Electricity and Economy in Kenya

1 January 2017

ICT has been the main driver of Kenya’s economic growth over the last decade, growing on average by 20 % annually, and propelling the combined transport and communications sector into the economy’s second largest after agriculture. In chapter three I have discussed the impact of electricity on key economic sectors in Kenya which are agriculture, educational services, banking and communication services, microenterprises and tourism all of which are key pillars of Kenya Vision 2030. It costs approximately Ksh. 5,000 to connect to the grid and about 15 US cents equivalent per kWh of electricity service. This high cost is a major obstacle to the expansion of electricity connection to low-income households. Chapter 1: Introduction 1. 1 Overview and statement of the problem Broad agreement exists that the level and the intensity of energy use in a country is a key indicator of economic growth and development. A number of researchers claim that for modern energy to make a difference on poverty, it must necessarily contribute to productive uses that generate income and create jobs.

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Kenya’s Vision 2030 identified energy as one of the infrastructure enablers of its pillars and it is expected that more energy will be required to realize the objectives of the Vision. The economic pillar of Vision 2030 aims at providing prosperity for all Kenyans through an economic development programme aimed at achieving an average GDP growth rate of 10% per annum over the next 25 years. Electricity remains the most sought after energy source by the Kenyan society and access to it is normally associated with rising or high quality of life.

Its current consumption is at 143 kilowatt hours (kWh) per capita and national connectivity rate of about 28. 9% which is below the average of 32% for developing countries. Electrification plays an important role in the start-up and growth of microenterprises which may lead to sustainable livelihoods and poverty reduction. Energy can be directly linked to improved food security because energy can be used in any part of the food supply chain, from growing, processing, storage and cooking, through to marketing and distribution.

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