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Last Published: 11/22/2017
Market Overview

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Kenya has a market-based economy and is generally considered the economic, commercial, financial and logistics hub of East Africa. With the strongest industrial base in East Africa, Kenya has been successful in attracting U.S. exporters and investors. More U.S. companies are investing in Kenya and setting up local and regional operations to take advantage of Kenya’s strategic location, diversified economy, entrepreneurial workforce, comprehensive air routes, and status as a regional financial center.
 
An additional attraction for U.S. companies is the strength of Kenya's human resources. According to UN data, Kenya’s population stood at 47.2 million people in 2016. Its urban areas, particularly Nairobi, are noted for their large number of well-educated English-speaking and multi-lingual professionals, and for their strong entrepreneurial tradition. Kenya is also a very “young” country with almost 79% of the population under the age of 35.
 
At the same time, businesses operating in Kenya face a number of challenges associated with corruption, unemployment, land titles, security, and poverty. The country’s per capita GDP was $1,553 in 2016, but unemployment and poverty remain high with an estimated 40% of the population living below the poverty line.
 
Sustained and significant economic growth is essential if Kenya is to address its development challenges. According to the World Bank, Kenya’s economy grew by 5.9% in 2016 anchored primarily on investment in public infrastructure, strong remittance inflows, low oil prices and a recovery in the tourism sector. However, 2017 growth is expected to dip to 5.5% due to an ongoing drought that has led to crop failure, higher energy prices and food insecurity as well as a slowdown in investments ahead of the elections on August 8, 2017. These elections were the second under a new constitution adopted in 2010. One of the most notable changes brought about by the new constitution was a broad devolution of power and responsibilities from the national government in Nairobi to local governments in 47 counties.
 
The World Bank’s ‘Ease of Doing Business Index’ shows Kenya moved up 21 places in the 2017 report to position 92 globally, making it the third most improved economy in 2017. This jump in ranking came following a similar improvement of 21 slots in 2016. The government has initiated a broad range of business reforms including the areas of starting a business, obtaining access to electricity, registering property, protecting minority investors and streamlining insolvency rules.  Kenya is also experiencing the fastest rise in FDI in Africa (47% increase in 2015) with the majority of foreign investment going into renewable energy projects. Kenya accounted for 67% of all private equity funding in East Africa.
 
Agriculture remains the backbone of Kenya’s economy and central to Kenya’s development strategy. It accounts for more than 25% of GDP and is the largest employer with more than 70% of Kenyans earning at least part of their income in the sector.
 
Although Kenya is the most industrially developed country in East Africa, manufacturing accounts for only 10% of GDP. Key exports such as tea, coffee and floriculture require little or no processing. Although Kenya’s mineral resources are limited, the country has a potentially important source of high-value mineral commodities such as titanium and gold. The construction and real estate sector is one of the fastest growing sectors in Kenya, growing at 14% in 2015. The growth is generally attributed to government investment in public infrastructure development projects as well as the real estate sector. The government is placing a high priority on implementation of mega infrastructure projects (road, rail, energy, port and airport modernization).
 
The technology sector is also one of the fastest growing business sectors in Kenya, and internet access rates are some of the highest in sub-Saharan Africa. The rise of 4G and 4G LTE services and the growth in smartphone usage is influencing growth in e-commerce and other e-based services and innovation.
 
The tourism sector in Kenya is one of the most diverse in East Africa with increased investments in conference, eco and leisure tourism. Tourist arrivals increased 12% in 2016 and sector earnings grew by 17% to approximately $1 billion. This increase, coupled with investments in new hotel space and Kenya Airways’ continued dominance in the region, could see tourism continue to grow.
 
Nairobi is the transportation hub of Eastern and Central Africa and the largest city between Cairo and Johannesburg. The Port of Mombasa is the most important deep-water port in the region, supplying the shipping needs of more than a dozen countries.


 

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.



Kenya Trade Development and Promotion