Agriculture, tourism power Kenya’s economic growth in 2023

May 20, 2024May 20, 2024 Newsroom

Kenya’s economy witnessed a robust resurgence in 2023, posting a growth rate of 5.6 percent up from 4.9 percent recorded in 2022.

This resurgence was primarily driven by a strong performance in a number of sectors, including agriculture, tourism as well as transport and storage according to the 2024 Economic Survey.

The report shows that agriculture industry experienced a turnaround, reversing the contraction reported in 2021 following the worst drought in 40 years experienced at that time. Last year, agriculture registered 7 percent growth.

This revival was attributable to a combination of favourable weather conditions, increased acreage under cultivation, and government interventions including a robust fertilizer subsidy programme.

According to the report released by the Kenya National Bureau of Statistics, maize production went up by 38.8 percent, reaching 47.6 million bags. This surge was fueled by expanded cultivation areas, the government’s commitment to purchasing maize at guaranteed minimum returns, improved weather and increased access to subsidised fertilisers.

The revitalization of the agriculture industry not only secured food supplies but also provided the much-needed foundation for economic stability, the 2024 Economic Survey notes.

Tourism reclaiming former glory

The tourism sector continued to experience revival in 2023, with the 2024 Economic Survey showing that international visitor arrivals went up by 35.4 percent to over 2.08 million, effectively surpassing pre-pandemic arrivals.

This resurgence was attributable to growth in the aviation sector as well as the country’s hosting of high-profile international conferences such as the Africa Climate Summit.

Data shows that hotel bed occupancy also saw an increase of 23.2 percent, signalling the sector’s massive recovery momentum.

Further, domestic tourism played a key role, with Kenyan residents accounting for over half of the total bed-night occupancy.

The number of international conferences held in Kenya grew by 9 percent, further bolstering the tourism sector’s performance and cementing Kenya as a prime destination for global events.

Transportation and storage

Meanwhile, the transportation and storage sector recorded a 17.6 percent increase in the total value of output, rising to Kes3.4 trillion last year from Kes2.9 trillion in 2022.

In particular, the air transport segment saw a 43 percent jump in output, while postal and courier services expanded by 36.1 percent in the 12-month period ending December 2023.

These gains signal the sector’s growing role in enhancing economic connectivity and supporting other industries in the country’s economy.

The railway sector also demonstrated growth, with the volume of cargo transported via the Metre Gauge Railway increasing by 27.2 percent and the Standard Gauge Railway (SGR) by 7.3 percent.

Passenger transport via the SGR increased by 14.1 percent, indicating improved infrastructure and connectivity. Additionally, cargo throughput at the Port of Mombasa rose by 6.2 percent, reinforcing Kenya’s position as a key logistics hub in the East African region.

Modest growth for manufacturing

The manufacturing sector showed a modest growth of 2 percent in 2023, compared to 2.6 percent in the previous year. Manufacturing sector’s contribution to the GDP stood at 7.6 percent, with the volume of output growing by 2.8 percent.

The country’s key agro-processing subsectors, such as processed animal feeds, dairy products, processed fruits and vegetables, meat and meat products, all posted growth during the year under focus.

However, the sector faced challenges, such as a decline in cement production, which fell from 9,790 thousand tonnes in 2022 to 9,616 thousand tonnes last year.

Despite this, employment in the formal manufacturing sector increased by 2.8 percent, reflecting the sector’s gradual yet steady expansion.