Case Study on Economy of Kenya

Presented By,Saman Firdaus

Salma

Introduction to the Case Brief about Kenya:   Kenya, is a country located in East

Africa. It has a land area of 580,000 km2 and a

population of nearly 39 million residents, representing many different people and cultures.

Kenya is classified as a developing and sometimes an emerging African nation. Its economy is the largest by GDP in East and central africa, Kenya's capital, Nairobi is a major commercial hub.

Geography of Kenya: It has a diverse geographic and climatic

endowment & 3/5 of the nation is semiarid desert.

The infertility Kenya has dictated the location of 85% of the population & almost all economic activity in the southern 2/5 of the country.

Kenya’s population is composed of many tribes and is extremly heterogeneous, including traditional herders, subsistence and commercial farmers, Arab’s muslims and cosmopolitan residents of Nairobi.

Contd……….

The standard of living, in the major cities is relatively high compared to the average of other Sub- Saharan african countries.

Economy of Kenya Kenya’s economy has been beset by high

rates of unemployment and underemployment for many years.

However, widespread poverty (per capita US $360) and growing income inequality make Kenya a country of economic as well as geographic diversity.

Agriculture is the most important economic activity. About three quarters of the population still lives in rural areas and about 7 million workers are employed in agriculture accounting for over 2/3 of the total workforce.

Economic History Kenya’s expansionary economic policy

is characterised by- - Large public investments- Support of small agricultural production

units- Incentives for private industrial

investment (domestic and foreign)

Which played an important role in the early 7% rate of GDP growth in the first decade after independence.

Contd……

In the past 7 years (1973-80) the oil crisis let to a lower GDP growth to an annual rate of 5%.

Lack of adequate domestic saving and investment slowed the growth of economy.

Various economic policies designed to promote industrial growth led to a neglect of agriculture and a consequent decline in farm prices, farm production and farmer incomes.

In Agriculture

Comprising 23% of 2000 GDP and 77% of merchandise exports, agricultural production is the backbone of Kenyan economy

Kenya’s chief agricultural exports are coffee, tea, sisal, cashew nuts, pyrethrum, and horticultural products.

Traditionally, coffee has been Kenya’s chief earner of foreign exchange.

In Industry: It is the most industrialised country in

eastern Africa.

Public and private industry accounted for 16% of GDP in 2000

The Kenyan government has implemented several policies to nourish the agriculture sector. Two such policies are:

- Fixing attractive producer prices - Making available amounts of fertilizer.

Kenya’s chief manufacturing activities :

- food processing- Production of beverages- Tobacco- Footwear- Textiles- Cement- Metal products- Paper- chemicals

Kenya Current problems :

Stagnating economy Growing political unrest A huge budget deficit High unemployment A substantial balance of payment problem Stubbornly high population growth rate. Decrease in price of export, with increase

in price of import. Terrorism Corruption

Questions : Is the economic environment of Kenya

favourable to international business Yes or No – substantiate

Case Study on Resurgent India?

INDIA - A PICTURE OF PARADOXES

Brief about India: India is the largest country in South

Africa & seventh largest in the world (32,87,263 km).

Has second largest population in the world and a birth rate of 1.8%.

The country achieved independence in 1947 from Britishers.

After that India was divided in to 3 parts, India, Pakistan & Bangladesh.

In the late 1980s & 1090s, India moved away from socialist economy and political orientation and adopted market capitalism.

India is at 43rd rank in global competitiveness.

POSITIVE PART OF INDIAN ECONOMY

GDP of India has an average growth rate of 5.3% in the 1980s and 6% in the 1090s and is now well past 9%.

Tortuous, bribe-laden procedures have been abolished.

Captains of industries are free to decide and implement.

India has become robust for the industrial sector, and is center of attraction for software and I.T.

Green Revolution(1960-70):Agriculture contributes 28% in the

GDP of India. After green revolution production is increasing at an annual rate of 3% plus. As a result, India is self sufficient in grain production.

Economic Reforms:Low import duties have ended the

smuggling and black market premium on foreign exchange has gone down. Inflation and interest rates have fallen with the reduction of external barriers. Poverty ratio has decreased from 56.1% in 1973 to 19% today

Financial Reforms:It has empowered consumers access

to loans, credit & debit cards and mutual funds. Interest rates have been decreased. ATMs have increased access to cash and computerization has improved the speed of bank stuffs.

Technological reforms:Its has revolutionized the capital

market, giving India NSE & by facilitating dematerialization of shares Mobile phone has removed the deference between grass root persons and VIPs. Computerization has facilitated micro-finance orgn allot.

NEGATIVE PART OF INDIAN ECONOMY

On Global Hunger Index, India ranks 94, out of 118 countries researched.

More than 1,50,000 farmers have committed suicide, 1 suicide every 30 mins.

Sensex is skyrocketing and real estate price are shooting up. As a result, the poor are increasingly getting isolated & the rich are aggrandising themselves.

Quality of public sector is pathatic.

Questions :

Compare the two above given cases and draw similarities and dissimilarities.