Kenya needs to undertake economic reforms to ensure long-term growth
Posted Friday, June 22 2012 at 18:44
The recent oil discovery in Turkana could help in re-balancing Kenya’s economy, but it could equally aggravate the challenges if the prospective revenues are not managed properly.
If commercially viable, Turkana oil will improve the country’s trade balance. In 2011, it spent $4.1 billion (Sh352.6 billion) on oil imports, equivalent to approximately 100,000 barrels per day.
For Kenya to become a net oil exporter, the resources in Turkana would need to be similar to those of Sudan or Chad.
However, for oil to catalyse development, it will have to overcome the special macro-economic and governance challenges associated with natural resources. Kenya can use the lead time to lay the right foundations for a successful oil economy.
Ms Kiringai is a senior economist while Mr Randa is an economist at the World Bank in Kenya.