Kenya’s manufacturing sector expanded modestly in 2025 but the growth was uneven, with industrial and construction-linked production driving gains while agro-processing weakened, according to the Economic Survey 2026.
- •Construction-linked and industrial activities led the expansion with the production of non-metallic mineral products, mainly cement, surging by 17.1% and reversing a 6.8% contraction in 2024.
- •Cement output rose to 10.4 million tonnes from 8.85 million tonnes, while consumption and stocks increased to 10.28 million tonnes from 8.54 million tonnes.
- •Manufacturing has fallen from 11.5% of GDP in 2009, 7.3% in 2024, to 7.1% in 2025, the most significant compositional shift in the economy over that period.
Overall production volumes increased by 2.1% in 2025 and the value of output rose to KSh 3.8 trillion from KSh 3.6 trillion in 2024.
Loans to the manufacturing sector increased by 5.7% to KSh 596.3 billion, driven mainly by commercial banks. Lending by development finance institutions declined, with approvals by the Development Bank of Kenya falling to KSh 360 million from KSh 559.7 million and by the Kenya Development Corporation to KSh 1.0 billion from KSh 1.9 billion.
Food and Beverages Industry
Agro-based manufacturing weakened and weighed on overall performance as total food manufacturing contracted by 1.2%, reversing a 7.9% expansion in 2024. The decline was largely driven by a 24.8% drop in sugar production, which fell from 815.5 thousand tonnes to 613.2 thousand tonnes amid cane shortages.
The manufacture of food products not elsewhere classified, mainly tea and coffee, declined by 5.5%, reflecting a drop in made tea production from 598.5 thousand tonnes to 550.4 thousand tonnes, although milled coffee edged up from 37.2 thousand tonnes to 37.9 thousand tonnes. Prepared and preserved fruits and vegetables contracted by 5%, weighed down by a 9.6% fall in processed fruit volumes.
However, some food-related segments expanded, including dairy products, which grew by 12.9% as processed milk rose from 619.1 million litres to 701.5 million litres, while yoghurt and fermented milk increased by 4.4%. Meat and meat products grew by 9.8%, prepared animal feeds by 8.9%, grain mill products by 3.4%, and bakery products by 1.8%. These gains were insufficient to offset declines in sugar and tea, leaving agro-processing as a drag on overall manufacturing performance.
Beverages expanded by 1.3% as soft drink production rose to 703.7 million litres from 671.1 million litres, while tobacco output declined by 0.7%.
The Manufacturing Turnaround
Basic metals grew by 4.9% in 2025, reversing a 6.1% decline in 2024, supported by higher output of flat-rolled steel, which rose from 281.3 thousand tonnes to 328.7 thousand tonnes.
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Fabricated metal products expanded by 3.3%, structural metal products by 3.7%, and electrical equipment by 3.2%, reflecting higher demand linked to construction, energy, and telecommunications. Wood and wood products grew by 5.8%, while plastics products increased by 2.8%, driven by packaging materials and construction inputs such as pipes and fittings.
Transport equipment recorded one of the strongest rebounds in the sector, with the motor vehicles, trailers and semi-trailers subsector expanding by 15.2% after a 3.6% contraction in 2024. Vehicle assembly rose by 18.5% to 13,692 units from 11,555 units, while production of coachwork and trailers increased by 9.6%. Machinery and equipment grew by 3.4%, and furniture by 5.4%.
Textiles grew by 2.6%, reversing an 11.4% contraction in 2024. Leather products edged up 0.9% after a 9.8% decline, while paper products and printing grew by 1.3% and 1.5% respectively. Chemical products expanded by 1.2%, constrained by a 20.1% drop in ethyl alcohol production, while pharmaceuticals rose by 2.0%.
Employment in manufacturing grew by 5.2% to 388,564 workers, accounting for 11.7% of formal wage employment. Compensation of employees in the sector rose to KSh 322.2 billion from KSh 309.6 billion in 2024. Employment in Export Processing Zones (EPZs) rose by 16.4% to 104,692 workers, driven mainly by apparel and agro-processing firms.
The number of EPZ enterprises increased to 185 from 180, while total sales rose by 4.4% to KSh 142.2 billion and exports increased to KSh 136.8 billion from KSh 129.4 billion.
