Global Trendsand what they mean for Kenya in 2010

Mind Speak, Rich Management

Dr. Wolfgang Fengler, Lead Economist

World Bank, Nairobi30. January 2010

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Born in Germany in January 1971 Graduated from German Universities in 1996 (Masters) and 2000 (PhD) Founded a number of companies, including “Africa Consulting” in the

1990ies Left Germany and joined the World Bank in January 2000 Became Senior Economist for the World Bank in Indonesia in 2004 Moved to Kenya as World Bank Lead Economist in August 2009 Married to Petra Fengler; 3 children aged 5-8

About myself

Main messages

Our generation is experiencing the most profound demographic transition ever: in 1970, the world had less than 4 billion people; by 2050 it will have more than 9 billion.

We are also experiencing a geographic transition from rural to urban. But “growth will always be unbalanced but development can still be inclusive” (WDR 2009).

Development is possible but it is not inevitable. Asia is rising – Africa continues to stagnate.

Paradox Kenya. Strong private sector but poor growth.

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Demographic shifts

The World will soon exceed 7 billion; working age population will continue to rise

Global population growth is driven by Asia and Africa …

… while Europe and North America’s share in global population is declining

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10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

Total Population

Working Ages 15-64

Youth 0-14

Older 65+

1950 2000

Population in thousands

20251975 2050

Kenya is growing by more than 1 million a year; by 2050, the country will exceed 85 million people

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Geographic shifts

Density: Tokyo—the biggest city in the world 35 million out of 120 million Japanese, packed into 4

percent of Japan’s land area

Distance: USA—the most mobile country More than 35 million out of 300 million changed

residence in 2006; 8 million people changed states

Division: West Europe—the most integrated continent About 35 percent of its GDP is traded, almost two

thirds within the region

The 3Ds: Density, Distance, Division

Concentration, a fact of life,

Half of the world’s production…..

WDR Conference in Central Asia, February 26-27 2009

at the global spatial scale

….can fit onto 1.5% of its land, less than the size of Algeria

Economic map of the World – Africa is still absent but Asia has been reappearing

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Kenya’s cities are growing rapidly

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1,000

2,000

3,000

4,000

5,000

6,000

7,000

Po

pu

lati

on

('0

00

s)

Nairobi 862 1,090 1,380 1,755 2,233 2,818 3,443 4,016

Mombasa 350 407 476 572 686 828 988 1,148

Kisumu 156 175 201 261 337 433 537 635

Nakuru 97 129 168 194 225 264 311 361

Eldoret 54 80 116 141 173 212 256 301

1980 1985 1990 1995 2000 2005 2010 2015

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Development is possible but not inevitable

Globally, extreme poverty has declined significantly…

Share of Population below US$ 1 a day; Source: Chen/Ravallion 2004

… but there is great regional variation

In Kenya, per-capita income recovered since 2002 - after more than a decade of decline

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KENYA’s economy in 2010

Kenya’s economy is dominated by services – and has always been

New SNA methodology

Source: Kenya National Accounts / WB Staff estimates; Please note that Kenya adopted SNA1993 and revised the GDP series. Starting 1999-03 the series reflects the structural break in the methodology and not changes in the trend.

Services have a much bigger role in the economy compared to Tanzania and Uganda

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Kenya has experienced a decade of strong, but uneven, growth

Even though Kenya never received debt relief, debt levels declined from 60% to 40%

Kenya is not aid dependent: Only 5% of the budget is financed by partners

Kenya is experiencing an IT revolution

Since 2008, IT and phone connections increased rapidly

Outlook 2010: A continuation of Kenya’s (slow) recovery with 3.5% growth

Kenya’s growth will be similar to the SSA average

… but remains below its neighbors

DankeAsante SanaThank you