The Kenya Forum | Manufacturing and agriculture stagnate in Kenya, services grows - The Kenya Forum

March 10, 2016


Manufacturing and agriculture stagnate in Kenya, services grows. This is according to a World Bank assessment of the economy.

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Manufacturing and agriculture stagnate in Kenya, services grows

Manufacturing and agriculture stagnate in Kenya, services grows

Nairobi skyline Image Co: Willy Abuga

A new report by World Bank has highlighted modern services as the main engine behind the acceleration of the Kenya’s economic growth, which has improved significantly in the past decade.

According to The 2016 Kenya Country Economic Memorandum: From Economic Growth to Jobs and Shared Prosperity (CEM) , since 2005, services exports in Kenya have accounted for over 50% of the increase in total exports, and are poised to overtake goods exports.


The report has also revealed that agriculture, which is the backbone of Kenya’s economy, and manufacturing have stagnated and  have therefore not created enough jobs for the country’s growing working age population.

“…. agriculture’s share in GDP declined from 26.5% in 2006 to 22.0% in 2014 while manufacturing stagnated at 11.8% of GDP on average during the same period,” the report says, adding that the informal economy has created most of the jobs.

The CEM report calls for the reviving of agriculture, which it says will go a long away toward eradicating poverty and also highlights the need to increase productivity in the jua kali sector.

“Reviving agriculture remains Kenya’s main pathway to poverty reduction. On jobs, improving the business environment, the education system, and reforming dated labor laws will help. On informality, the real gains come from increasing productivity in the Jua Kali sector”, says Diarietou Gaye, World Bank Country Director for Kenya


The report also identifies three long-term growth drivers: Innovation, Oil, and Urbanization.

According to the report, accelerating growth to meet Kenya’s development goals requires technological advances and innovation that raise firms’ productivity, “as only a few Kenyan firms have come up with products that are actually new to the domestic market.”

The Country Economic Memorandum says that the recent discovery of oil opens new opportunities for raising the county’s growth.

“If used prudently, it can contribute to achieving the country’s Vision 2030 goals, and with appropriate management of resource revenues, it can generate resources that could be used to raise public investment, human capital, and productivity in the non-resource sectors of the economy,”

The report also recommends improvements in the public investment management process and better execution.

The Country Economic Memorandum is a strategic World Bank product that analyzes key aspects of the country’s economic development, with the main aim of providing an integrated and long-term perspective of the country’s development priorities.


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