The services sector, including information and communications technology (ICT), professional, technical and financial services, has driven much of Kenya’s economic growth, the World Bank said in a report released Tuesday.
According to the Kenya Country Economic Memorandum (CEM), most of the country’s economic growth has come from the services sector, with more limited contributions from agriculture and industry.
“The services sector now contributes to 54 percent of value-added and 45 percent of jobs in the country,” said the report dubbed “Seizing Kenya’s Services Momentum.” The report analyzed the key drivers and constraints to boosting inclusive long-term growth and provided policy options for reforms in Kenya.
The global lender noted that the growing role of the services sector raises questions about the process of structural transformation in Kenya, which traditionally for many of the current high-income countries was based on industrial sectors.
The findings noted that the services sector is becoming increasingly tradable and plays an important enabling role in fostering wider economic growth in other sectors.
“The challenge is to maximize the opportunities emerging from this sector in the most effective manner, especially given Kenya’s ambitions of becoming a regional hub in areas such as digital trade, finance, and education,” the World Bank said.
The analysis indicated that within the services sector, the financial sector in particular will play an important role, including supporting Kenya’s transition to a low-carbon economy, given the need for green, sustainable finance and leveraging technological solutions.
The multilateral financial institution noted that labor productivity in services has also been increasing, exceeding that of industry and agriculture in recent years.