Nairobi — A new report by the African Union (AU) paints a sobering picture of Kenya’s economic trajectory, warning that the country’s heavy dependency on raw‐material exports is limiting its ability to create industrial jobs and wider growth.
According to the 2025 African Integration Report, Kenya and its regional neighbours in the East African Community (EAC) score slightly below the continental average when it comes to how diversified and sophisticated their economies are. The EAC’s diversification score stands at 0.3920, while Africa’s average is 0.4072.
The report highlights that Kenya still exports a large share of raw inputs roughly 68 % of its exports fall into this category while manufacturing exports lag behind, at about 34.20 %, compared with manufacturing imports at 59.86 %.
By contrast, Tanzania registers a higher score of 0.4457, placing it ahead of Kenya in terms of trade diversification.
This divergence underscores a deeper structural challenge. Kenya, despite being one of East Africa’s more advanced economies, appears to be stuck in a goods-in–raw-materials- out pattern that generates fewer value‐adding jobs and leaves its economy vulnerable to external shocks.
The report argues that greater depth and scale in regional production networks are vital. It suggests that trade among EAC states should shift from simply exchanging raw goods to building value chains around agro-processing and light manufacturing. A key recommendation reads: “Regional value chains in agro-processing and light industry could help close the import–export gap.
Kenya’s macroeconomic outlook still shows signs of resilience: Recent forecasts project growth of around 5.3 % in 2025, and the country is benefiting from tourism, agriculture and investment reforms. However, structural issues remain. One report shows Kenya’s export competitiveness index has dropped from 7.9 to 4.7 over two decades.
Trade diversification is not just economic jargon. It affects job creation, income stability and resilience in the face of global shocks such as commodity price swings or currency fluctuations. Economies that remain dependent on raw exports typically capture less of the value chain and leave themselves exposed. Experts argue that boosting manufacturing and intermediate goods production can generate higher wages and more sustainable employment.
What stands out in the EAC comparison is Tanzania’s relative success. With a stronger diversification score, it appears to have made better headway in building the kinds of industries and trade networks that the AU report describes as missing in the region. For instance, Tanzania’s infrastructure drive, particularly rail and port upgrades, plays into the report’s emphasis on transport corridors and regional value flows.
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