Kenya attained its independence from
Britain in 1963 and opted for a mixed
economy that was market based,
supportive of the private sector and open to
foreign investment. The Kenyan economy
performed relatively well in the years
between 1964 and 1980. The growth rate of
GDP in this period averaged 5%. Fiscal
deficit and the overall balance of payments
were manageable and ranged between 3-
6% of GDP. Despite the positive economic
trends, economic growth in 1973-76 began
to decline and averaged 3.4% per annum.
The drop in economic growth and resulting
macroeconomic instability was attributed to
various economic shocks such as oil prices
increases in 1973, the decline of coffee
prices in 1979, and the break up of favored
partnership with East African countries.
From 1980, the country implemented
structural adjustment programs that failed
to create conditions for sustained recovery
of economic growth. The country has had a
mixed macroeconomic performance with
fluctuations in GDP growth rates, inflation
and other economic indicators. Between
1990 and 2000, the economy fell into
recession, exacerbated by poor
governance, with GDP in 2000 falling by
0.2%. This economic downturn coupled
with high population growth rates has
resulted in widespread poverty, with over
50% of the population living below the
poverty line of US$ 1 per day. The economy
has in the past 2 years begun to show signs
of recovery. In 2003, GDP growth of 1.7%
was realized in comparison to 1.2% in 2002.