Abstract:
Introduction:
Kenya’s economy continued to perform below its potential during the 1990s. Since 1997,
growth has averaged only 1.3%, consistently below the rate of population increase
estimated at 2.4% per annum. Consequently, per capita income in constant 1992 prices
has declined from US$271 in 1990 to US$239 in 2002. In addition, agricultural
productivity has been on the decline, competitiveness eroded and international financial
support diminished. During this period, poverty and food insecurity have increased.
This poor performance corresponds with the time when the economy has been
undergoing major transformations. Wide-ranging trade and macro-economic policies that
impact on production costs, incentive structures, and the competitiveness of different
sectors are at various stages of implementation. At the same time, regionalization and
globalization have exposed domestic production and trade to fierce regional and
international competition. One outcome of these changes has been lower and more
volatile prices for key commodities.