Lending Institutions, Health Care, Education and Human Capital

Introduction

Providing help for developing countries has been a permanent issue of many international organizations. Climate peculiarities of a given country, lifestyle of its residents as well as their customs are key factors which predetermine the international support implementation. The majority of developing countries cannot improve their economic conditions by themselves and have problems in health sector and education; that is why they need international support.

Kenya belongs to such developing countries. It is one of the largest countries in Africa. Due to droughts and poor water supply, the country suffers from a lack of food supply for many inhabitants.

Taking into account all the problems of Kenya, international organizations have offered some development plans for the country. The ways how these programs can be implemented will be analyzed in this paper as well as proved that Kenya has reliable growth perspectives. The statistical indices of Kenya’s development have improved for the last 5 years, so with international support Kenya will show even higher results in further years.

International Funding Establishments and Their Cooperation with Kenya

The country’s principal field of industry, ensuring Gross Domestic Product (GDP), is agriculture and forestry (Kenya National Bureau of Statistics [KNBS], 2014). There are programs and development perspectives provided by such international organizations as World Bank (WB) and International Monetary Fund (IMF). The latter created 2 Medium Term Plans (MTP) for 2008-2012 and 2013-2017 (International Monetary Fund [IMF], 2014b). WB pays attention to poverty and inflation reduction and outlines growth prospects as well as possible risks for economic development in Kenya.

Economy of Kenya, particularly tourism, agriculture, transportation and connection underwent a serious recession in 2009 due to the global financial crisis. It happened due to droughts. Such economic conditions predetermined the need for international investment. According to Githua (2011), IMF and WB created special structural adjustment programs (SAP) outlining the strategy of loan costs spending. They presuppose that a certain strategy of costs’ distribution in Kenya has to be followed without deviation or changes. Reduction in financing of social spheres such as health and education became the reason of decline. This has led to the debt burden. Therefore, IMF and WB do not provide loans for the country as they aim to improve domestic opportunities.

In its poverty reduction strategy, IMF (2014a) determines 7 fields which would help to improve the country’s economy, among which are tourism and oil pumping, as these sectors are considered as highly profitable. Particularly, IMF (2014b) marks that the amount of tourists that visited Kenya in the planned period to 2013 estimated 3 million people a year. Kenya exports oil to Europe. It is estimated that the country’s reserves are well above the 600 millions of oil barrels, which is much higher than the same indices in Congo and Guinea (IMF, 2014a).

Therefore, due to investments offered by WB and IMF, the economy of Kenya gradually recovers from poverty. The rates of poverty decreased already in 2000 due to urbanization processes (Randa & Gubbins, 2013). Between 2005 and 2009, poverty rates fluctuated between 32% and 34%. Although they reduced during the last decade, they remained on the level of 42% in 2009 (Randa & Gubbins, 2013).

The data of 2014 mark small growth of different fields. Agriculture contributed 20.7% to GNP, industrial sector – 15.9 % and services – 63. 4%. The agriculture percentage increased by 0.6%, services by 4.5% and industry by 4.0% (African Development Bank Group, 2014).

As to financial system, IMF (2014a) noticed some stable macroeconomic environment and a promising regional increase in the stock market. These inflows contributed to stabilization of the market-determined exchange rate. The share of foreign investors in the stock exchange’s annual $2 billion turnover has remained slightly above 50 percent. Bond market foreign inflows have increased but their level remains modest due to macro-prudential regulations, which limits the term for currency swaps by non-residents to one year.

The Ways of Strengthening the Economy of Kenya by Healthy Population

Kenya’s healthcare requires stable and profound reforms. As the country’s population suffers from many diseases, its productiveness reduces resulting in recession. A key factor influencing population rate is childbirth. Kenyans are rather young as almost half of the people are less than 15 years old. Women between 15 and 49 are able to have children, which enables population growth (National Coordinating Agency for Population and Development [NCAPD], 2010).

