782.0 16980.0 21260.0 24085.0METAL. PRODUCTS 160 23313.0 34711.0 36266.0 42110.0 7!5809.0NON-ELECTRICAL MACHINERY 161 1036.0 1182.0 1611.0 1831.0 2165.0ELECTRICAL MACHINERY 162 12816.0 15713.0 20177.0 22721.0 34355.0TRANSPORT EQUIPMENT 163 8770.0 12857.0 1.4004.0 165859.0 i13147.0MISCELLANEOUS MACHINERY 164 1167.0 1789.0 2498.0 1918.0 :2914.0

TOTAL. VALIUE OF OUTPUT 165 309869.0 463009.0 535466.0 734602.0 *******

SOURCE: CENTRAL BUIREAU OF STATISTICS, STATISTICAL ABSTRACTS.

TABLE 8.7KENYA: QUANTITY INDEX OF MANUFACTURING PRODUCTION

(1972 = 100)

ITEM 1973 1974 1975 1976 1977 1978

MEAT AND DAIRY PRODUCTS 168 99.0 96.0 134.0 1:26.0 1:28.0 82.0CANNED VEGETABLES, OILS S FATS169 1:20.0 1:26.0 156.0 2:21.0 287.0 3:23.0GRAIN MILL PRODUCTS 170 118.0 1:37.0 1:31.0 145.0 142.0 147.0BAKERY PRODIJCTS 171 108.0 1:34.0 126.0 175.0 180.0 1 98.0SUGAR AND CONFECTIONERY 172 162.0 1184.0 184.0 196.0 213.0 2415.0MISCELLANEOUS FOODS 173 110.0 103.0 106.0 1:28.0 148.0 161.0

TOTAL FOOD PRODUCTS 174 115.0 119.0 123.0 158.0 173.0 184.0

BEVERAGES 175 114.0 1:31.0 138.0 146.0 173.0 191.0TOBACCO 176 113.0 1:33.0 1:31.0 1:34.0 14t3.0 168.0

TOTAL BEVERAGES & TOBACCO 177 114.0 1:31.0 136.0 143.0 161.0 183.0

TEXTILES 178 1:31.0 129.0 143.0 124.0 161.0 175.0CLOTHING 179 91.0 84.0 85.0 105.0 172.0 234.0LEATHER AND FOOTWEAR 180 94.0 101.0 184.0 255.0 242.0 331.0WOOD AND CORK PRODUCTS 181 1(?6.0 117.0 141 .0 135. 0 1 53.0 163.0FURNITURE AND FIXTURES 182 102.0 110.0 95.0 93.0 105.0 88.0PAF'ER AND PAPER PRODlJCTS 183 132.0 93. 0 88.0 1,74.0 204.0 260.0PRINTING AND PUBLISH:ING 184 113.0 1 28.0 1 48.0 1 46.0 187. 0 233.0BASIC INDUSTRIAL CHEMICALS 185 1 1o.0 1:30.0 89.0 91.0 93.0 108.0PETROLEUM & OTHER CHEMICALS 186 114.0 122.0 117.0 127.0 1 50. 0 163.0RUEBBER PRODlJCTS 187 149.0 146. 0 103.0 157.0 188.0 186.0PLASTIC PRODUCTS 188 108.0 1 58.0 244.0 259.0 350.0 5(1.0CLAY AND GLASS PRODUCTS 189 89.0 95.0 96.0 77.0 170. 0 184.0NON-METALLIC MINERALS 190 93.0 107.0 114.0 89.0 105.0 102.0METAL PRODUCTS 191 113.0 120.0 1 18.0 168.0 186.0 204.0NON-ELECTRICAL MACHINERY 192 91.0 121.0 65.0 45.0 44.0 44.0ELECTRICAL MACHINERY 193 121.0 163.0 139 0 1 55.0 185.0 256.0TRANSPORT EOUIPMENT 194 83.0 73.0 102.0 108.0 225.0 656.0MISCELLANEOUS MANUFACTURES 195 143.0 115.0 107.0 130.0 69.0 104.0

TOTAL MANUFACTURING 196 115.0 121.0 121 .0 14 4. 0 166. 0 1 90.0

SOLIRCE: CENTRAL BUREAU OF STATISTICS, STATISTICAL ABSTRACTS.

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