An appraisal of Agricultural investment in the 1964-1970 Kenyan development program

Abstract

Kenya exhibits a dualistic economy in the Agricultural Sector. In scheduled agricultural areas, there is commercial farming and in the nonscheduled agricultural areas, a mixture of semi-commercial and peasant (subsistence) farming. The rural area is the center of life for more than 70 percent of the Kenyan population. If these people are to improve their 1st, it will be through interacting schemes of agricultural and community development. The scope of this study is to appraise agricultural investments during the Six-Year Development Plan, and to estimate what role agricultural investment will play in bringing about the projected economic growth and development by 1970. The analysis of the economy between 1954-1962 reveals many interesting facts. The rate of population growth has been three percent and is expected to remain the same in the future. Thus the population growth rate suggests that, to achieve any net economic growth, output must increase by more than three percent per annum if income per capita is to be raised. A problem that will face the government is that of unemployment. The gross domestic product at current prices increased at a rate of five and one-half percent. Prices, measured by changes in the Nairobi cost of living index, increased

by two and one-half percent per annum. The growth rate of the Gross National Product, in real value, is only a three percent increase, which is just enough to support the population growth. The real per capita income probably has increased from zero to one and one-half percent during that eight-year period. In differentiating per capita income from per capita product, labor has grown by two and one-half percent over this period. The rate of economic growth between 1954-62 has occurred in two phases. In the first phase between 1954 to 1958, where each sector of the economy showed substantial growth, real gross domestic income grew by at least three and six tenths percent. The annual growth in the agricultural sector was more than six percent. The second phase was between 1958-62 which was characterized by a declining growth rate. The Agricultural Sector is the major source of income. Over 80 percent of the population earns its living from this sector. Primary exports have contributed between 85 and 90 percent of the total export earnings. It constituted about 40 percent of the Gross Domestic Product. New methods of farming have been adapted to nonscheduled agricultural areas under the Swynnerton Plan. The resources of Kenya are too limited for her to engage in quick industrialization. The planning

authorities have designed the Six-year Development Plan 1964-70 with a view of utilizing the available resources in the most profitable and efficient way. To achieve its goals of raising per capita income and economic growth, the planners advocate heavy capital investment in the agricultural sector, where less skilled manpower is needed. A complete revolutionary change is expected to take place. The scheduled agricultural areas will be re-distributed; nonscheduled agricultural areas will be consolidated and titles to land established. New farming areas will be provided through the irrigation schemes and land reclamation. Agricultural credits have been offered in order to facilitate loans to the farmers. Cooperative institutions have been organized so that farmers will be united, better farming methods adapted, better prices obtained and loan facilities readily available. The Agricultural Sector is aimed at providing employment facilities in the near future and in financing the future development. This will come about through earnings from exports and taxes. It may be pointed out that the economic growth of the country might change from depending on the agricultural sector, if discovery of natural resources takes place. For instance, a new metal, Wollastonjte, estimated to be worth at least

25,00O,000, has been discovered near Kajiado. This discovery will have substantial impact on economic growth. It is too early to appraise accurately the impact of the agricultural investment, and its actual role in economic growth and development, because of many factors which are involved. Some of these factors are export prices which might decline or rise; private investors' attitude about investment; the adoption of new methods of farming by farmers; political stability; availability of funds from abroad; and climatical factors which can or can not be favorable. If all goes well, the intended investments in the course of the Six-Year Development Plan 1964-70 will boost the entire economy. In this thesis, the author has attempted to appraise the impacts of investment in the agricultural sector which is aimed at creating employment, raising capital income per capita, increasing agricultural outputs, and providing export earnings, foreign exchange, and capital formation. Furthermore, the social and political implications of land "hunger" in Kenya will be somewhat minimized by the programs. Since economic growth and development is an evolutionary process, Kenyans and their government have to exercise patience coupled with dedication to make economic transition smooth, cumulative, and progressive.