Kenya’s growth failing to deliver quality jobs amid stagnating productivity - World Bank
The report notes that although Kenya has recorded sustained economic growth over the past two decades, much of it has been driven by public sector.
Jobseekers queue for interviews in Nairobi in the past. (Photo: File)
Kenya's economy is failing to generate enough quality jobs for its growing workforce despite two decades of steady economic growth, the World Bank has warned.
This is amidst weak productivity across key sectors, leaving most new labour market entrants confined to low-paying informal employment.
In its latest Kenya Growth and Jobs white paper, the lender says the country's job creation model has struggled to keep pace with a rapidly expanding labour force, limiting the ability of economic growth to deliver broad-based prosperity.
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The report notes that although Kenya has recorded sustained economic growth over the past two decades, much of it has been driven by public sector spending and capital-intensive investments that have yielded limited employment gains.
“Kenya has seen little productivity growth across most sectors of the economy and disappointing job trends, as the majority of new entrants to the labour market find low-productivity, part-time informal jobs in non-tradable sectors,” the World Bank said.
It adds that the challenge has been compounded by stagnant earnings, with real wages declining by 12.8 per cent between 2019 and 2023, before registering only a modest recovery in 2025.
According to the report, Kenya's real gross domestic product (GDP) expanded at an average annual rate of 4.5 per cent between 2001 and 2025, contributing to higher incomes, lower poverty levels and improved access to essential services.
However, the lender reckons those gains have become increasingly difficult to sustain as structural constraints weigh on productivity and private sector expansion.
The report also links the country's weak labour market outcomes to broader economic challenges, including rising public debt, subdued foreign direct investment, weakening export competitiveness and climate-related shocks, which have collectively reduced the economy's capacity to create productive employment opportunities.
Although Kenya initially recorded significant reductions in poverty, the World Bank notes that many of those gains were reversed during and after the Covid-19 pandemic, exposing the vulnerability of workers concentrated in low-productivity sectors.
It argues that stronger productivity growth will be essential to improving employment outcomes, particularly by strengthening labour-intensive industries, improving the business environment and fostering greater competitiveness across the economy.
“Economic growth that also brings increasing private investment and quality jobs is unable to be sustained and be inclusive if constraints are not addressed.”
Nevertheless, it notes that addressing Kenya's structural constraints would help create an environment where businesses can expand, productivity can improve, and economic growth can generate better-paying and more sustainable jobs for a growing workforce, while making future gains in poverty reduction more resilient.