Would Nuclear be the booster of the Kenyan Economy?

Kenya is the biggest and one of the most dynamic economies in the East Africa region, with an annual growth rate of 4.9%. Kenya’s population is approximately 50 million. However, access to electricity in the country remains quite low with only 56% of the population benefiting from electrification. Biomass mass constitute the main source of energy accounting for 68%, with wood fuel taking the lion’s share, comes after petroleum with 22%, and hydro with 9%. Not only are these methods very polluting, but wood fuel increases deforestation of the region.

Today we are here to make pledges, today we are here to make commitments, and on behalf of Kenya, our government and our people, I am pledging by 2022, we want to reach a minimum of 10 percent forest cover in our country as a way of ensuring we play our part in combating climate change” Kenya’s president Uhuru Kenyatta on March 2019

In 2016, the electricity generation was 10 TWh, also Kenya import some of its supply from Ethiopia. For the reasons above, the Kenyan government has decided to adopt nuclear in the next decade. Kenya aims to have a nuclear power plant ready by 2027 of 1,000 MW and then quadruple that amount to reach 4,000 MW less than a decade later.

kenya map

The Kenyan GDP was at approximately $75 Billion in 2017, Kenya is aiming to become a newly-industrialized, middle-income country by 2030 through “vision 2030”. Since 2003, Kenya has seen rapid economic growth with a relatively low level of inflation and interest rate, in addition to a stable exchange rate. The vision 2030 is a plan to develop the country based on three pillars: economic, social and political. The plan is supposed to maintain macroeconomic stability and tackle infrastructure, security and energy issues. Also, it’s aiming to enhance land and public sector reforms. As a matter of fact, energy demand will increase to sustain the growth and boost the ongoing projects. Nuclear energy would play an important role in the scheme as a clean and reliable source of energy compared to renewable which is not enough to respond to the needs of Kenya, and fossil fuels which are extremely polluting and harmful to the environment.

Kenya has had a decade of very strong growth, after which the country became a middle-income country in 2016. Kenya is particularly advanced in the services sector and is driving innovations that have been adopted throughout the continent (e.g. M-Pesa). In March 2017, Kenya became the first country in the world to sell government bonds by mobile phone. Despite the severe drought that affected the country at the end of 2016 and the presidential campaign, Kenyan growth remained strong in 2017 (4.8% of GDP according to IMF estimates). Kenyan growth is showing good results for the year 2018. According to the latest World Bank economic report, the figure is 5.7%, 0.9% more than last year. The causes of this improvement: a recovery in industrial activity, and a recovery in the agricultural sector driven by rainfall which resulted in better harvests. But equally encouraging factor, according to the World Bank, the improvement of private demand, which includes household consumption and investment. Moderate inflation and a stable exchange rate also contributed to the recovery of the economy, which was evident in all sectors. The big four program initiated by President Kenyatta which focus on four key sectors as a locomotive of development, the four sectors are the following healthcare, food, housing, and manufacturing. Also, the implementation of policies aiming to stimulate the private sector engagement, including improving access to credit for the private sector (especially micro and small enterprises) is providing a good basis for growth. Nevertheless, Kenya still suffers from high unemployment (especially among young people), ethnic rivalries and poverty which affect 36.8% of the population (living on less than US $ 1.90 per day). However, good progress has been made between 2005-2006 and 2015-2016, where a decline, 10% of poverty has been made within a 10 years period.

The main sectors of the Kenyan economy are agriculture which accounts for more than 35% of GDP and employs more than 60% of the labor force. The country’s main products are coffee, Tea, wheat, sugar cane, animal products as well as fruits and vegetables. The country is the first exporter of black tea in the world. The services sector contributes around 45% of GDP and employs around 30% of assets. Tourism, a key sector for the Kenyan economy, is suffering from numerous attacks by the Al-Shabaab group since 2013, but is starting to recover. Manufacturing and financial industries, although modest, are the most sophisticated in East Africa. The communication technology sector is growing rapidly, while the construction sector is very dynamic. Although the country’s mineral resources are limited, some high-value minerals such as titanium have potential. Kenya could also become a producer of oil and gas in the coming years, as new oil reserves (with a potential of 750 million barrels) have been discovered as a result of the of exploration in Turkana. The industry sector accounts for less than 20% of GDP and 8.6% of jobs. Generating a sufficient and stable energy supply would help greatly all those sectors mentioned above to grow faster and bigger.

gdp growing trend

In the area of infrastructure, the progress made in this sector is tangible, notably thanks to the opening up to private investors, Kenya have an 80% renewable electricity mix. The same is true for access to water, which is progressing significantly, even though the country didn’t reach universal access yet.

kenya train

Also, huge projects has been initiated in the transport infrastructure such as the train between Nairobi and Mombasa (the two main cities of the country). This project cost $ 3.8 billion and is financed and built mainly by China, the line would stretch over 472 kilometers with a capacity of 1,260 passengers. China Communications Construction Company “CCCC” will manage the service for ten years before handing over to a local operator. According to the Kenyan government, the new train will boost Kenya’s GDP by 1.5 percent a year, boost industrialization and encourage investment along the road, while reducing the cost of transportation. As Mombasa is the main port of East Africa and the train is considerably reducing transportation time from 2 days through roads to 5 hours for passengers and 8 hours for freight by train.

Furthermore, earlier this month Kenya has signed with France infrastructure deals amounting for $2.2 Billion, among those deals a $1.8 Billion highway between Nairobi and Nakuru to be operated by Vinci for a 30-year concession. However, the most gigantic project so far for Kenya is the construction of a smart city called “Konza city” modeled around Silicon Valley in an attempt to attract technological investment and become a hub of technology in the region. The project would cost around $14.5 Billion.

10 Projects in East Africa

According to Deloitte, the East Africa region as a whole saw a tremendous increase in the number of construction projects from 2017 to 2018 with a 96% growth and a 167% increase in the total US dollar value of projects compared to the previous year. Kenya leads the way for the region by having the largest number of projects (41). Energy is one of the sectors which attract the most investment in Kenya and around the region, as the majority of African countries are still lacking universal coverage of electricity.

Also, energy is a driver for all the economy, by having a robust energy source the other industries flourish as it’s more appealing to local and foreigner investors. The aim of Africa Nuclear Business Platform is to play an important role in facilitating and providing all the means for all nuclear industry stakeholder to engage and meet at the same place to bring to life nuclear power in Kenya and around Africa at that crucial time where Africa is about to take off, as the continent is the most dynamic and having most rapid growth over the last decade.

In conclusion, Kenya is growing fast and working their way toward a better flourishing future through massive investment in the infrastructure and the political will to make Kenya a stable middle-income country. The road is still long considering the obstacles and problems Kenya are still facing such as poverty and unequal wealth distribution. Nevertheless, as the figures mentioned above shows, the economy has been growing constantly over the last decades and efforts are made to make Kenya the regional leader and a model for the neighboring countries.

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By |2019-07-18T14:36:22+08:00July 16th, 2019|nuclear-industry|0 Comments