High interest rates, poor weather hold back Kenya’s economic progress

Kenya’s economy slowed down in 2024 due to a mix of bad weather, high interest rates, and fewer new jobs, according to the Kenya National Bureau of Statistics (KNBS) Economic Survey 2025.

The country recorded a growth of 4.7 percent, a drop from 5.7 per cent in 2023. This was mainly caused by weaker performance in agriculture, which makes up over a fifth of the gross domestic product.

Even though large investments were made in the farming sector, its growth dropped to 4.4 percent in 2024 from 7.7 percent the previous year.

The fall was blamed on lower maize production and reduced horticulture exports to Europe due to stricter pest control rules and delivery problems. Maize output fell from 47.6 to 44.7 million 90kg bags, while horticulture exports dropped by 14.1 percent.

“At one point, we feared it could slow further to 4.6 per cent. Factors such as constrained fiscal space, high debt servicing costs, post-pandemic socioeconomic unrest, and frequent extreme weather events have significantly disrupted economic activity,” said National Treasury CS John Mbadi.

Although the overall growth dipped, some sectors still posted gains. Financial and insurance activities rose by 7.6 percent, real estate by 5.3 percent, and transport and storage by 4.4 percent.

Wholesale and retail trade grew by 3.8 percent, and information and communication expanded by 7 percent. The manufacturing sector had only a slight rise, improving from 2.2 percent to 2.8 percent in 2024.

The share of GDP from manufacturing stood at 7.3 percent, and output volumes rose by 4.4 percent. The number of people formally employed in the sector increased by 1.9 percent to 369,200.

The mining sector, however, faced a major setback. The value of minerals fell from Sh33.8 billion in 2023 to Sh25.5 billion in 2024.

The drop was mainly due to lower earnings from titanium. Other minerals had mixed performance, with soda ash increasing in value to Sh2.2 billion from Sh1.7 billion.

But crude salt fell sharply by 98.5 percent to just Sh0.8 million, and soapstone dropped by 70.2 percent to Sh21.7 million.

KNBS CEO Macdonald Obudho noted improvements in the transport sector. “Kenya’s transportation and storage sector recorded a 6.4 per cent growth in output, rising from Sh3.28 trillion in 2023 to Sh3.48 trillion in 2024.”

Government spending on road maintenance rose by 20.1 percent to Sh80.1 billion. However, new road motor vehicle registrations fell by 21.4 percent to 93,646, and motorcycle registrations declined by 4.7 percent.

At the same time, road accidents went up by 11.8 percent to 11,173 cases, raising safety concerns.

Rail services showed mixed results. Metre Gauge Railway (MGR) freight volumes rose slightly from 1.00 to 1.03 million tonnes, but passengers on MGR and Standard Gauge Railway (SGR) dropped.

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MGR passenger numbers fell by 26.9 percent to 2.52 million, while SGR passengers decreased by 10.3 percent to 2.45 million. Still, SGR revenue jumped by 39.4 percent to Sh4.1 billion, pointing to higher fares or longer trips.

Kenya’s external trade also shifted. Exports grew by 10.4 percent to Sh1.12 trillion, while imports rose by 3.3 percent to Sh2.7 trillion.

This narrowed the trade gap from Sh1.9 trillion to Sh1.6 trillion, with the export-import cover ratio rising to 41.1 percent.

“The United States remained the top source of remittances, contributing Sh354 billion out of a total Sh674.1 billion. China led as Kenya’s largest import partner (Sh576.1 billion), while Uganda was the top export destination (Sh125.9 billion), followed by the U.S. (Sh88.9 billion) and the Netherlands (Sh72.5 billion),” Obudho said.

Kenya’s main exports included tea, coffee, apparel, and horticulture, while key imports were petroleum, industrial machinery, and metals.