Kenya’s power costs are among the highest in Africa, according to a new report by the Kenya Association of Manufacturers (KAM).
The report, supported by Trademark Africa and the Foreign, Commonwealth, and Development Office, highlights how expensive electricity is impacting the country’s manufacturing sector, making it less competitive in both regional and global markets.
Kenya’s industrial power tariffs range from $0.18 to $0.23 per kilowatt-hour, far above those in neighbouring countries like South Africa and Egypt ($0.03), Morocco and Ethiopia ($0.05), and Tanzania and Uganda ($0.08). SMEs face even higher rates.
The high energy costs, coupled with taxes and fees at both national and county levels, are pushing up production costs, making Kenyan goods more expensive. This is reducing Kenya’s ability to compete in export markets and against cheaper imports from countries like China and Egypt.
The report reveals that Kenya’s manufacturing sector contributed 7.6% to the GDP in 2024, a significant decline from 10% between 2011 and 2016. Experts warn that Kenya is experiencing premature deindustrialization, hindering its transition from agriculture to manufacturing and slowing its economic growth.
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KAM CEO Tobias Alando emphasized the need for policy and regulatory certainty to foster a competitive manufacturing environment. With the African Continental Free Trade Area (AfCFTA) providing new opportunities, a strong industrial base is critical for Kenya’s long-term economic resilience.
The World Bank also raised concerns over high operating costs, including energy and taxation, which are limiting industrial growth. Inconsistent policies and an unpredictable regulatory environment further discourage investment.
By Obegi Malack
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