2015 Index of Economic Freedom

Kenya

overall score55.6
world rank122
Rule of Law

Property Rights30.0

Freedom From Corruption27.0

Limited Government

Government Spending72.1

Fiscal Freedom78.0

Regulatory Efficiency

Business Freedom47.9

Labor Freedom63.8

Monetary Freedom72.8

Open Markets

Trade Freedom64.0

Investment Freedom50.0

Financial Freedom50.0

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Quick Facts
  • Population:
    • 44.4 million
  • GDP (PPP):
    • $80.4 billion
    • 5.6% growth
    • 4.6% 5-year compound annual growth
    • $1,812 per capita
  • Unemployment:
    • 9.2%
  • Inflation (CPI):
    • 5.7%
  • FDI Inflow:
    • $514.4 million
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Kenya’s economic freedom score is 55.6, making its economy the 122nd freest in the 2015 Index. Its score is down by 1.5 points from last year, with an improvement in freedom from corruption outweighed by declines in five of the 10 economic freedoms, including trade freedom, business freedom, and the control of government spending. Kenya is ranked 23rd out of 46 countries in the Sub-Saharan Africa region, and its overall score is just above the regional average.

Over the past half-decade, Kenya’s economic freedom score has declined by 1.8 points, pushing the economy further down into the ranks of the “mostly unfree.” Declines in four of the 10 economic freedoms include alarming deteriorations in business and trade freedom that could threaten local entrepreneurs and Kenya’s integration into global trading networks.

Kenya ranks higher than the global average in just three of the 10 economic freedoms. Property rights are poorly protected, much of the population lacks land titles, and corruption throughout all levels of government undermines basic procurement of government services.

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Background

In March 2013, Uhuru Kenyatta won the first presidential election under the 2010 constitution. Both he and running mate William Ruto have faced International Criminal Court charges of crimes against humanity related to post-election violence in 2007. In November 2011, Kenya launched a military incursion into Somalia in response to terrorist activity and kidnappings by Somalia’s al-Shabaab. Kenya joined the African Union peacekeeping mission in Somalia in 2012. In September 2013, al-Shabaab terrorists attacked a Nairobi mall, killing 67 people. In April 2014, Kenya and several other East African states agreed to send troops to South Sudan. There has been a moderate economic recovery since the 2007–2008 ethnic clashes, but poor infrastructure, systemic corruption, high unemployment, and a lack of public security undermine economic development. A $25.5 billion trade corridor in the port of Lamu is scheduled for completion by 2017.

Rule of LawView Methodology

Property Rights 30.0 Create a Graph using this measurement

Freedom From Corruption 27.0 Create a Graph using this measurement

Corruption is a serious problem. The 2010 constitution increased transparency and the independence of the judiciary, but no top officials have been prosecuted successfully. In 2013, the head of the state anti-corruption agency was charged with corruption, and an IMF request to publicize agreements between the government and mining corporations was rejected. The lower courts remain understaffed, underfinanced, and slow.

Limited GovernmentView Methodology

The top individual and corporate income tax rates are 30 percent. Other taxes include a value-added tax and a tax on interest. Total tax revenues are equivalent to 20.1 percent of gross domestic product. Government expenditures equal 30.5 percent of Kenya’s GDP, and government debt is equal to 50 percent of annual output.

Regulatory EfficiencyView Methodology

Implementation of reforms to enhance regulatory efficiency has been uneven. Launching a firm still takes 10 procedures and 30 days, and completing licensing requirements takes a month. The public sector is the main source of employment, and the informal economy employs much of the labor force. The government still regulates prices through subsidies, agricultural marketing boards, and state-owned enterprises.

Open MarketsView Methodology

Kenya’s average tariff rate is 10.5 percent. Efforts to facilitate trade through customs improvements are underway with other members of the East African Community. Foreign investors face regulatory hurdles. The state still owns or holds shares in several domestic financial institutions and continues to influence the allocation of credit. Financial inclusion has increased through mobile banking.

Country's Score Over Time

Bar Graph of Kenya Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Kenya to other economic country groups Download Charts

Regional Ranking

rank country overall change
1Mauritius76.4-0.1
2Botswana69.8-2.2
3Cabo Verde66.40.3
4Rwanda64.80.1
5Ghana63-1.2
6South Africa62.60.1
7Madagascar61.70.0
8Swaziland59.9-1.3
9Uganda59.7-0.2
10Namibia59.60.2
11Benin58.81.7
12Zambia58.7-1.7
13Burkina Faso58.6-0.3
14Côte d'Ivoire 58.50.8
15Gabon58.30.5
16Senegal57.82.4
17Tanzania57.5-0.3
18Djibouti57.51.6
19The Gambia57.5-2.0
20Seychelles57.51.3
21Mali56.40.9
22Nigeria55.61.3
23Kenya55.6-1.5
24Mozambique 54.8-0.2
25Malawi54.8-0.6
26Niger54.6-0.5
27Burundi53.72.3
28Mauritania53.30.1
29São Tomé and Príncipe 53.34.5
30Togo533.1
31Liberia52.70.3
32Comoros52.10.7
33Guinea52.1-1.4
34Guinea-Bissau520.7
35Cameroon51.9-0.7
36Sierra Leone51.71.2
37Ethiopia51.51.5
38Lesotho49.60.1
39Angola47.90.2
40Chad45.91.4
41Central African Republic45.9-0.8
42Democratic Republic of Congo454.4
43Republic of Congo 42.7-1.0
44Equatorial Guinea40.4-4.0
45Eritrea38.90.4
46Zimbabwe37.62.1
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