Kenya’s export ambition is constrained by the nature of its economy. To improve competitiveness, policy-makers must focus on strengthening regulation and institutions to support innovation, tackling inefficiencies within the public sector to build credibility with global investors, and expanding the participation of smaller Kenyan firms in international trade networks.
Kenya’s 2026 Budget Policy Statement sets out an ambitious economic transition: to move the country from a net importer to a net exporter of goods and services, with a particular emphasis on agricultural and manufactured products. This objective sits alongside a broader transformation agenda anchored on four national priorities: investment in human capital, expansion of productive capacity, reliable energy, and efficient transport and logistics systems.
Framed as the next phase of development in the Bottom-Up Economic Transformation Agenda (BETA), the Kenya Kwanza Administration’s roadmap emphasizes long-term industrial planning, skills development, and the creation of competitive national capacities. At its core, this is a vision of an export-driven economy powered by capital, technology, and talent.
To finance this transition, the government has approved the establishment of two major instruments: a National Infrastructure Fund and a Sovereign Wealth Fund. Together, these are expected to mobilize up to 5 trillion Kenyan shillings through domestic resources, asset monetization, and private capital, leveraging up to ten shillings for every shilling invested. Privatization proceeds are to be ring-fenced toward priority areas such as food security, infrastructure, and energy-led industrialization.
On paper, this is a coherent and ambitious framework, with the President comparing the proposed move to initiatives in other countries such as Australia’s Future Fund, the United Arab Emirates’ Mubadala and Singapore’s Temasek. However, financing mechanisms of this scale depend heavily on governance structures, transparency in asset monetization, and the ability to attract and sustain credible private investment.
Without strong institutional oversight and clear accountability mechanisms, there is a risk that these instruments replicate the inefficiencies they are intended to resolve. Leveraging capital at this scale also assumes investor confidence in the broader macroeconomic and regulatory environment, an assumption that must be actively sustained.
The starting point
Kenya remains a net importer, with imports consistently outpacing exports. While exports have shown modest growth in recent years, this has not been sufficient to significantly narrow the trade deficit. At the same time, Kenya’s Trade Openness Index in 2024, measured as the sum of exports and imports as a share of GDP, stands at approximately 30%. This is below the average for lower-middle-income countries, indicating relatively limited participation in global trade relative to the size of the economy.
Note: Trade deficit = Imports − Exports
Source: KNBS Economic Survey 2024
Equally important is the composition and reach of Kenya’s exports. Export market penetration remains low, with exports concentrated in a narrow range of products and destinations. So, while Kenya is producing and exporting, it has not yet expanded into new markets or diversified its export base in a way that signals sustained competitiveness.
Over the past decade, Kenya has made notable progress in improving trade systems. Transparency has increased through the publication of regulations and improved access to trade information. Digitization and coordination across agencies have been strengthened through platforms such as the Kenya Trade Network Agency (KenTrade), the Trade Information Portal, and the National Electronic Single Window System.
Targeted reforms have also streamlined processes in key sectors such as agriculture. These gains demonstrate a clear focus on improving the efficiency and predictability of trade processes.
However, they have not translated into a proportional increase in export performance. In 2024, domestic exports grew by under 3%, contributing to a marginal reduction in the trade deficit, while export market penetration remained low, at approximately 4%.
This disconnect suggests that trade facilitation reforms alone are insufficient to improve export competitiveness, and the constraints lie beyond trade systems themselves. Regionally, Kenya is also being outpaced. While Kenya’s exports of goods and services have roughly doubled between 2000 and 2024, countries such as Uganda have recorded significantly higher growth, with exports increasing nearly sevenfold over the same period.
The way forward
At its core, this reveals a deeper contradiction. Kenya’s ambition to become a net exporter is being pursued within an economic environment that does not yet support it. It is difficult to build an export-driven economy within a system characterized by regulatory inefficiencies, weak enforcement, and policy inconsistency.
These conditions further constrain Kenya’s export ambitions. The 2026 Index of Economic Freedom, for example, ranks Kenya as “mostly unfree,” with a score of 55.5, placing it 116th out of 184 countries assessed. This classification reflects underlying structural challenges, including regulatory inefficiencies, policy inconsistency, and a weak rule of law. Similarly, widespread corruption and inefficiencies in public finance management distort incentives, increase the cost of doing business, and undermine the credibility of reform efforts.
At the same time, the structure of Kenya’s trade participation further limits its export potential. SMEs and the informal sector account the largest share of economic activity and represent a critical base for expanding trade volumes, diversifying products, and strengthening competition. Yet, their continued exclusion from efficient trade systems means that a significant portion of the economy remains disconnected from export pathways.
Low trade openness reinforces this disconnect. With trade accounting for a relatively small share of GDP compared to peer economies, Kenya remains insufficiently integrated into regional and global markets. This signals limited participation and missed opportunities for learning, specialization, and scale— all of which are critical drivers of export competitiveness.
Moving Kenya toward a net exporter position requires a shift from a narrow focus on trade facilitation to a more integrated approach that strengthens the economic foundations of trade itself. This is a question of structural alignment, including improving the regulatory and institutional environment to support investment and innovation, addressing inefficiencies in public finance management, and deliberately expanding the participation of SMEs and informal actors within trade systems.
Kenya must move beyond ambition and confront the structural conditions that currently constrain it. Export competitiveness cannot be engineered through trade systems alone; it must be built through an economy capable of delivering it. Until the economic environment is aligned with this ambition, improvements in transparency will remain necessary but insufficient, serving as signals of reform rather than drivers of export transformation.
