Manufacturing sector./FILE
The government, in partnership with the private sector—led by the Kenya Association of Manufacturers—has set an ambitious but achievable goal: to increase the manufacturing sector’s contribution to GDP from the current 7.2 per cent to 20 per cent by 2030.
This target recognises the sector’s critical role in Kenya’s economic development. Manufacturing is not only a major source of employment, directly supporting more than 347,000 jobs as of last year, but also carries a powerful multiplier effect—creating at least four additional jobs for every one within the sector.
As the largest private-sector employer, manufacturing offers opportunities across key sub-sectors, including agro-processing, food production, textiles and apparel. However, persistent challenges such as high input and energy costs, complex taxation and inadequate infrastructure continue to undermine competitiveness and discourage investment.
One of the most immediate threats facing the sector is the impending expiry of the African Growth and Opportunity Act, which has been instrumental in boosting Kenya’s textile and apparel exports to the United States. Without an extension beyond this month, Kenya risks a major economic setback—mirroring the fallout seen in Ethiopia after its exclusion from Agoa in 2022, which resulted in massive job losses, factory closures and reduced foreign earnings.
Kenya must not wait to react. It must act. A proactive approach—anchored in strong public-private collaboration—is essential to keeping the industrialisation agenda on track.
The government must focus on creating a competitive, business-friendly environment where innovation and entrepreneurship thrive. This includes easing production costs, improving infrastructure, expanding market access and streamlining regulations.
Beyond the US market, Kenya should explore alternative strategies such as exporting, franchising and joint ventures to expand its footprint in Europe, Asia and other regions. This will cushion the industry from overreliance on a single trade partner.
Meanwhile, other critical manufacturing sub-sectors—including food and beverages, construction materials, agro-processing, pharmaceuticals, automotive, chemicals, plastics and ICT—must also receive targeted support and investment.
Job creation remains a pressing national challenge, with between 800,000 and one million young Kenyans entering the labour market annually—most without formal employment prospects. Manufacturing holds the potential to close this gap and offer sustainable livelihoods for the country’s growing youth population.
But achieving the 20 per cent GDP target will require more than policy papers and promises. It will demand bold, coordinated action across government and industry. Kenya must walk the talk: lower the cost of production, diversify export markets, and implement the structural reforms necessary to unlock the full potential of its manufacturing sector.
Only then can we secure inclusive growth and economic resilience for future generations.
