According to the findings of the 2026 Economic Survey, Kenya’s economic growth slowed slightly, registering 4.6 per cent in 2025 compared with 4.7 per cent in 2024. However, despite the country’s continued growth, recent data from the Kenya National Bureau of Statistics (KNBS) indicate an unstable and fragile recovery. 

One of the main themes emerging from the survey is that recovery has not been consistent across all of Kenya’s industries. On a brighter note, the Economic Survey highlights significant progress. For example, the construction sector, which had struggled the previous year, recorded strong growth. Mining grew at double digits, while financial services also performed better. At the same time, tourism-related activities grew significantly. But can Kenya maintain its current growth levels while increasing inclusivity and sustainability across its economy?  

Recovery at Different Speeds  

One of the best-performing sectors in 2025 was construction, which grew by 6.8 per cent despite falling in the previous year. Likewise, the mining and quarrying industry performed exceptionally well, increasing by 14.9 per cent, mainly due to higher production of construction materials. Why is that important beyond just numbers?  

Construction is a key multiplier sector, and its performance drives greater demand for cement, transport, labour and logistics support services. Consequently, the growth in mining is directly connected with construction and real estate.  

The problem with this trend, however, is sustainability. Major construction projects remain dependent on government and investor loans and financing, and sustaining this level of growth may be difficult due to Kenya’s financial constraints.  

A more sustainable way to finance the construction boom would involve greater cooperation between government institutions and businesses. Greater county involvement in infrastructure development is just as crucial. Affordable housing and decentralised industrial zones might also contribute to this goal.  

Agriculture Still Carries the Economy  

Despite agriculture contributing more than a fifth to Kenya’s GDP and providing livelihoods for many Kenyans, the sector recorded growth of just 3.1% in 2025. This was due to drought, weather changes and increased production costs.  

This proves that it is increasingly becoming clear that Kenya’s reliance on rain-fed agriculture is sustainable in a time of climate stress.  

Climate shocks are becoming more frequent and costly, leading to food inflation. This, in turn, affects household expenditure and agricultural uncertainty, which then impact industrial development, as agro-processing industries rely on agricultural products. The survey indicates the need for a new agricultural paradigm. Irrigation, climate-smart agriculture, storage facilities, and value addition industries are economic imperatives rather than reforms. In addition, Kenya should develop agricultural financial frameworks to cushion small-scale farmers against climate shocks. Without coordinated reforms, agriculture could sustain the economy but fail to drive economic growth.  

Growth in Finance and Technology  

The survey also shows how resilient Kenya’s financial and digital economies have been. Activity in the finance and insurance industry increased by 6.5 per cent, while the information and communication sector grew by 4.8 per cent. E-money transfers, e-lending, and e-commerce continue to act as buffers for households and businesses during tough economic times. However, Kenya’s digital economy will not completely save the country from its economic challenges. 

First, most digital jobs in the country remain informal or temporary. Credit costs for the smallest businesses in Kenya remain high. In addition, the pace of technological growth continues to outstrip regulatory processes in areas such as digital taxation, e-lending, and data protection. To enhance this process, Kenya might need to shift from an import-oriented economy to an innovative one. This would call for more investment in software development, digital infrastructure beyond urban centres, and technological manufacturing.   

Finally, there is a need to link digital growth with the country’s employment policies. Failure to do so might result in a digitally linked economy that cannot employ its citizens.  

Warning Signs in the Manufacturing Sector  

As other services continued to improve, manufacturing kept emitting warnings. This industry expanded by just 2.1 per cent in 2025, slower than in 2024. This is important due to its role in industrialisation, exports, and employment creation. These developments can be attributed to factors such as high electricity tariffs, competition from foreign goods, exchange-rate fluctuations, and rising operational costs.   

One reason the manufacturing industry is lagging is the inconsistent implementation of industrial policies. 

Industrial policies and manufacturing incentives have been announced multiple times in Kenya, but have not been properly coordinated. Investors remain uncertain about regulations, while manufacturers grapple with logistics and energy issues.   

To overcome this challenge, however, much more than tax incentives is needed. Kenya should consider sector-oriented strategies targeting industries with a competitive edge, such as agro-processing, pharmaceuticals, textiles, and green manufacturing. Reliable electricity will also be important for industrial development.  

The Cost-of-Living Question  

Even as positive macroeconomic trends continue, many Kenyan families find themselves under economic strain. The inflation rate was recorded at 5.6 per cent in April 2026, primarily driven by increases in the costs of food, transport, and shelter. In this way, the survey reveals an increasing gap between economic growth and people’s economic experiences.   

Kenyans may feel financially constrained even as the economy grows, because GDP growth doesn’t necessarily translate into improved economic well-being for citizens.   

Most recently, Kenya’s economic growth has been driven by industries that cannot create enough jobs to sustain it. Wages have failed to keep pace with the rising cost of living, while informal employment remains rife.  This suggests that future economic policies will need to consider not just growth figures but also the impact on households. For example, in terms of social investments, improvements to transport networks, the provision of affordable food chains, and healthcare financing might prove more effective than general macroeconomic solutions.  

Growth Alone No Longer Works 

The Economic Survey of 2026 provides an evaluation of the country’s economy in light of its continued growth amid numerous problems. In particular, the report notes increased construction activity, growth in digital payments, and a recovery in tourism. Still, the survey also shows that households have growing worries regarding employment, the rising cost of living, and a lack of opportunities.  

 At the same time, the significance of the survey goes far beyond statistics, as it highlights several important policy issues that must be addressed to ensure the economy’s future prosperity. Over the next few years, it will become clear whether the economy will continue to grow or transform into a more advanced system. Such a transformation will take place provided that reforms in agriculture, industry, social services, and economic governance are successfully implemented.   

More importantly, the standards of success are changing, as economic growth can no longer be viewed as a criterion for successful economic development. Instead, the new criteria for a sustainable and resilient economy are used as indicators of future success. Overall, while Kenya’s economy shows signs of progress, the need for fundamental reforms is more pressing than ever to achieve lasting prosperity and stability.