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Economic Freedom: Country Studies - Kenya

Rankings in Freedom in the World 2010: 4 Political Rights, 3 Civil Liberties (Partly Free)


Kenya, a middle-sized country of 582,660 square kilometers (47th largest in the world), is located on the eastern coast of Africa. Its port cities served as Muslim trading centers under the control of an Omani dynasty before the country became a colony of Great Britain in the late 19th century. After it achieved independence in 1963, Kenya's early period of democracy devolved into a one-party state by 1969. Although multiparty elections were held beginning in 1992, the ruling party retained power until the opposition National Rainbow Coalition defeated it in 2002.


Kenya's first president, Jomo Kenyatta, adopted policies that improved the overall economy and land distribution, while allowing white colonial residents to retain property rights. Particularly after Kenya became a one-party state in 1969, elite members of the president's Kikuyu ethnic group received preferential treatment in the distribution of wealth, land, and offices, and corruption flourished. Under Kenyatta's successor, who took power in 1978, the economy deteriorated. Once one of Africa's economic success stories, Kenya fell into poverty. In 2006, with a growing population of nearly 35 million, Kenya had a nominal GDP of just $21 billion and a nominal GNI per capita of $580, ranked 175th in the world. Adjusted for PPP, the GNI per capita was $1,300, or 185th in the world. While the National Rainbow Coalition in 2002 drove the ruling party from power for the first time since independence, the new government's steps to improve economic performance and decrease corruption became entangled in a political conflict over changes to the constitution aimed at curtailing executive power.


Home to fossil evidence of some of the oldest known hominid species, Kenya owes most of its modern population to Cushitic speakers migrating from the north in the second millennium BC and Bantu speakers who arrived roughly 2,000 years later. Trade with the Arabian Peninsula and Persian Gulf was under way in the first century AD, and migrants from those regions established port cities along the coast during the Middle Ages.

Portuguese and Omani Control

In 1498, the Portuguese explorer Vasco da Gama visited the main coastal city, Mombasa, on his famous voyage around the Cape of Good Hope to India. Subsequent Portuguese expeditions seized the port and exercised control over the Kenya coast for much of the 16th and 17th centuries. However, beginning in the 1650s, the ruler of Oman sent naval forces to help free the Muslim city-states, and the Portuguese were expelled from Mombasa for the last time in 1729. The coast then enjoyed a high degree of independence under Omani dynasties until the 19th century. The sultan of Muscat, in Oman, began to rule his empire from the island of Zanzibar in present-day Tanzania in 1832, and in 1837 he ousted a rival dynasty from Mombasa to secure control over the whole coastal area. By this time, the small-scale slave trade had expanded significantly, in part to supply labor to new clove plantations on the coastal islands.

Supporter of Jomo Kenyatta
Colonization by Great Britain

Great Britain outlawed the slave trade in 1807 and committed itself to suppressing the practice throughout its empire in 1833. The Omani ruler of Zanzibar, a British ally, gradually shut down the slave trade in his domain over the following half-century, but other commerce continued to flourish as European, American, and Indian merchants arrived in greater numbers. Christian missionaries and explorers made their way into the interior, and competition between Britain and the newly unified Germany led the two powers to delineate their spheres of influence in East Africa in 1886, in effect drawing the border between modern Kenya and Tanzania. The sultan of Zanzibar transferred his territories on the mainland north of this line to the British East Africa Association the following year, and it received a royal charter as the British East Africa Company in 1888. The British government assumed control from the struggling company in 1895, establishing the East Africa Protectorate.

The British constructed a railroad from Mombasa to Kisumu on Lake Victoria between 1895 and 1901, but their expanding presence met with resistance from local peoples, including the Kikuyu and the Nandi. In the first decades of the 20th century, the British encouraged white settlers to begin large-scale farming in the highlands of the interior. The Kikuyu and other groups were displaced to make way for these settlers and in some cases were confined to reserves. Since the indigenous people had developed no formal landownership in the European sense (land was typically held collectively by the tribe or ethnic group), the British legal system confirmed the right of the protectorate to grant title to settlers. After 1920, the territory was divided into the Kenya Protectorate, the coastal area still nominally under Zanzibari sovereignty, and Kenya Colony, encompassing the interior. White settlers were represented in the colony's legislative council.

