Business

Kenya is recognised as the regional hub of East Africa and formerly enjoyed one of the continent's strongest economies. The combination of agriculture (tea, coffee, cotton and flowers) and tourism, (safaris and prolific wildlife) was responsible for an annual GDP growth rate of 5%. However the country's continued growth has been hampered by corruption, political uncertainty and drought.

In 1997, the IMF suspended Kenya's Enhanced Structural Adjustment Program due to the government's failure to maintain reforms and to curb corruption. A severe drought from 1999 to 2000 compounded Kenya's economic problems, causing water and energy rationing and reducing agricultural output.

The IMF resumed lending to Kenya in order to assist the country through the drought of 1999/2000. Once again lending by the IMF was halted in 2000 when the government failed to institute several anticorruption measures. This saw growth reduced quite severely.

In the key December 2002 elections, Daniel Arap Moi's 24-year-old reign ended, and a new opposition government took on the formidable economic problems facing the nation. In 2003, progress was made in rooting out corruption and encouraging donor support. Since then, however, the Kibaki government has been rocked by high-level graft scandals.

The World Bank suspended aid for most of 2006, and the IMF has delayed loans pending further action by the government on corruption. However, despite the numerous scandals which have plagued the Kibaki government, economic growth does not appear to have been impaired and the GDP grew more than 5% in 2006.