President William Ruto
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As Kenya grapples with sluggish growth in its manufacturing sector and explores ways to diversify its economic drivers, tourism has emerged as a promising alternative, garnering support from economic experts and industry leaders.
The discussion, gaining momentum in recent forums, suggests a potential shift in focus away from traditional mainstays like manufacturing and agriculture. Speaking at a recent forum in Nairobi, National Treasury Principal Secretary Chris Kiptoo emphasized the untapped potential within the tourism sector to significantly boost the economy and stimulate growth in ancillary industries through its service-oriented nature.
This comes amid concerns over the underperformance of the manufacturing sector, despite efforts to revitalize it, and the acknowledgement of agriculture's role in sustaining Kenya's 4.6% growth in 2024. Discussions at the DTB Economic and Sustainability Forum highlight Kenya's declining competitiveness in the East African Community (EAC) market due to growing competition from South Africa, India, and China. Participants at the forum express scepticism regarding the feasibility of making manufacturing a central pillar of economic growth, especially considering its dependence on agriculture.
Julius Kipngetich, CEO of Jubilee Holdings, points to bureaucratic obstacles and bottlenecks at the county level as factors contributing to the high cost of doing business within the manufacturing sector. He argues that Kenya should prioritize sectors where it holds a competitive advantage, such as tourism, citing its labour-intensive nature and potential for job creation, drawing parallels to France, where tourism significantly bolsters employment.
While the current administration's Bottom-up Economic Transformation Agenda (Beta) under President Ruto doesn’t prioritize manufacturing as a standalone sector, it aims to increase its contribution to GDP from 7.2% to 20% by 2030, primarily through micro, small, and medium enterprises (MSMEs) focusing on sectors like leather products and agro-processing. The Beta agenda also focuses on agricultural transformation, housing and settlement, healthcare, a digital superhighway, and the creative economy.
The National Treasury’s 2025 Budget Policy Statement prioritizes key value chains such as agro-processing, leather products, and building materials.
Despite Kenya’s strong agricultural base, much of it remains small-scale, necessitating aggregation to enhance performance, according to Kipngetich. He notes the transformative impact of tourism in Morocco, which grew from one million visitors in 2001 to 15 million in 2024, suggesting Kenya, with its superior tourism offerings, could aim for 20 million tourists. This influx, he argues, would create demand across various sectors, stimulating broader economic activity.
Kenya Private Sector Alliance CEO Carol Kariuki echoes this sentiment, advocating for leveraging tourism to stimulate growth in sectors such as construction through increased demand for accommodation. Kariuki clarifies that this approach does not advocate abandoning agriculture or manufacturing but rather utilizing tourism as a catalyst for comprehensive economic stimulation. DTB’s head of research and analysis, Faith Atiti, highlights the emerging importance of the services sector, including tourism, for economic stability and growth, despite the traditional focus on agriculture and manufacturing.
She proposes incentivizing agriculture and manufacturing through a service-oriented approach and investing in tourism due to its low investment requirements and high potential for private-sector involvement. The prevailing sentiment among economic experts is that, with strategic investment and a focus on competitiveness, tourism could transform Kenya's economic landscape, creating substantial employment opportunities and enhancing other key sectors. They suggest that Kenya can redefine its economic strategy and achieve sustainable growth by studying successful models such as France and Morocco.