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Agricultural Sector Key to Kenya’s Economic Growth despite poor performance

  Dec 8, 2017

Agriculture has historically been and remains Kenya’s most dominant economic sector, and the largest contributor to the country’s GDP averaging between 20 – 25% of the total value.  

Despite a 25% reduction in the output of Kenya’s main food crop, Maize, in 2017 due to adverse weather conditions and a shrink in the overall percentage contribution of the agricultural sector to GDP, the sector continues to grow exponentially.

Strathmore Business School in Collaboration with the Kenya Business Guide, launched its first sector brief giving an overview of the current trends in the agricultural sector, an analysis of its projected trajectory.

Dr. George Njenga, Dean Strathmore Business School spoke of the impact of good agricultural policies in improving the sector and impacting the livelihoods of Kenyans, “Linkage between policy and practice in the agricultural space remains a key concern for the sector, as most of these policies are not translated into a language that the ordinary Kenyan citizen can understand and relate to. Policy in the sector must translate to impact to Kenyans.”

The agricultural sector in Kenya can clearly be segmented between food crops and cash crops in terms of market structure, production practices and policy positions. From 2015 -2016, food crops like maize registered a parallel percentage decrease as cash crops like tea recorded percentage increases. Among other reasons, this can be attributed to the production practices and market structure differences. Food crops are primarily produced by small-scale farm holders with limited resources hindering use of optimal inputs and mechanized processes.

Food crops like maize dominate the agriculture sector and have widespread effects on the economy. Drops in Maize production have a marked impact on food prices, inflation, household income as well as the currency.

“We must leverage the synergies between the agriculture and Manufacturing sector to drive productivity, value addition and employment creation in both sectors,” said policy economist Sahil Shah, who was appointed as the new project Lead for the Kenya Business Guide early last month.

The brief also notes the importance of deliberate efforts to attract the youth to the sector through value-addition and mechanization of agricultural processes that could open more value chain opportunities for MSMEs.

Strathmore Business School in collaboration with Kenya Business Guide will periodically release sector and policy briefs, with the aim of providing deeper understanding of the emerging trends features. Click here to gain access to the sector brief.

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