Monetary Policy Tools of Kenya
MONETARY POLICY TOOLS OF KENYA AND ITS EFFECTIVENESS IN THE RECENT YEARS
* INTRODUCTION Kenya, officially the Republic of Kenya, is a sovereign state in East Africa. Although Kenya is one of the biggest economy in Africa, Kenya is still developing with a Human Development Index (HDI) of 0.519 putting the country at a position of 145 out of 186 – one of the lowest in the world and about 38% of Kenyans live in absolute poverty. The most important agriculture sector is one of the least developed and inefficient, employing 75 percent workforce and less compared to 3 percent of that food secure developed countries. Kenya’s economy grew by 7% in 2007, but this changed immediately after the disputed presidential election in December 2007, which followed with a chaos in the whole country. The economy has posted tremendous growth in the service sector, boosted rapid expansion in the telecommunication and tremendous financial activity over the last few decades and now contributes 62% of GDP. Kenya has traditionally been a liberal economy with minimal government inference (price control). As of May 2001, economic prospects are positive, with an expected 4-5% growth in GDP largely due to the expansion of telecommunications, transport, construction and a recovery in agriculture. The World Bank estimated growth of 4.3% in 2012.
Kenya is east and central Africa’s hub for financial serviced. The Nairobi Securities Exchange (NSE) is ranked 4th in Africa in terms of market capitalization. The Kenya banking system is supervised by the Central Bank of Kenya (CBK). Till July 2004, the system consisted of 43 commercial banks (down from 48 in 2001) several non-bank financial institutions, including mortgage companies, four savings and loan associations, and several score foreign-exchange bureaus.
* The conduct of Monetary policy in Kenya after liberalization
INSTITUTIONAL AND OPERATIONAL Following the economy wide economic reforms aimed at allowing market
* INTRODUCTION Kenya, officially the Republic of Kenya, is a sovereign state in East Africa. Although Kenya is one of the biggest economy in Africa, Kenya is still developing with a Human Development Index (HDI) of 0.519 putting the country at a position of 145 out of 186 – one of the lowest in the world and about 38% of Kenyans live in absolute poverty. The most important agriculture sector is one of the least developed and inefficient, employing 75 percent workforce and less compared to 3 percent of that food secure developed countries. Kenya’s economy grew by 7% in 2007, but this changed immediately after the disputed presidential election in December 2007, which followed with a chaos in the whole country. The economy has posted tremendous growth in the service sector, boosted rapid expansion in the telecommunication and tremendous financial activity over the last few decades and now contributes 62% of GDP. Kenya has traditionally been a liberal economy with minimal government inference (price control). As of May 2001, economic prospects are positive, with an expected 4-5% growth in GDP largely due to the expansion of telecommunications, transport, construction and a recovery in agriculture. The World Bank estimated growth of 4.3% in 2012.
Kenya is east and central Africa’s hub for financial serviced. The Nairobi Securities Exchange (NSE) is ranked 4th in Africa in terms of market capitalization. The Kenya banking system is supervised by the Central Bank of Kenya (CBK). Till July 2004, the system consisted of 43 commercial banks (down from 48 in 2001) several non-bank financial institutions, including mortgage companies, four savings and loan associations, and several score foreign-exchange bureaus.
* The conduct of Monetary policy in Kenya after liberalization
INSTITUTIONAL AND OPERATIONAL Following the economy wide economic reforms aimed at allowing market