Kenya's economy in 1979 was in transition, facing challenges that had begun to emerge in the late 1970s. Unlike the relatively prosperous economic context of 1974, the 1979 election took place amid rising inflation, growing budget deficits, and questions about the sustainability of Kenya's development model.
The second oil crisis of 1978-1979 put pressure on Kenya's economy. Oil prices had risen again, and Kenya's oil import bill was substantial. Kenya, which depended on imported petroleum, faced higher energy costs that affected both the government budget and the broader economy.
Agricultural commodity prices, which had been high in 1974, had declined by 1979. Coffee prices, important to Kenya's economy and government revenue, had fallen from earlier peaks. Tea prices were also lower than they had been. These declining commodity prices reduced government revenues from agricultural exports and reduced the incomes of farmer exporters.
The Kenyan government's budget was facing deficits. Government expenditures on development projects, administration, and military spending exceeded revenues. These deficits were funded partly through borrowing, which was increasing Kenya's external debt.
Inflation was rising in the Kenyan economy. The combination of higher oil prices, higher government spending, and imported inflation contributed to rising prices. Workers and consumers experienced declining real purchasing power as inflation eroded wages and savings.
Agricultural production, while still important to the economy, was facing challenges. Droughts in some regions affected pastoral production. Agricultural productivity growth had slowed compared to the rapid expansion of the 1960s and early 1970s.
The industrial sector continued to grow, but at a slower pace than in the previous decade. Manufacturing industries producing consumer goods, agricultural inputs, and construction materials maintained production, but growth was modest.
The service sector, including trade, transportation, and tourism, remained important to the economy. Tourism continued to be a significant source of foreign exchange.
The development project agenda continued in 1979, though with less momentum than in 1974. Candidates still campaigned on promises to deliver development projects to their constituencies, but the government's capacity to fund projects was declining as budget deficits grew.
The economic context of 1979 was thus significantly different from 1974. The economic growth and optimism of the mid-1970s had given way to economic challenges and uncertainty. The new Moi government faced economic difficulties that would shape its policy options in subsequent years.
See Also
- Kenya Economy 1970s
- 1979 Election
- Oil Crisis Kenya
- Coffee Production Kenya
- Kenya Economic Policy
- Inflation Kenya 1970s-1980s
Sources
- Killick, Tony. "A Reaction Too Far: Economic Theory and the Role of the State in Developing Countries." London School of Economics, 1989.
- Widner, Jennifer. The Rise of a Party-State in Kenya. University of California Press, 1992.
- Bigsten, Arne. "Income Distribution and Development." World Bank Economic Review, 1983.