Although Kumar, Sanghrajka, and Bellows (2013) as well as NCAPD (2010) state that rising population will cause commercial problems, the role of health care remains vital. Firstly, healthy children can learn more quickly. Cognitive processes improve due to better nutrition and fewer diseases in early childhood. The children will spend less time on sick days off and gain more from school. The better children study, the more chances they have to enter higher educational establishments. Besides, their better health condition will provide more opportunities for work and peak performance (DSAED, 2010).

Secondly, healthier workers can raise production output. Therefore, less time will be spent on taking care of a sick dependant. They tend to be less absent from work due to illness and are able to maintain and improve their skill levels (Harmonization for Health in Africa [HHA], 2011). DSAED (2010) exemplifies that workers receiving anti-retroviral treatment for AIDS had higher earnings due to the reduced amount of sick days off in Kenya and South Africa.

Furthermore, the elimination of deadly diseases, the agents of which transmit through the ground, will allow using more land sources, create more jobs in agriculture, and provide crop rotation for highly exploited territories. For example, the eradication of malaria from Italy and Corsica made additional land habitable. During the first attempt of construction the Panama Channel, a high mortality rate was observed among the workers, resulting in the failure to complete the Channel in time, which illustrates the way in which diseases hampered infrastructure development (DSAED, 2010).

Finally, better health will allow decreasing the expenses for treatment and less curative care will be required. In this case, the focus shifts to the development of primary and preventative care, which is generally cheaper (HHA, 2011).

Foreign Aid in Improving Healthcare

EU countries, the USA and China provided international aid for Kenya in the size of above $ 14 million in 2005. The number of donors is rather volatile (Mwega, 2009). NCAPD implemented a voucher system, which was implemented in 2006. According to the estimated ratio total health expenditure (THE) for 2013, 2014 and 2015 would be 273.42, 295.76, and 327.11 respectively. The government health expenditure will comprise 78.75, 85.18, and 94.21 (NCAPD, 2010).

Chinese share in health support increased in 2002 after the election of a new government (Mwega, 2009). China achieved 1.23 percent index in total investments in 2003, then slightly decreased to 1.15 percent in 2004, and by 2005 the statistics marked 8.25 % index of Chinese aid (Mwega, 2009).

USAID (2013) marks 40% satisfaction of healthcare industry due to poor distribution and retention in rural areas. The major strategies of USAID helped to finance the health workforce alongside with the Ministry of Health. The main priorities, as USAID claims, are strengthening of human resources, providing information management, regulatory and professional bodies, and introducing pre-service and in-service training (USAID, 2013).

WB, International Finance Corporation (IFC) alongside with International Development Association (IDA) provided subsidies of inpatient and outpatient care in both private and public health facilities for the poorest families in Africa. WB provided $ 20 million for 125 000 Kenyans in 23 500 families (The World Bank, 2014).

Education System in Kenya

Education level is another vulnerable issue concerned. According to the statistical data of 2013, 5,149.1 boys and 5,033.4 girls were enrolled in primary schools. The amount of enrolled university students was 193.2 boys and 131.4 girls (KNBS, 2014).
Data provided by KNBS (2014) show a large difference between children going to primary schools and children entering universities or higher educational establishments.

Paid primary education in Kenya is the main reason of illiteracy among Kenyans. As many citizens have a low paying capacity, a majority of them cannot afford educating their children. Thanks to the funding in education, the country spent 6.7% of GNP for education in 2010, which raised primary school enrollment from 62% in 1999 to 83% in 2009 and increased teacher-pupil ratio and lower secondary gross enrolment ratio (UNESCO, 2012).

Conclusion

Kenya is considered as one of the biggest and most developed countries in Sub-Saharan Africa. Yet the country still has a trouble of overcoming high poverty levels. Proper health investments can help develop the overall economy of Kenya as healthy population works more efficiently, and this will allow reducing treatment expenses and investing them into perspective spheres. The debt burden recesses the country’s economy, but the world lending institutions predict positive tendencies for proper loan extinguishment and the country is likely to achieve better results in the following years.

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