The Lower Eastern Times Opening The Third Eye
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Kenya is forfeiting over Sh685 billion each year in unrealised export potential, according to a new competitiveness report that highlights major structural weaknesses limiting the country’s ability to grow its exports—even though ready markets exist both regionally and internationally.
The Kenya Export Competitiveness Study (2025), published by the Kenya Association of Manufacturers, shows that the country’s export performance has been stagnant for more than ten years. While other economies continue expanding their export presence across Africa and globally, Kenya is utilising less than half of its available export opportunities.
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The report cites data from the International Trade Centre (ITC), revealing that Kenya has an unmet export potential of USD 5.3 billion (about Sh685 billion) and an additional USD 10 billion (Sh1.29 trillion) in long-term export opportunities. These losses persist not due to a lack of markets, but because Kenya has failed to consistently pursue a competitiveness agenda that unlocks these opportunities.
The unmet USD 5.3 billion exceeds Kenya’s annual trade deficit and is equivalent to more than 4% of GDP. The broader USD 10 billion reflects long-term prospects hindered by structural challenges.
Despite Kenya enjoying preferential access to nearly half of the global market—through trade agreements such as the EAC, COMESA, AfCFTA, EU and UK EPAs, and AGOA—the study stresses that the primary issue is a competitiveness deficit, not limited market access.
Over half of the missed Sh685 billion lies in value-added industries such as agro-processing, construction materials, pharmaceuticals, chemicals, plastics, apparel, and automotive parts. Many of these sectors face strong regional demand, yet local firms struggle to expand due to high production costs, bottlenecks, and domestic inefficiencies.
The report further estimates that Kenya loses an additional Sh260 billion every year through reduced revenue, shrinking market share, lost investment, and missed employment opportunities. Without rapid reforms, half of these losses could become permanent within just three years as regional competitors—including Tanzania, Uganda, Ethiopia, and Egypt—strengthen their manufacturing sectors. Kenya’s share of manufactured exports within the EAC has already dropped sharply from 59% to 38% in the last decade.
Key factors contributing to this decline include burdensome fiscal and regulatory regimes, high energy prices, inefficient logistics, heavy import dependency, and inconsistent policy implementation. These issues collectively add an “invisible surcharge” to Kenyan exports, making them costlier and less reliable than competing products.
The study warns that without accelerated, coordinated reforms across the entire system, Kenya risks being sidelined from regional and global value chains. With more than Sh685 billion in export earnings slipping away every year, the report concludes that Kenya’s core challenge is not finding markets—but being competitive enough to serve them.
