Stessy Nyaga

African Economic
Outlook 2016 Kenya and African
On Thursday 30th June 2016 Chatham House
held an event to discuss the African Economic
Outlook 2016 Report: Members of Diaspora
Youth Empowerment had the privilege of visiting
the topic of Sustainable Cities and Structural
Transformation where we pay particular interest
to the case of Kenya and African youth. Guests
received insight from Dr Arthur Minsat
(Economist, Africa Europe and the middle east, OECD Development); Dr Deborah Potts (Reader in
human Geography, Kings College London) and were chaired by Lanre Akinola (Editor, African
Business, IC Publications)
The African Economic Outlook 2016 report is an essential reference for monitoring the economic
and social developments of the continent and is the result of a unique partnership between the
African development bank, OECD Development centre and the United Nations development
programme. The 2016 edition marks the 15th anniversary. This short summary hopes to provide an
overview of the report as well as visit Kenya from a youth perspective.
The UN predicts that by 2050 56% of Africa's population will be urban, placing Africa as one of the
most rapidly urbanizing regions of the world. The latest AEO16 report addresses the challenges
resulting from unplanned urbanization that lacks the correct policies to drive the implementation
and sustainable development needed for urbanization.
It is evident a considerable amount of hype and momentum has been given to the various
opportunities for development and structural transformation however can job provisions and quality
services equate to the high levels of demand from an increasing populous as well as demands from
urbanisation; resulting in a significant impact on the livelihoods of individuals. Can African nations
take advantage and utilize the demographic dividends occurring furthermore combat the effects of
Economic progress in Africa remains steady; reports show Africa's gross domestic product grew an
average of 3.6%. Growth is expected to remain moderate in 2016 at 3.7% but strengthen in 2017
to 4.5% (Fig.1.1). (African Development Bank, OECD Development Centre, United Nations
Development Programme, 2016) GDP however varied between various regions in Africa for example
northern regions faced significant impact due to the Libyan oil tap as well as the volatility of fragile
states and commodities: Despite this Africa demonstrated resilience to the meandering effects of

Stessy Nyaga
the global economy and maintained economic growth. " Total external flows to Africa remain
stable at USD 208 Billion. Remittances and official development assistance increased by 1.2% and
4% respectively" (African Development Bank, OECD Development Centre, United Nations
Development Programme, 2016)

In the face of economic development, human development still remains low and unequal "in 2015
approximately 879 million Africans lived in countries with low human development, while 295
million lived in medium and high human development countries. Africa's youth in particular are at
risk from slow human progress: in sub-Saharan Africa nine out of ten working youth are poor or
near poor" (African Development Bank, OECD Development Centre, United Nations Development
Programme, 2016) Africa may be urbanizing quickly however structural transformation is slow, more
productivity is needed to drive growth as well as cater to the 27million+ people joining the job
market each year. People may be migrating into cities however usually find themselves within the
slums where there is no job creativity/ creation.
Despite urbanization creating large benefits for African countries, harnessing the potential means
harnessing the human capitol with new policies and strategies; effective implementation will require
country specific strategies and collaboration in various sectors for example, an efficient transport
system creates more jobs which drives the food chain and overall contributes to the health and
livelihoods of individuals. civic education is also crucial to separate law from tradition like in the case
of clarification of land rights; context specific decentralisation (devolution) is also a key strategy if it
can be protected from vulnerabilities such as corruption; transparency and capacity building also
remain vital.
Asian countries on the other hand compare very differently to African countries, Asia was able to
harness the demand for jobs and became a vital global competitor in terms of manufacturing,
agriculture and so forth: It can be unfair to demand African countries to create employment when
jobs are in the hands of global competitors. Aspirations in Africa are being further dampened by the
high population of unemployed youth and dependants. Countries must recognise and cultivate

Stessy Nyaga
potential of young people and close the gap between the demands placed on young people and the
opportunities provided to them.
In the case of Kenya "GDP growth remained robust in 2014 at 5.3%. The expansion of construction,
manufacturing, finance and insurance, information, communications and technology, and
wholesale and retail trade buoyed GDP. The economy slowed in the first half of 2015, but growth is
estimated to have reached 5.5% by year-end. As shown in the table below, overall GDP growth
prospects are 6.0% and 6.4% for the years 2016 and 2017 respectively. Consumer Price Index (CPI)
inflation projections remain at
around 6.0% over the same
period. The short- to mediumterm positive growth
projections are based on the
assumptions of increased
rainfall and enhanced
agricultural production, a stable
macroeconomic environment,
continued low international oil
prices, the stability of the Kenya
shilling (KES), improved security
boosting tourism and reforms in
governance and justice" (African
Development Bank, OECD
Development Centre, United Nations Development Programme, 2016)
Political activity; social exclusion and corruption continue to be a huge threat to the development of
Kenya. Major reforms and efforts to implement the new constitution and new policies to sustain
urbanization will be significantly hindered despite the need to decentralise and increase finances to
the 47 county governments as well as their growing Diaspora communities. political activity
threatens to undermine the ongoing growth in GDP with corruption big on the agenda: Kenya is
losing a third of its state budget - the equivalent of about $6 billion - to corruption every year: funds
that are vital during the current season of urbanization and growth. Social exclusion of women,
youth and various tribes significantly obstruct human development and structural transformation. If
Kenya is able to harness the human capitol of youth and women by investing into such groups in the
same way Asia took advantage of their demographic dividends, Kenya is set to experience rapid
urbanisation in the foreseeable future.