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- A young, hardworking, entrepreneurial population has embraced technology, earning Kenya the distinction of being one of the most digitally progressive countries in the world.
- Government initiatives to increase food security, affordable housing, manufacturing, and access to health care should be positive for long-term growth.
- A government-imposed interest-rate cap has stifled lending and contributed to multiple years of creditless growth. The politically popular cap has proven difficult for policymakers to remove.
- Corruption, political instability, and unemployment are overarching concerns, especially among young consumers.
Kenya has historically struggled with a host of development challenges, including corruption, government ineffectiveness, large fiscal deficits, and a low-value-added, agriculture-driven economy. In recent years, however, policies aimed at inclusiveness and prosperity have begun to catalyze major shifts in Kenya, potentially setting sub-Saharan Africa’s fifth-largest economy on a path to sustainable growth.
Kenya’s GDP has compounded nearly 6% annually since the start of the decade,1 making it one of the world’s fastest-growing frontier markets. The investable equity market is still small, with a market capitalization of US$23 billion as of this writing.2 And while rapid growth typically creates near-term opportunities, we wanted to gain a deeper appreciation for Kenya’s long-term investment potential. On a recent grassroots research trip to Nairobi, we met with small business owners and consumers to learn firsthand about their concerns, preferences, and aspirations. This paper notes our primary takeaways.
Young, digitally savvy populace
Like much of Africa, Kenya is a young country, with 50% of the population under 19 years of age.3 Nairobi, the capital and largest city, has a population of four million (8% of the population) and produces roughly 60% of Kenya’s GDP. Kenya is urbanizing at a brisk pace, albeit from a low level. Approximately one million people enter Kenya’s workforce each year, and a major challenge — and a key ingredient for continued growth — is ensuring that Kenya’s jobs supply can meet rising labor demand. In an online survey we conducted of Kenyan consumers, 51% of respondents said their top concern was “lack of job opportunities.”
Aspirational and frustrated with the government’s ability to create jobs, young Kenyans are determined to make their own way. They see themselves as innovators, embracing technology and adapting innovations from…
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1The World Bank. | 2CEIC. | 3PopulationPyramid.net.