The World Bank has warned that Kenya’s agriculture and manufacturing sectors have stagnated for the last eight years.
In a new report on the country, the World Bank says the two sectors have been overtaken by the services sector as the major contributor to Kenya’s economic growth.
According to the report, Kenya’s business environment is not favourable for the manufacturing sector because of high taxation and a decline in growth of the agriculture sector.
For a country which boasts of agriculture being the backbone of its economy and contributing 25 per cent to the nation’s gross domestic product (GDP), little has been done by the government to improve fortunes in the sector, the report adds.
The World Bank, however, notes that some sub-sectors within agriculture and manufacturing, such as horticulture and food production, have prospered.
Agriculture’s contribution to the GDP has dropped from 26.6 per cent in 2006 to 22 per cent in 2014, with the government’s intervention through inhibitive tax policies to blame.
Although expansion in modern services such as financial intermediation and mobile communication can be credited for the tremendous growth in the services sector, it has emerged that Kenya is not a hotbed of innovation with only a quarter of Kenyan firms spending on in-house innovations.
A cultural change has also been witnessed in the country with financial savings in the country being at an all-time low and the Bank called for reformation of the savings and pension systems.
All is not lost for Kenya as the silver lining can be seen in the reducing political volatility as a result of peaceful election cycles, although implementation of public policies on poverty reduction is still wanting.