Kenya doing well in policy environment for poverty reduction, says World Bank

The latest World Bank review of policies and institutions in Sub-Saharan Africa shows that Kenya is on a positive trend for poverty reduction, despite the crunch in the economic environment and the bottlenecks in the global economy.

Despite registering a CPIA score of 3.8 in 2011 which was also recorded in 2010, Kenya recorded improvements in 2011 in key pointers including debt management, legal, regulatory and infrastructural framework to support financial outreach and services, and also in ratings for social protection and labor, fiscal reporting and access to information on public affairs.

However, the song was not sung in full throat as challenges such as monetary policy which lagged in responding to the internal and external shocks that the economy experienced, hit the country in full swing.

In the report, Johannes Zutt, World Bank’s Country Director for Kenya said that the country needed to improve the management of public sector to reap from benefits of policies that hold up the country’s quest to attain the middle income status.

“The new scores on economic management, social safety nets and labuor market policies demonstrate Kenya’s determination to create an economic environment that will support its growth to Middle Income Country status, but more needs to be done to improve the scores on public sector management to consolidate these gains,” said Mr Zutt.

Kenya’s current CPIA score is above the average for all IDA countries and among the top 25% of the International Development Association (IDA) countries in Sub-Saharan Africa and is at par with Uganda and Rwanda within the EAC region.

The review is part of the annual Country Policy and Institutional Assessment (CPIA) that rates the performance of all developing countries in 16 indicators covering four pillars of economic management, structural policies, policies for social inclusion and equity and public sector management and institutions. Countries are rated on a scale of 1 (low) to 6 (high) for each of the 16 indicators.

An overall CPIA score reflects an average for the 16 indicators combined. The latest results show a higher CPIA score for nearly half of all IDA eligible African countries, with the number of gainers outpacing decliners by more than 2 to 1.

“There was a concern that a decline in the payoff to economic reforms during times of global economic turmoil would result in the slowdown of reform programs across the continent. Despite the uncertainty, African policymakers generally did not backtrack on policy reforms during the global crisis, and some countries even accelerated them,” asserts Shanta Devarajan, World Bank Chief Economist for the Africa region.

The pace of reform varies across the four areas covered by the CPIA, with performance in economic management leading all other areas. This is followed closely by performance in the area of structural policies, with social inclusion in third place.

Governance lags other areas, indicating that reforms that are deeply political or incremental by nature only tend to improve slowly.