Conflicting views on Kenya's prospects.

Enhanced security was one of the reasons cited by the Director of a Nairobi think tank, the African Economic Research Consortium (AERC), for Kenya's 4.3 percent 2004 economic growth rate in tourism, agriculture and manufacturing.

The overall growth rate for Kenya's GDP in 2004, according to the Central Bank of Kenya's "Monthly Economic Review for March 2005" was 2.6 percent up from 1.8 percent in 2003. This is in agreement with the International Monetary Fund's (IMF) estimate of Kenya's growth in GDP of 2.6 percent. The CIA's estimate for 2004 is 2.2 percent growth.

The Central Bank is forecasting growth in GDP of 3.5 percent in 2005, and this is in agreement with the IMF's 3.6 percent growth prediction for 2005.

The AERC said that improvements in security, such as the creation of a special police unit with 300 officers, managed to set the minds of tourists at ease in matters of personal safety.

The Central Bank also commented on favorable growth in tourism as being partly responsible for growth in GDP.

The AERC also cited growth in manufacturing was promising. The Central Bank, however, termed industry growth as "modest".

The Central Bank said that it expected tourism to remain strong in 2005, and it specifically credited advertising campaigns directed at foreign tourists for the strength.

The AERC also commented on the success of the country's advertising. The Director's comments were reported by The Sunday Standard (Nairobi). The Director was speaking before an annual meeting of economists from 18 African countries and other world nations.

While tourism is instrumental in creating jobs and income for Kenyan consumers, the textile industry was mentioned by both the AERC's Director and the Central Bank as an area of concern. The textile industry is responsible for 40,000 jobs, particularly in Kenya's Export Processing Zones (EPZs), which are currently endangered by aggressive competition from China, India, Europe and the United States.

Of the 77 factories in the EPZs in 2003 only 66 remained in 2004.

In contrast to the relatively upbeat view of the AERC and the Central Bank, a story in The East African (Nairobi) sourcing a "government planning paper" said that Kenya's economy was threatened by AIDS. Over the past 20 years, says The East African, the incidence of AIDS has severely depleted the country's skilled workforce. It has also reduced the country's consumer base and, therefore, negatively affected consumer spending. The cost of AIDS is also a factor slowing Kenya's growth.

The East African said that the government was planning to spend US$2.3-billion to fight AIDS. Currently 7 percent of Kenya's population has AIDS. The plan, focusing on prevention, predicts lives saved will number 270,000.

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