Page 22 - LUA September-October 2025 for Magzter

COUNTRY REPORT

Rising routes

HOW KENYA IS SHAPING AFRICA’S

LOGISTICS FUTURE

Kenya transforms into a logistics hub as trade, FDI, and global partnerships boost
cargo flows, infrastructure, and supply chains, reports Sakshi Basutkar.

n 2025, Kenya finds itself at a defining is the recognition that logistics is not a The diversification of FDI sources is
moment in its economic story, where background player but the engine that equally noteworthy. The United States,
trade flows, investment inflows, and enables Kenya’s exports of mainly flowers, traditionally a significant investor, has
Ilogistics capacity are intersecting tea, coffee, avocados, and manufactured seen its FDI stock in Kenya fluctuate, with
to reshape the country’s position in the goods to reach global markets efficiently, recent years indicating a resurgence in
global supply chain. For decades, Kenya while also ensuring the seamless inflow of interest. This renewed engagement is partly
has been seen primarily as East Africa’s critical imports such as fuel, machinery, attributed to Kenya's strategic positioning
gateway, with the Port of Mombasa acting and industrial inputs. as a gateway to the East African market
as the main artery of cargo movement The transformation of Kenya’s logistics and its commitment to enhancing the
for the region. But today, the country’s is therefore not a sudden occurrence but business environment.
logistics sector is no longer just about the outcome of years of steady, incremental
being a transit corridor, it is evolving into progress now converging at the right time. TRADE DYNAMICS:
a competitive hub in its own right. This For global investors and logistics players, BALANCING IMPORTS
transformation is the result of multiple, Kenya represents not only a reliable entry AND EXPORTS
interlinked forces. point to the fast-growing East African Kenya's trade landscape in 2025 presents
On one hand, Kenya’s policymakers market but also a testing ground for a complex picture. On one hand, the total
have spent years laying the groundwork innovation, partnerships, and sustainable import value decreased from KSh 226.4
through deliberate reforms like growth strategies that could redefine billion ($1.74 billion) in February 2024 to
strengthening institutions, digitising supply chains across the continent. KSh 208.2 billion($1.6 billion) in the same
customs procedures, and pushing for month of 2025, signaling a contraction
investment in transport infrastructure like FOREIGN DIRECT in import activities. On the other hand,
the Standard Gauge Railway (SGR) and INVESTMENT: A STEADY export activities have shown resilience,
road networks. On the other hand, the ASCENT with key sectors such as horticulture, tea,
country has worked to expand its trade Kenya's allure as an investment destination and coffee maintaining their prominence
footprint through bilateral and multilateral is underscored by the 2024 Foreign in international markets.
agreements, most recently engaging in Investment Survey Report, which indicates The government's efforts to diversify
deeper discussions with the United States a 13.3% increase in FDI assets, rising from export markets, particularly through trade
and Japan to enhance market access and KSh 328.9 billion ($2.53 billion) in 2022 to agreements with Japan and the United
investment opportunities. Simultaneously, KSh 372.5 billion($2.87 billion) in 2023. States, have been instrumental. These
the private sector has responded with bold This growth reflects a broader trend where agreements aim to reduce trade barriers,
investments in modern logistics parks, 95% of Kenya’s cumulative FDI of $2.75 enhance market access, and promote
warehousing solutions, and technology- billion has been attracted post-2007, Kenyan products globally, thereby fostering
driven supply chain models. What with a notable peak at $2.23 a more balanced trade environment.
ties all these efforts together billion in 2011.
INFRASTRUCTURE
DEVELOPMENT: THE
BACKBONE OF TRADE

20 LUA SEPTEMBER-OCTOBER 2025