New KIPPRA report exposes the hidden weaknesses crippling Kenya’s forest industry
According to the study, the forest sector remains a cornerstone of Kenya’s economy and livelihoods, yet persistent structural weaknesses are holding back growth and long-term sustainability.
Rising demand for wood products is putting increasing pressure on Kenya’s forest sector, with wood shortages and significant inefficiencies in processing threatening to undermine its economic potential, a new study shows.
Despite serving as a key pillar of manufacturing and supporting thousands of livelihoods, the sector is struggling to keep up with rising demand for forest products while operating far below its optimal capacity.
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A study by the Kenya Institute for Public Policy Research and Analysis (KIPPRA) highlights the extent of the problem, revealing widespread inefficiencies and material losses across wood, furniture and paper manufacturing firms.
According to the study, the forest sector remains a cornerstone of Kenya’s economy and livelihoods, yet persistent structural weaknesses are holding back growth and long-term sustainability.
The analysis shows that furniture and wood firms make up most industry players but continue to register low technical efficiency scores.
Limited innovation uptake
This underperformance is largely linked to limited innovation uptake, weak adoption of circular economy practices, inadequate employee training and the slow pace of formal firm registration.
As a result, these shortcomings are emerging as major obstacles to competitiveness and sustainable forest resource use.
KIPPRA notes that key efficiency drivers—innovation, circularity, training and formal registration—remain underutilised across much of the sector, despite their critical importance.
“Innovation adoption improves technical efficiency by fostering new methods and processes that enhance productivity,” KIPPRA said.
The research further highlights that employee skills are central to a firm’s ability to operate modern machinery and adapt to new technologies.
Circular economy practices—such as waste reduction and improved resource recovery—are also emphasised as essential in reducing pressure on Kenya’s already strained wood supply.
Firms registration
In addition, the study underscores that firm registration enhances technical efficiency by formalising operations, improving access to resources and ensuring compliance with industry standards.
With Kenya working to expand forest cover and support sustainable industries, the findings carry significant policy implications.
KIPPRA recommends targeted investment in staff training, greater support for innovation and stronger incentives for firms to integrate circular practices into production.
It also calls for reforms to simplify business registration while strengthening enforcement across the sector.
Enhanced oversight by the Kenya Forest Service—through stricter rules on sourcing, resource use and waste management—is deemed crucial to curb unsustainable extraction and improve compliance.
Looking ahead, KIPPRA notes that the government’s pursuit of the fourth medium-term plan (MTP IV) target of establishing five million acres of agroforestry, alongside the promotion of a circular economy, will require coordinated policymaking.
The study therefore proposes tax incentives, subsidies, technical assistance and extended producer responsibility schemes to help the forest sector meet rising demand sustainably while contributing more effectively to economic growth.
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