New investment landscape emerges from economic recovery

Urban centers, especially Nairobi, have witnessed an increase in shops selling luxury goods and services ranging from clothing and footwear to household goods.

A good example, is clothing store Deacons, which in the last four years has increased its stores from nine to 21 egged on by the emerging middle class.

“The emerging middle class is behind our success,” says Wahome Muchiri, the managing director of Deacons.“We are seeing a growing number of Kenyans who are willing to consume goods beyond the bare minimum,” added Muchiri, arguing that his store will be opening more outlets to capture this new demand.

Kadogo economy

The swathe of low income consumers are also emerging on the radar of executives selling fast moving consumer goods, such as airtime, soap and edible oil.

These executives are deepening the foray into the kadogo economy - the sale of consumer goods in small packaged, low priced goods - to capture the 90 per cent of Kenya’s citizens who scramble for 62 per cent of the country’s wealth.     

The signs of a take-off that may now fuel the increased spending power of these lower earners is key, say analysts.

“For growth to benefit all we must see real growth in the industrial sector, full commercialisation of our agriculture and in other more labour intensive sectors,” says Robert Bunyi, an analysts at Mavuno capital.

Agriculture performance remains tightly linked to the increasingly erratic rainfall pattern making it the most critical determinant of the country’s economic fortunes.

However, increased agricultural financing is now upgrading farm management and value addition, reaping early results, and freeing a rising minority of farmers from weather dependency.

Alternative energy

Until now, the bulk of Kenya’s citizens have been subsistence and small holder farmers in the coffee, tea and sugar sectors - leaving lucrative sectors like horticulture and food processing in the hands of foreigners and the small wealthy class.

In manufacturing, alternative energy sources are now offering the prospect of liberation from crippling costs of electricity, although the nation’s battered infrastructure and ongoing corruption continue to hinder development.

Critical, as the country now chases its vision of becoming a middle-income nation by 2030, will be its success in achieving middle-income status for the bulk of the Kenyan labour force, leaving all eyes focused on how deep, and how sustained, the current take-off in the country’s core productive sectors will turn out to be.