December 31st, 2011

Kenya’s economy in 2011 is estimated to have grown at 4.3% over the year, a decline on the previous year (5.6%) and lower than the forecast rate of 5.3%. Although well below the levels needed to reach the Government’s goal of achieving middle-income status by 2030, it was still sufficient to produce a modest increase in gross domestic product (GDP) per capita. Of concern was the deterioration in the macro-economic position with inflation peaking at 20% by the year end. The weakening trade position precipitated by high oil prices and the Euro crisis combined with inflation to produce a
sharp decline in the Kenya shilling. The Central Bank Rate (CBR) was raised from 7% to 18% within the last quarter. Although this tightening resulted in a rapid recovery of the shilling, it led to a sharp reduction in the expansion of private sector credit seen over the first three quarters of the year. Despite the challenging environment, the evidence we have suggests that over 2011 Kenya sustained its progress in expanding financial inclusion. Unfortunately technical challenges forced the postponement of the planned 2011 round of the FinAccess survey on retail financial inclusion until 2012. Thus we will not be able to quantify the progress made for another year. Nevertheless the data from leading institutions remain positive.

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