February 12, 2025
Key Sectors in Economic Growth In Kenya

Key Sectors In Economic Growth In Kenya

Building and construction, infrastructure development, manufacturing, transportation and services, tourism (especially from emerging markets), agriculture, wholesale and retail, and tourism from emerging markets are the primary industries driving economic growth.

Agriculture

The foundation of the economy is the agriculture sector. As of 2013, the industry generated 18% of formal employment, 65% of Kenya’s total exports, and a direct 25% contribution to the country’s GDP. 

The bulk of Kenyans rely on the agricultural industry for both their primary source of income and as the engine of the country’s economy. 

Crop production (food and industrial), horticulture, livestock, fishery, and forestry are all included in this industry. 

Crop and horticultural production accounts for 76.5% of agriculture’s GDP, with livestock production coming in second at 4.9%.

A fifth and 0.7 percent, respectively, of the GDP of agriculture comes from forestry and fishing. In 2013, the total agricultural output increased by 2.9% due to lower rainfall, which decreased the yield of sugarcane, beans, and maize. 

Traditional agricultural exports from Kenya include tea and coffee, while non-traditional exports include horticulture, which saw a rise in 2013 to 213.8 thousand tonnes from 205.7 thousand tonnes in 2012. 

Tourism

After manufacturing and agriculture, tourism is Kenya’s top source of foreign exchange earnings and its third-largest contribution to the country’s GDP. 

Several reasons, including political stability, strong tourism promotion, continuing government support and commitment to creating an enabling environment, deregulation, and the diversification of tourist markets, have contributed to the sector’s rapid growth.

Manufacturing

Currently centered mostly on agriculture, this sector contributes significantly to the value-adding of agricultural output by establishing both forward and backward links with the agricultural sector. 

Kenya’s industrial policy is shifting toward export-oriented manufacturing, nevertheless, as the nation seeks to create specialty products for both new and existing markets, as well as increase the country’s product share in the regional market from 7% to 15%. 

Kenya is pushing for the creation of Industrial Parks, Industrial Clusters, Special Economic Zones (SEZs), small and medium-sized manufacturing companies, niche product development, and the commercialization of research and development outcomes.

Transport and Infrastructure

The value of communications and transportation to the GDP is about 11%. Kenya plans to significantly expand and upgrade its infrastructure. 

Regarding this, the nation has emphasized several infrastructure initiatives that offer noteworthy prospects for investors in the upcoming years.

It is noteworthy that although the Government has presented its intentions for infrastructure development, it remains receptive to suggestions and ideas from possible investors.

  • Reconstruction in the Northern Corridor 
  • creation of a network of commuter trains surrounding Nairobi 
  • constructing a standard gauge railway to take the place of the existing Kenya-Uganda railway 
  • Jomo Kenyatta International Airport’s new terminal’s design and construction 
  • creation of a new route (LAPSET) connecting Lamu with South Sudan and Ethiopia

Investments in these initiatives may come from public-private partnerships or direct investments. 

Information & Communications Technology

The estimated value of the Kenyan ICT market is $500 million. 

It is noteworthy that businesses like Spanco entered the country after Airtel to provide ongoing support. 

Given Kenya’s relative sophistication in comparison to its neighbors, these companies are projected to grow into the area to support their clients’ expansion aspirations into the EAC and beyond.

Building & Construction

Kenya boasts a thriving building and construction sector with easily accessible high-quality engineering, building, and architectural design services. 

Following the rehabilitation and replacement of roads and bridges under the Kenya Urban Transport Infrastructure Program, this industry is presently seeing growth.

Key Sectors In Economic Growth In Kenya