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Recession and population surge strains Kenya's capitalist base

By Mary Anne FitzgeraldSpecial to The Christian Science Monitor / June 3, 1986

Nairobi, Kenya

Kenya was once touted as Africa's showcase of capitalism, but it seems to have fallen on hard times. Despite a bout of sound fiscal management, long-term prospects for the economy are no longer lustrous. The country is still considered a haven by expatriate businessmen; but the reasons for enjoying its sunny climate and laid-back life style are fading.

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Soon after Kenya won its independence in 1963, a mix of African civil servants, British ``settlers,'' and Indian entrepreneurs turned their talents to creating a sound industrial base for the fledgling republic. Within a decade, manufacturing -- composed almost entirely of import substitutes -- accounted for 15 percent of national output. With few natural resources to draw on, Kenyans laid the foundations for their economy on the expectation of export to neighboring countries.

Their initial flush of success attracted foreign investors from the United States, Europe, Japan, and India.

Kenya's progress and stability seem all the more remarkable when measured against a regional yardstick. Socialist Tanzania is bankrupt. Uganda has been brought to a standstill by a series of blood-stained regimes punctuated by military coups. Marxist Ethiopia has been beset by famine and a quarter-century-old guerrilla war in the north.

Sudan is also fighting an internal rebellion while it struggles to put together its first civilian government in nearly two decades. By contrast, Kenya has had only one brief coup attempt (in 1982), and it has stuck tenaciously to its capitalist creed.

Even so, its gross domestic product, which grew at about 6.6 percent a year during the 1970s, slowed to 4 percent and less as the country slipped into recession in the '80s. To make matters worse, agricultural output between 1972 and 1980 rose only 2.5 percent a year -- well below the country's annual population increase of 4 percent.

For the first time, its fertile highlands did not provide enough corn to feed the country's rapidly growing population. The shortage was the result of poor planning and wildly seesawing prices. When prices dropped, farmers simply refrained from planting, forcing Kenya to buy grain from South Africa, its political enemy.

The lesson has been learned, and Kenya now offers farmers fiscal incentives that have enabled it to recover from the 1984 drought that cast a shadow of famine across the continent. This year it will be a net exporter of corn; it has also been able to build up strategic reserves that are a safeguard against the next drought.

Nevertheless, poor farming practices do not augur well for the government target of self-sufficiency in food. Land ownership is central to every Kenyan male's ambition; as a result, plots of land are constantly subdivided into ever smaller plots as they are passed down from father to sons.

Competition for land tenure is fierce, since only one-fifth of Kenya is considered arable. But inefficient extension services and fertilizer distribution mean that yields from the overworked soil are declining.

Another reason that Kenya may eventually find it difficult to feed its people is that there will be too many of them. If the population growth continues at its present rate -- the highest in the world -- the number of Kenyans will double to 40 million in 18 years.