Kenya: Economic and Political Overview
In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline
Kenya has enjoyed a decade of strong economic growth, allowing the nation to access the status of a middle-income country. It has one of the fastest-growing economies in Sub-Saharan Africa, and growth was only partially affected by the COVID-19 pandemic, with GDP contracting by a mere 0.3%. The country returned to its growth path in 2021 (7.5%), 2022 (4.8%), and 2023 (5.6%, as per the IMF estimates). Following the strong cyclical rebound in 2023, the growth rate decelerated to 4.7% in 2024 as severe floods, subdued business sentiment following the mid-2024 protests, and reduced public spending weighed on the country's economy. The projected real GDP growth for 2025 and 2026 is around 5%, driven by a rebound in private sector activity, despite the government's implementation of spending cuts.
Regarding public finances, the fiscal deficit is projected to be 4.3% of GDP in 2025/26, down from 4.9% in 2024/25, according to the ministry's Budget Policy. Total spending is expected to rise to KES 4.34 trillion (USD 34 billion) in 2025/26, up from KES 3.95 trillion in the year ending in June. The government plans to finance the deficit through net external financing of KES 146.8 billion and net domestic financing of KES 684.2 billion. Persistent revenue collection underperformance and significant spending pressures have led to a rise in government debt in recent years; however, the IMF estimated that the debt-to-GDP ratio decreased to 69.9% in 2024 from 73.1% one year earlier, mainly due to a stronger shilling in the second half of FY24. The government plans to raise approximately USD 5 billion (nearly 4% of GDP) through official and commercial borrowing in FY25, with half of this amount sourced from multilateral creditors, including the final USD 0.9 billion disbursement from the IMF programme ending in April 2025 (Fitch Ratings). The government continues to accumulate pending bills, with domestic arrears rising to KES 528.4 billion (3% of GDP) by the end of September 2024, up from KES 516.3 billion at the end of June. Fitch projects the revenue/GDP ratio will increase in FY25-FY26, averaging 17.7%, though still below the government's initial target of 18.4%. Meanwhile, the inflation rate decreased from 7.7% in 2023 to around 5.1% last year and Kenya's central bank reduced its benchmark lending rate by a larger-than-expected 75 basis points to 11.25% in December 2024, citing room for looser policy to support economic growth as inflation remained under control. Over the forecast period, inflation is expected to remain relatively stable.
The unemployment rate was estimated at 5.7% in 2024 (World Bank). Kenya’s total workforce is projected to increase by 40.6% to 40.4 million by 2035; as data from the Kenya National Bureau of Statistics (KNBS) indicate the country will add 11.7 million to the job market by 2035, this may cause mounting unemployment in an economy that is not generating adequate jobs for school leavers and college graduates. Overall, the country’s GDP per capita (PPP) was estimated at USD 7,157 in 2024 by the IMF and the international poverty rate (USD 2.15) is estimated to have decreased from 35.8% in 2022 to 34.7% in 2023 (World Bank). However, economic growth has not been sufficiently inclusive, and the connection between growth and poverty reduction has weakened. Adverse climate shocks are reducing agricultural productivity, particularly in arid and semi-arid counties. Well-paying jobs in services are more accessible to skilled workers, while poorer and low-skilled workers face difficulties accessing productive employment. The poverty ratio stands at 38.6%, above the pre-pandemic level as poor and rural households have not participated as much in Kenya’s economic recovery. The recent deceleration in poverty reduction, coupled with unequal access to education and other opportunities, weak job creation, and consistently low productivity growth, underscores the necessity for an inclusive growth strategy.
