How Kenya managed to grow its economy by 6.3%


The economy generated 840,600 new jobs compared to 787,800 in 2017

Kenya’s economy expanded by 6.3 per cent in 2018, the economic survey released on Thursday indicates, a notable comeback from a 4.6 per cent growth recorded the previous year.

This came as the country recovered from the effects of the persistent drought experienced in 2017, coupled with uncertainties associated with general elections held in the same year.

READ:Kenya’s economy falls below Tanzania and Rwanda, records 4.9% growth

The growth has principally been attributed to increased agricultural production, accelerated manufacturing activities, sustained growth in transportation and vibrant service sector activities.

“Agricultural activities benefited from sufficient rains that were well spread throughout the country,” Kenya National Bureau of Statistics (KNBS) Director General Zachary Mwangi said during the launch of the Economic Survey (2019) in Nairobi.

Similarly, the increased precipitation was a significant boost to electricity generation and consequently favourable to growth during the review period.

During the year, the growth realized was anchored on a relatively stable macroeconomic environment with the various macroeconomic fundamentals remaining supportive of growth for the better of the year.

Inflation remained low at 4.7 per cent compared to 8.0 per cent in 2017, majorly as a result of considerable declines in prices of food after the shortage experienced in 2017.

The current account deficit narrowed to stand at Sh441.8 billion(USD 4.3 billion ) compared to Sh503.4 billion(USD4.9 billion ) in 2017, mainly due to a faster growth of imports of goods and services.

In the markets, the Nairobi Securities Exchange (NSE) 20-Share index dropped to 2,834 points in December 2018 from 3,712 points in December 2017. The performance was also manifested in the increased uptake of credit facilities across most sectors of the economy during the year.


Activities of agriculture, forestry and fishing were vibrant in 2018 mainly on account of favourable weather conditions . The sector’s growth accelerated from a revised growth of 1.9 per cent in 2017 to 6.4 per cent in 2018.

The growth was mainly driven by marked improvement in crops and animal production that benefited significantly from the sufficient rains during the period under review.

Increased supply of food crops was mirrored in significant drop in prices of key food crops during the review period. The quantities of key food crops such as maize, irish potatoes and vegetables increased notably in 2018 compared to depressed performances reported in 2017.

Performance of the sector was further supported by significantly improved performances in other agricultural subsectors. Production of tea grew by 12.1 per cent to stand at 493,000 tonnes in 2018 compared to a 7.0 per cent decline recorded in 2017.

Similarly, the sector’s performance was buoyed by increased production of coffee from 38,600 tonnes in 2017 to 41,400 tonnes in 2018.


Activities in the manufacturing sector were robust in the year compared to the constrained performance in 2017 when elections fever and uncertainty rocked the industry.

The sector grew by 4.2 per cent compared to a revised growth of 0.5 per cent in 2017. In contrast with 2017, strong performances were recorded in most activities in the sector in 2018.

The sector’s performance was largely supported by agro-processing activities and production of beverages that recovered from considerable declines in 2017 ,to grow remarkably in the period under review.

Under manufacture of food and beverages, improved growths were recorded in manufacture of sugar (30.3 per cent); processing of liquid milk (18.5 per cent); processing of black tea (12.1 per cent); manufacture of beer and stout (6.3 per cent); manufacture of bread (5.8 per cent) and soft drinks (4.2 per cent).

Other sub-sectors that showed better performance in 2018, albeit in smaller magnitudes, included manufacture of maize meal products (0.4 per cent); edible oils (2.1 per cent) and manufacture of wheat flour (1.1 per cent).

Similarly, the sector’s performance was enhanced by increased manufacture of non-food products, although some declines in production of some products were reported in 2018.

However, manufacture of cement and that of clinker declined by 2.6 and 2.5 per cent, respectively.

Credit to manufacturing activities increased from Ksh315.5 billion (USD3.1 billion )in 2017 to Ksh336 billion(USD3.3 billion ) in 2018.

READ:How Kenyan manufacturers will grow sector by 2022

Transport sector

The transportation and storage sector expanded by 8.8 per cent compared to 7.2 per cent in 2017. The growth realized in the sector emanated from notable growths in most of the transportation sub-sectors.

The sector’s growth was considerably supported by increased activity in railway transport that has flourished since the introduction of the Standard Gauge Railway (SGR) train services between Mombasa and Nairobi.


The Information and Communication Technology (ICT) sector expanded by 12.9 per cent to Sh390.2 billion(USD 3.8 billion) , from Sh345.6 billion (USD 3.4 billion)  in 2017, driven mainly by growth in the digital economy.

Another key sector which contributed to growth of the  economy was the tourism sector which registered an improved performance in 2018 compared to 2017, as the number of international visitor arrivals increased by 14.0 per cent from 1.778 million to 2.027 million.

“The improved performance may be attributed to stable political environment, withdrawal of travel advisories, improved security and investor confidence in the country,” Mwangi said.

The construction sector however recorded a slower growth of 6.6 per cent compared to a 8.5 per cent growth in 2017, despite an increase in loans and advances to the sector which increased by 1.8 per cent to Ksh114 billion(USD1.12 billion).

This was also at the  back of a vibrant real estate sector which has gone hand in hand with infrastructure development.

Job creation

Last year, the economy generated 840,600 new jobs compared to 787,800 jobs created in 2017.

The informal sector which accounted for 83.6 per cent of the total employment created 762,100 new jobs. This is despite the credit crunch which continues to hit  Small and Medium Enterprises (SMEs) since the law capping interest rates came into place in 2016.

Banks have been shying off  the private sector mainly individuals whom are perceived high risk borrowers. Instead, banks have been investing heavily in government securities where they are assured of returns.

During the year, employment in the public sector went up from 833,100 in 2017 to 842,900. The private sector which accounted for 69.5 per cent of the total employment grew by 3.0 per cent.

The World Bank and the International Monetary Fund (IMF) had projected growths of  4.9 per cent and 5.5 per cent respective .The National Treasury had projected a six per cent growth.

2019 outlook

The government has projected an even stronger growth in 2019, expected to be driven by growth in manufacturing, tourism sector and a fast expanding SME sector.

“With continued government strategies, we will achieve a better growth in this coming year,” National Treasury Cabinet Secretary Henry Rotich said during the report launch. He has projected a growth of above xsix per cent.

The results of the survey will inform policy formulation and implementation of various government initiatives targeted for economic growth, as the government moves implement the Big Four Agenda.

READ:Uhuru’s Big Four Agenda takes shape

”The big Four agenda does require statistics so that we can be able to monitor and evaluate the progress,” Principal Secretary-State Department for Planning Julius Muia said.

CS Rotich on the other has said the government will continue to put in place incentives which will make it easier to do business in the country.

READ ALSO:Kenya lures Private Equity, Venture Capital entities to fund Big 4

Martin Mwita is a business reporter based in Kenya. He covers equities, capital markets, trade and the East African Cooperation markets.

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