The city county of Nairobi accounts for over 17% of Kenya’s total GDP. Other counties that significantly contribute to the national GDP are Nakuru (6.31%), Kiambu (5.15%), Mombasa (4.05%), Nyandarua (2.99%), Machakos (2.84%), Meru (2.80%), Kisumu (2.37%), Bungoma (2.24%), Kakamega (2.23%), Narok (2.19%, Nyeri (2.13%), Murang’a (2.11%), Kisii (2.00%), and Uasin Gishu (1.98%) According to a survey conducted by the Kenya National Bureau of Statistics in 2017, these fifteen urbanized counties have a cumulative GDP of USD 95,544 and collectively form 58.38% of Kenya’s GDP. Between 2017 and today, being three years of compound average growth of the Kenyan economy, these counties have recorded tremendous expansion in size of trade and cultural exchange.
With the ongoing robust conversations to increase allocation of revenue to county governments, the counties are expected to be more efficient in service delivery. Infrastructural development in counties is another major factor that will make it possible for production to take place in the counties rather than Nairobi. Currently, the Nairobi – Nanyuki meter gauge railway is operational and the Nairobi – Kisumu Port line is also opening up the lake basin corridor for trade. There is also a record increase in industrial parks outside of Nairobi, business parks, commuter buses between major towns, connectivity to electricity and water. Furthermore, there is a larger resource of skilled labour from fresh college, technical institutes and university graduates in the counties than in Nairobi.
With all this data, the investor would end up asking which sectors exactly have higher returns on investment in the counties. The general answer would be agriculture. Agriculture is the economic backbone of most major towns in Kenya other than coastal towns. There are now more incentives in practicing agriculture for export thanks for deliberate efforts to market Kenyan goods in the international markets by export promotion department in the ministry of trade. While some counties may not have the competitive advantage of attracting agribusiness investors, they have lots of other natural resources whose exploitation must be subjected to sound government policies and meaningful Public Private Partnerships (PPP). A vibrant network of agricultural economy between counties will steer growth in other key service sectors. For coastal and inland tourist towns, Kenya has still a long way to go to become the most visited tourist destination on the continent. Investors should seize the opportunity to invest further in tourist facilities. This will boost both domestic and foreign tourism.
In summary, there are many reason why investment flows should go to counties. The goal of any entrepreneur other than maximizing profits is to minimize losses. In this column, I make a conclusion that it is easier to minimize losses when running production from the counties than from Nairobi. This conclusion is considerate of proximity to markets, factors of production and sound environment for doing business.