Policy Brief No. 01 of 2024/2025 on Enhancing Productivity for Sustained Economic Growth

Abstract

This Policy Brief is based on the Kenya Economic Report (KER) 2024, themed “Enhancing Productivity for Sustained Inclusive Growth.” The country has recorded a recovery in economic performance since 2020, when the economy contracted by 0.3 percent. However, this recovery momentum was disrupted by weaker global growth due to the Russia-Ukraine war, tightened international financial markets, and a prolonged drought. Various policy measures have been employed to enhance the countries productivity growth including the provision of subsidized fertilizer, investment in research and development, improvement of infrastructure and skills development. The analysis in the report covered interplay between a conducive policy environment, infrastructure development, human capital investment, technology and innovation, market access, and sustainable resource management is crucial. The Report offers an in-depth analysis that highlight how the country can unlock its full potential and propel the economy toward sustained and inclusive growth through enhanced productivity. The Report covers a review of recent macroeconomic performance and discusses the medium-term prospects. For a more comprehensive understanding, it provides sectoral analysis covering manufacturing, agriculture, and the digitalization of the informal sector. With the 10-year milestone of devolution, the report analyses productivity at the county level to strengthen devolution. It also explores international engagements and collaborations to leverage to boost productivity. Additionally, the report considers key enablers of productivity, including trade for efficient distribution, skills development, and the public sector role in providing essential services. The report concludes by providing key recommendations that can be considered to drive productivity growth in the country.