Kenya’s economy grew at 4.7% in 2024, a notable decline from 5.7% in 2023, marking the slowest pace since 2020, when the COVID-19 pandemic disrupted global economies.

This slowdown reflects a broader trend of economic softening throughout 2024. The 2023 growth rate of 5.7%, revised from earlier estimates of 5.6% by the Kenya National Bureau of Statistics (KNBS), was driven by a robust recovery in agriculture and steady performance in services like tourism and financial sectors.

However, 2024 presented a more challenging landscape, with GDP growth decelerating across multiple quarters:4.6% in Q2, according to a report by KNBS and 4% in Q3 according to Nation Africa leading up to the annual figure of 4.7%.

The World Bank had initially projected a 5.0% growth for 2024 but downgraded this to 4.7% by December 2024, citing fiscal challenges, the impact of floods, and anti-government protests.

This slowdown from 2023’s 5.7% growth rate to 2024’s 4.7% represents a 1% drop, aligning with Kenya’s long-term growth average of 4.6% over the past decade but falling short of the government’s Vision 2030 target of 10% annual growth.

Factors Contributing to the Slowdown

Several domestic and global factors contributed to Kenya’s economic deceleration in 2024.

The construction and mining sectors contracted significantly, with construction growth dropping to a mere 0.1% in Q1 2024, down from 3.0% in Q1 2023, and recording a negative growth rate of -2.9% in Q2 2024.

The manufacturing sector also struggled, growing at just 1.3% in Q1 2024, the slowest since 2008, due to high production costs and tough tax measures. These sectoral declines highlight structural weaknesses exacerbated by fiscal and policy challenges.

Fiscal consolidation efforts, aimed at reducing Kenya’s fiscal deficit projected at 4.3% of GDP in 2024/25 led to reduced public spending, impacting sectors reliant on government contracts like construction.

The Finance Bill 2024, which proposed new taxes to address a $2 billion Eurobond repayment, sparked nationwide protests in June 2024, resulting in violence, over 50 deaths, and the bill’s eventual withdrawal.

These protests, alongside floods earlier in the year, disrupted economic activity, particularly in major cities like Nairobi, further dampening growth.

Globally, tight monetary policies in advanced economies, such as the U.S., led to higher borrowing costs for emerging markets like Kenya.

The Kenyan shilling weakened by 30% against the U.S. dollar from 2014 to 2024, increasing the cost of debt servicing, which consumed 60% of tax revenues in 2023/24.

Public debt, at 68% of GDP in March 2023, remained a concern, with Kenya issuing a $1.5 billion bond at a high 10.4% interest rate in 2024 to avoid default.

Inflation, though easing to 3.6% by September 2024 from 6.8% in 2023, still strained household consumption, which accounts for 77% of GDP.

On a positive note, sectors like accommodation and food services grew by 26.6% in Q2 2024, driven by a tourism surge that saw international arrivals reach 2.09 million in 2023, and financial services expanded by 5.1%.

Agriculture also showed resilience, supported by favourable weather conditions, though its momentum slowed compared to 2023’s 6.5% growth. Despite these bright spots, the overall economic performance reflected a challenging year.

The Slowest Growth Since 2020

The 4.7% growth rate in 2024 marks Kenya’s slowest annual growth since 2020, when GDP contracted by 0.27% due to COVID-19 restrictions.

The 2020 downturn was a sharp deviation from the pre-pandemic average of 5.4% (2015–2019), driven by global supply chain disruptions and domestic lockdowns.

The 2021 rebound (7.59%) and 2022 growth (4.85%) showed recovery, but 2024’s 4.7% indicates a return to a lower growth trajectory, influenced by both structural and cyclical challenges.

The third quarter of 2024, with a 4% growth rate, was particularly telling, as it was the slowest Q3 growth since 2020, reflecting the cumulative impact of sectoral contractions and socio-political unrest.

Looking Ahead: World Bank Projections and Challenges

The World Bank projects Kenya’s growth to recover to an average of 4.9% during 2025–2027, driven mainly by easing inflation, accommodative monetary policy, and a pickup in credit growth.