Kenyans Move Toward Independence

The first indigenous political movement, the Young Kikuyu Association, was organized in 1921 and eventually evolved into the Kenyan African Union (KAU) in 1944. Along with other, similar groups, it sought African representation in the colonial legislature and improved economic and cultural rights for Africans, but its demands were resisted by the colonial government and white settlers. Finally, in 1944, Africans gained limited representation in the legislative council. International and African pressure on Great Britain to decolonize increased after World War II. In 1952, a mainly Kikuyu insurgent group known as the Mau Mau launched a rebellion against colonial rule, and the British declared a state of emergency that lasted until 1960. The rebellion was suppressed in 1956, by which time about 13,000 people had died. Thousands of Kikuyu and other Africans were forcibly relocated by the British as part of their campaign. Jomo Kenyatta, head of the KAU since 1946, was jailed with other nationalist leaders during the state of emergency, accused of orchestrating Mau Mau actions. After the emergency was lifted, a new Kenya African National Union (KANU) was formed, with Kenyatta—released in 1961—as its leader. Africans also won a majority on the legislative council at this time, and negotiations between the British and a coalition headed by Kenyatta resulted in a constitution, elections, and finally independence on December 12, 1963. Kenyatta, the first prime minister, became president when the country converted to a presidential republic under a new constitution in 1964.

Instead of nationalizing or seizing the property of settlers, [President Jomo] Kenyatta recognized their property rights and arranged an inventive deal with the British government to finance the purchase of white-owned land for redistribution to
The Development of Strongman Rule

Jomo Kenyatta consolidated power by dispensing privileges and economic favors to placate the country's various ethnic groups and by using authoritarian methods to silence critics and potential rivals. Nevertheless, opponents perceived favoritism toward the Kikuyu and suppression of non-Kikuyu leaders. In 1969, an important opposition party was banned and Kenya became a de facto one-party state.

Kenyatta rejected socialism, which was adopted by most other postcolonial independence leaders. He maintained a mostly pro-Western policy orientation as well as the legal features of a capitalist or free-market economic system. Instead of nationalizing or seizing the property of settlers, Kenyatta recognized their property rights and arranged an inventive deal with the British government to finance the purchase of white-owned land for redistribution to Africans. Many settlers were thus able to leave the country voluntarily on good terms, while others remained and aided in the country's economic growth. Kenya's initial economic success made it a model for Africa and a target for foreign investment. The economy grew at an average rate of 6 percent from 1971 to 1981, outstripping most other countries on the continent.

Economic and Social Contradictions

Kenyatta's policies represented a contradictory blend of liberalism, corruption, and authoritarianism. While many poor Kenyans received small farms as part of the land redistribution effort, large blocks of land also went to a privileged Kikuyu elite. In one round of government land transfers, 6,070 square kilometers went to a small number of wealthy, mostly Kikuyu owners. Yet Kenyatta also spent a third of the budget on education, and the overall economic growth benefited all Kenyans to some extent, despite expanding wealth disparities.

Economic Freedom

Dictatorship and Economic Deterioration

Kenyatta died in 1978 and was succeeded by his vice president, Daniel Arap Moi. Moi ended any ambiguity that remained from Kenyatta's tenure and led Kenya into a more explicit dictatorship. In 1982, the constitution was amended to make the KANU the only legal political party, rendering Kenya a one-party state in law as well as in fact. The judiciary and the press were more tightly controlled by the executive branch, and political repression increased. Corruption spread widely throughout government, with Moi's Kalenjin ethnic group displacing the Kikuyu in prominent positions. Foreign aid and investment subsided as political conditions worsened, and Moi actively sought to limit foreign ownership of industry as part of an Africanization policy. Economic growth rates fell, worsened in part by Kenya's continued vulnerability to drought and the fluctuating world prices of its main agricultural exports, including coffee. But even a booming economy would have been hard-pressed to cope with the country's massive population growth, from about 8 million at independence to the current 37 million. Under these conditions, per capita income dwindled and poverty rates soared.