| Main Indicators | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) | 2027 (E) |
|---|---|---|---|---|---|
| GDP (billions USD) | 108.75 | 116.32 | 116.66 | 118.57 | 124.60 |
| GDP (Constant Prices, Annual % Change) | 5.6 | 5.0 | 5.0 | 5.0 | 5.0 |
| GDP per Capita (USD) | 2,110 | 2,218 | 2,187 | 2,185 | 2,258 |
| General Government Gross Debt (in % of GDP) | 73.1 | 69.9 | 72.4 | 71.9 | 70.2 |
| Inflation Rate (%) | 7.7 | 5.1 | 5.2 | 5.1 | 5.1 |
| Current Account (billions USD) | -4.32 | -4.75 | -4.79 | -4.69 | -4.97 |
| Current Account (in % of GDP) | -4.0 | -4.1 | -4.1 | -4.0 | -4.0 |
Source: IMF – World Economic Outlook Database , Latest available data
Note: (e) Estimated Data
Kenya is particularly advanced in the sector of services and has been the source of innovations adopted throughout the continent (for example, it was the first country to sell government bonds through mobile phones). The country is the third-largest producer of tea and the leading exporter by volume in the world. It is also the eighth-largest producer of dry beans and ranks among the top 20 coffee exporters (FAO). The primary sector represents 21.8% of Kenyan GDP and employs 32.3% of the workforce (World Bank, latest data available), making agriculture and horticulture the two largest sectors of the national economy. Coffee, wheat, sugarcane, fruit, and vegetables are among the main crops, and dairy products, beef, fish, pork, poultry, and eggs are the main animal products. The country exports tea, coffee, cut flowers, and vegetables. According to data from the Central Bank, the agricultural sector grew by 6.1%, 4.8%, and 4.2% in the first three quarters of 2024, respectively.
Industry accounts for 16.9% of the GDP and employs only 15.6% of the workforce. Although the country has little in terms of mineral resources, some high-value minerals, such as titanium, have considerable potential. In addition, Kenya could become an oil and gas producer in the years to come, as new oil deposits (with a potential of 750 million barrels) were found following the drilling of exploration wells in Turkana County (North-West). Manufacturing, estimated to account for 8% of GDP, with the processing of agricultural products as the main subsector, is estimated to have grown by 1.3% in the first quarter of 2024 (marking the slowest pace since 2008), accelerated to 3.2% in the second quarter, and then slowed to 2.3% in the third (Central Bank data).
The services sector contributes to 55.4% of the GDP and employs 52.2% of the workforce. Tourism, a core sector of the Kenyan economy, has been hit by several terrorist attacks carried out by the Al-Shabab group since 2013. According to a performance update by the Kenya Tourism Board, the total number of arrivals in Kenya surged to 2.4 million in 2024, marking a 15% increase from 2023 and recording a substantial increase in earnings, which rose by 19.8% to KES 452.2 billion (approximately USD 3.49 billion), up from USD 2.92 billion one year earlier. The IT and communications sectors are expanding rapidly, and the construction industry is very dynamic. The growth pace of transport, medicine, education, and financial services makes Kenya a regional hub. Furthermore, Mombasa is the largest port in East Africa. In the banking sector, the 14 largest banks—accounting for 87% of total sector assets—each had core capital exceeding KES 10 billion as of the end of Q3 2024. Their strong domestic and regional franchises continue to underpin solid financial profile metrics (data Fitch Ratings).
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
|---|---|---|---|
| Employment By Sector (in % of Total Employment) | 32.3 | 15.6 | 52.2 |
| Value Added (in % of GDP) | 21.8 | 16.9 | 55.4 |
| Value Added (Annual % Change) | 6.5 | 1.9 | 6.8 |
Source: World Bank - Latest available data.
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| Monetary Indicators | 2016 | 2017 | 2018 | 2019 | 2020 |
|---|---|---|---|---|---|
| Kenyan Shilling (KES) - Average Annual Exchange Rate For 1 MUR | 2.87 | 3.00 | 2.99 | 2.87 | 2.71 |
Source: World Bank - Latest available data.
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The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.
Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024
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Kenya is relatively open to foreign trade, which accounts for 32% of its GDP (World Bank, latest data available). The country remains committed to trade liberalization through its membership in the World Trade Organization (WTO), the Common Market for Eastern and Southern Africa (COMESA), and the East African Community (EAC), which includes Kenya, Tanzania, Uganda, Rwanda, Burundi, and South Sudan. Kenya also ratified the African Continental Free Trade Agreement and signed many bilateral trade agreements. The country is currently negotiating a U.S.-Kenya Strategic Trade and Investment Partnership (STIP) and is one of the top five beneficiaries of the U.S.-Africa trade initiative, the African Growth and Opportunity Act (AGOA). Most tariff barriers have been eliminated, and customs duties are not very high. Of Kenya’s top 10 exports, six are agricultural products, including tea, roses, coffee, cut flowers, palm oil, and nuts, with tea being the country’s leading export. Other main exports include petroleum oils, medicaments, and cement. On the other hand, imports are led by petroleum oils, palm oil, wheat and meslin, and medicaments.