These factors are expected to support household and business incomes, driving private consumption and investment.

However, the report cautions that unless growth translates more efficiently into higher incomes for the poor, poverty is unlikely to decline rapidly.

At the international poverty rate ($2.15 in 2017 PPP), poverty in Kenya is projected to decline by just half a percentage point to 34% in 2025.

The World Bank emphasises the need for structural reforms to ensure inclusive growth and strengthen the link between growth and poverty reduction.

These include raising the productivity of the private sector, expanding access to skills, increasing access to capital, and strengthening households’ resilience to climate shocks.

Agriculture, which contributed 21.8% to GDP in 2023, remains vulnerable to climate variability, as seen with the 2024 floods.

Without addressing these structural challenges, Kenya risks perpetuating a growth model that fails to lift millions out of poverty, despite modest GDP gains.

Implications for Kenya’s Economic Future

The 2024 slowdown raises concerns about Kenya’s ability to achieve its Vision 2030 goal of becoming a newly industrialised, upper-middle-income economy by 2030.

Poverty, already at 34% in 2025 according to World Bank projections remains a pressing issue, as growth has not translated into significant income gains for the poor.

Unemployment, averaging 4.2% over the past decade, and income inequality further complicate inclusive growth.

The informal sector, which created 85% of new jobs with 720,900 out of 848,200 in 2023, continues to dominate, but formal job creation remains sluggish.

Fiscal vulnerabilities, including high debt levels and reliance on expensive borrowing, pose risks to long-term stability.

The World Bank’s projected recovery to 4.9% average growth from 2025 to 2027 depends on favourable weather, sustained reforms, and global economic stability. Risks like climate shocks, political instability, and global financial tightening could derail this outlook.

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Reckless Spending: A Betrayal of Austerity Pledges

President Ruto’s administration has been marked by fiscal irresponsibility, undermining his 2022 campaign promises of economic prudence and a “bottom-up” model to uplift the poor.

Despite pledging austerity, Ruto’s advisers now total 17 in just over 10 months, up from a promised 50% reduction, costing taxpayers over Sh1 billion annually.

This extravagant expenditure on advisers, who often serve political rather than developmental purposes, diverts funds from critical areas like education, healthcare, and climate resilience, which the World Bank identifies as essential for inclusive growth.

More alarmingly, Kenya borrowed Sh974.9 billion without parliamentary approval after the Treasury failed to submit 2024/25 revenue estimates.

This illegal borrowing, spent on recurrent expenses rather than development projects, violates public finance laws and prioritises short-term consumption over long-term investment.

The Office of the President’s 2025/26 budget allocation of Sh2.3 billion, including Sh894.9 million for renovations at State House and presidential lodges, further exemplifies this misallocation.

At a time when public employees’ average monthly salary dropped by 10% to Sh51,491 in 2024, down from Sh57,441 in 2023, such lavish spending on luxury upgrades is a slap in the face to struggling Kenyans.

A Critical Perspective

While the official narrative attributes the 2024 slowdown to external shocks and domestic protests, deeper structural issues warrant scrutiny.

Kenya’s heavy reliance on agriculture makes it vulnerable to climate variability, yet investment in climate-smart agriculture remains inadequate.

The government’s fiscal consolidation, while necessary, has disproportionately burdened the poor through indirect taxes, as seen in the rejected Finance Bill 2024.

The high debt servicing cost that makes up 60% of revenue suggests a debt trap, where borrowing to repay debt limits development spending.

Moreover, the focus on short-term fixes, like high-interest international bonds, overlooks long-term solutions such as broadening the tax base currently at 16.5% of GDP, below the African average, or tackling corruption, which erodes public resources.

Kenya’s economic resilience, evident in its ability to grow amidst protests and floods, cannot be understated.

However, without addressing structural inequalities, diversifying the economy beyond agriculture and services, and promoting a more inclusive growth model, the country risks remaining stuck in a cycle of modest growth and persistent poverty.

Ronnie Paul is a seasoned writer and analyst with a prolific portfolio of over 1,000 published articles, specialising in fintech, cryptocurrency, and digital finance at Africa Digest News.