A Transfer of Power and Democracy Reborn

In 1988, Moi instituted the mlolongo (queuing) system of voting, in which voters lined up publicly behind an image of their chosen candidate or party. This denied voters a secret ballot and even the right to abstain. Widespread calls for constitutional reform broke out that year, and the arrest of reform advocates sparked riots. Sensitive to international pressure, Moi agreed to remove the single-party clause from the constitution in 1991.

In 1988, Moi instituted the mlolongo (queuing) system of voting, in which voters lined up publicly behind an image of their chosen candidate or

Facing a divided opposition, Moi easily won multiparty elections in 1992 and 1997, though critics accused him of electoral fraud and other abuses. Furthermore, opposition parties gained 45 percent of the seats in parliament in 1992 and nearly supplanted KANU as the majority in 1997 voting. For the 2002 elections, Moi was constitutionally barred from running for another term, while the opposition had united its various political and ethnic groups into the National Rainbow Coalition (NARC). Opposition politician Mwai Kibaki, a Kikuyu, easily defeated Moi's handpicked candidate, Uhuru Kenyatta, the first president's son but a political novice. NARC routed KANU in the parliamentary elections. It was the first time a peaceful transfer of power had taken place between political parties.

Mwai Kibaki

President Kibaki initially took serious steps to broaden representation in his government, as well as to decentralize authority, curb corruption, and improve the economy. These policies have led to a return of foreign investment and an increase in economic growth and initiative (see links to two columns by Thomas Friedman in the New York Times below). However, two years after Kibaki's election, the government became entangled in controversy over proposed reforms to the constitution. One purpose of the reforms had been to create the position of prime minister and reduce the power of the presidency, but when the final government-backed draft went before voters in a referendum, it contained provisions that actually strengthened the presidency. Opposed by several members of Kibaki's own cabinet, the proposal was rejected by voters, 57 percent to 43 percent. This incident and subsequent actions by Kibaki to consolidate power by favoring his own ethnic group have created political tension ahead of presidential elections scheduled for late 2007. At the same time, the referendum showed that the country had genuinely returned to a democratic path and established a strong sense of political pluralism.

Confronting the Legacy of Dictatorship

Kenyatta and Moi left a difficult economic legacy to overcome. Kenya began its independence as an economic model, only to sink into poverty; it was ranked 152nd on the United Nations Development Program's 2006 Human Development Index. It confronts these challenges in the midst of the continent's formidable HIV/AIDS crisis, which has taken an enormous human, social, and economic toll. Roughly 1.3 million Kenyans were living with HIV as of 2006, and more than a million children had been orphaned by AIDS. It is now the country's leading killer, ahead of malaria and other infectious diseases, and is rapidly winnowing out the able-bodied population. Life expectancy stands at a mere 47.5 years of age.

Another challenge is rampant corruption. Transparency International has estimated that the average Kenyan must pay 16 bribes per month, most often to police. The judiciary is no less corrupt. Initial steps under President Kibaki to reform the judiciary were promising. According to the Library of Congress Country Profile, "Following the resignation of the chief justice, the anticorruption authority found credible evidence of corruption against five of nine Court of Appeal judges and proof of misconduct against 18 of 36 High Court judges and 82 of 254 magistrates. In October 2003, one-half of Kenya's senior judges were suspended over allegations of corruption, and tribunals were established to investigate the charges against them." Nevertheless, corruption remains a stubborn problem, and government efforts to tackle it have fallen short of expectations. Transparency International gave Kenya a ranking of 150 out of 179 countries in its 2007 Corruption Perceptions Index.