Kenya’s economic debate is often framed around taxes, debt, and elections. Yet a quieter, more stubborn challenge is increasingly shaping corporate balance sheets and public finances alike: weak productivity growth.
While inflation and interest rates grab headlines, productivity determines whether firms can grow profits without passing costs to consumers, and whether the State can expand services without perpetually raising taxes.
At firm level, many Kenyan businesses are working harder but not necessarily smarter. Long hours, manual processes, and duplicated approvals remain common, even in sectors that should be digitally mature.
The result is rising operating costs, slow decision-making, and declining competitiveness—especially when compared with regional peers such as Rwanda and global rivals who embed technology into everyday operations.
This challenge is mirrored in the public sector. Government ministries and agencies have made notable progress in digitisation, yet productivity gains remain uneven.
Systems exist, but they often do not “talk” to each other. Businesses still submit the same data repeatedly to different offices, undermining the efficiency benefits technology is meant to deliver. For entrepreneurs and investors, this translates into time costs that quietly erode returns.
The irony is that Kenya does not lack talent or ideas. What is missing is systematic productivity management. In many organisations, performance is measured by activity rather than outcomes.
Meetings substitute for execution, and compliance crowds out innovation. Boards and senior managers rarely ask the most important question: how much value are we generating per shilling of labour, capital, and time? There is also a policy dimension. Institutions such as the Central Bank of Kenya and the Kenya Revenue Authority focus, understandably, on stability and revenue.
But productivity growth is the bridge between fiscal sustainability and private sector expansion. Without it, tax hikes become politically tempting but economically damaging, as firms struggle to absorb additional costs. Encouragingly, some Kenyan companies are beginning to treat productivity as a strategic asset.
They are investing in process automation, data analytics, and staff upskilling—not as IT projects, but as business transformation. The lesson is clear: technology alone does not raise productivity; disciplined management does. Clear targets, simplified workflows, and accountability matter as much as software.
For policymakers, the implication is equally direct. Productivity should be an explicit national objective, measured and reported with the same seriousness as inflation or GDP growth.
Regulatory impact assessments must ask not only whether a rule is necessary, but whether it saves or wastes productive time.
Public sector managers should be rewarded for efficiency gains, not just budget absorption.
Kenya’s next phase of growth will not be driven by working longer hours or borrowing more. It will be driven by producing more value with what we already have. That makes productivity not just an economic concept, but a boardroom issue—and a national priority.
Prof Collins Miruka is the the Deputy Vice Chancellor - Administration, Finance, Planning and Development at Tharaka University
