NAIROBI, Kenya-Kenya’s ambition to become a regional industrial powerhouse is being constrained by weak infrastructure, limited technical skills, and an overreliance on digital services, a new continental assessment has found.
The 2025 RED Index of Industrial Development in Africa, published by the Business Council for Africa, evaluates countries based on three pillars: engines of industrialisation, accelerators, and decelerators of growth.
The report places Kenya in a mixed position, strong in digital and financial innovation, but weak in the foundational drivers required for sustained industrial expansion.
While Kenya performs well in “accelerators” such as digital payments, mobile money penetration, and financial openness, it lags significantly in core industrial enablers, including reliable electricity supply, transport infrastructure, scientific and technical education, and the development of large-scale domestic manufacturing industries.
According to the report, Kenya meets only one of the seven key industrial drivers assessed, digital broadband connectivity, highlighting what analysts describe as an imbalance between technological advancement and industrial capacity.
The findings suggest that although Kenya has emerged as a regional leader in digital finance, the gains have not yet translated into broad-based manufacturing growth or large-scale job creation in the industrial sector.
The report warns that this structural gap could result in “jobless growth,” where economic expansion fails to generate sufficient employment opportunities, particularly for young people entering the labour market.
Kenya is grouped alongside economies described as “vulnerable” or “stalled” in industrial development performance, indicating limited progress in building resilient manufacturing ecosystems.
In contrast, only Morocco, Egypt, South Africa, and Mauritius are ranked as having strong and stable industrial foundations capable of sustaining long-term manufacturing-led growth.
The report notes that Kenya’s success in mobile money innovation has significantly improved financial inclusion and digital access, but has not yet catalysed proportional growth in heavy industry or manufacturing output.
Economists argue that while digital infrastructure has boosted services and financial technology sectors, it has not been matched by equivalent investment in energy reliability, industrial parks, transport logistics, and technical training institutions.
Kenya’s manufacturing sector has long been identified as a key pillar of the government’s Bottom-Up Economic Transformation Agenda, which seeks to increase industrial output and create jobs through value addition and local production.
However, structural challenges such as high energy costs, reliance on imports for intermediate goods, and skills mismatches continue to weigh on competitiveness.
The RED Index findings align with previous economic assessments that have pointed to the gap between Kenya’s digital economy success and its slower industrial transformation.
