Kenya is located in Eastern Africa, bordering the Indian Ocean, between Somalia and Tanzania. Its land area is 582,650 square kilometers. Kenya’s population as of August 2003 is 31,639,091. Estimates explicitly take into account the effects of excess mortality due to AIDS; this can result in lower life expectancy, higher infant mortality and death rates, lower population and growth rates, and changes in the distribution of population by age and sex than would otherwise be expected. English and Kiswahili are the official languages, and there abound numerous indigenous languages as well.

The World Bank rates Kenya as the 17th poorest nation in the world (1996). However, it fares fairly well when compared to its immediate neighbors. Kenya, the regional hub for trade and finance in East Africa, is hampered by corruption and reliance upon several primary goods whose prices remain low. Following strong economic growth in 1995 and 1996, Kenya’s economy has stagnated, with GDP growth failing to keep up with the rate of population growth. In 1997, the IMF suspended Kenya’s Enhanced Structural Adjustment Program due to the government’s failure to maintain reforms and curb corruption. A severe drought from 1999 to 2000 compounded Kenya’s problems, causing water and energy rationing and reducing agricultural output. As a result, GDP contracted by 0.3% in 2000.

The IMF, which had resumed loans in 2000 to help Kenya through the drought, again halted lending in 2001 when the government failed to institute several anti corruption measures. Despite the return of strong rains in 2001, weak commodity prices, endemic corruption, and low investment limited Kenya’s economic growth to 1 %. Growth fell below 1 % in 2002 because of erratic rains, low investor confidence, meager donor support, and political infighting up to the elections. In the key December 27, 2002 elections, Daniel Arap MOTs 24-year-old reign ended, and a new opposition government took on the formidable economic problems facing the nation. Substantial donor support and rooting out corruption are essential to making Kenya realize its substantial economic potential.

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