According to data from Comtrade, in 2023, the country's main customers were Uganda (12.5%), Pakistan (7.9%), the Netherlands (7.6%), Tanzania (6.8%), and the United States (6.4%); whereas imports came chiefly from China (17.6%), the United Arab Emirates (15.8%), India (10.3%), Saudi Arabia (5.6%), Malaysia (4.6%), and the United States (4.3%).
Kenya imports almost three times more than it exports, which translates into a trade balance that is largely in deficit. This situation persists, due to imports related to infrastructure modernization and oil exploration. In 2023, total goods exports reached USD 7.2 billion whereas imports amounted to USD 18.6 billion (-2.9% and -12.1% y-o-y, respectively). The bill of import for services stood at USD 5 billion, below that of exports (USD 5.5 billion). Overall, the negative trade balance was estimated at 8.7% of the country’s GDP (down from -9.3% one year earlier – data World Bank).
| Foreign Trade Indicators | 2019 | 2020 | 2021 | 2022 | 2023 |
|---|---|---|---|---|---|
| Imports of Goods (million USD) | 17,655 | 15,435 | 19,559 | 21,166 | 18,591 |
| Exports of Goods (million USD) | 5,839 | 6,034 | 6,739 | 7,411 | 7,193 |
| Imports of Services (million USD) | 3,855 | 3,507 | 4,119 | 5,271 | 5,000 |
| Exports of Services (million USD) | 5,601 | 3,880 | 4,859 | 6,435 | 5,520 |
| Imports of Goods and Services (Annual % Change) | 1.8 | -9.4 | 22.2 | 4.6 | -3.1 |
| Exports of Goods and Services (Annual % Change) | -3.2 | -14.9 | 15.3 | 11.9 | -4.5 |
| Imports of Goods and Services (in % of GDP) | 20.3 | 17.6 | 20.1 | 21.5 | 20.4 |
| Exports of Goods and Services (in % of GDP) | 11.4 | 9.6 | 10.8 | 12.2 | 11.7 |
| Trade Balance (million USD) | -10,683 | -8,338 | -11,152 | -11,924 | -10,023 |
| Trade Balance (Including Service) (million USD) | -8,937 | -8,006 | -10,186 | -10,652 | -9,421 |
| Foreign Trade (in % of GDP) | 31.8 | 27.2 | 30.8 | 33.7 | 32.1 |
Source: WTO – World Trade Organisation ; World Bank , Latest Available Data
| Main Customers (% of Exports) |
2023 |
|---|---|
| Uganda | 12.5% |
| Pakistan | 7.9% |
| Netherlands | 7.6% |
| Tanzania | 6.8% |
| United States | 6.4% |
| See More Countries | 58.8% |
| Main Suppliers (% of Imports) |
2023 |
|---|---|
| China | 17.6% |
| United Arab Emirates | 15.8% |
| India | 10.3% |
| Saudi Arabia | 5.6% |
| Malaysia | 4.6% |
| See More Countries | 46.1% |
Source: Comtrade, Latest Available Data
Source: Comtrade, Latest Available Data
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| 6.4 bn USD of services exported in 2022 | |
|---|---|
| 35.83% | |
| 17.32% | |
| Personal travelPersonal travel | 16.05% |
| OtherOther | 46.85% |
| Business travelBusiness travel | 1.26% |
| 16.25% | |
| 14.61% | |
| 11.37% | |
| 2.08% | |
| 1.30% | |
| 1.15% | |
| 0.10% | |
| 5.2 bn USD of services imported in 2022 | |
|---|---|
| 41.21% | |
| 31.38% | |
| 6.99% | |
| 6.24% | |
| 5.24% | |
| 3.44% | |
| 2.97% | |
| Personal travelPersonal travel | 1.61% |
| OtherOther | 55.82% |
| Business travelBusiness travel | 1.36% |
| 1.75% | |
| 0.77% | |
| 0.02% | |
Source: United Nations Statistics Division, Latest Available Data
The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House
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