Kenya is targeting a transformation from a third-world to a first-world economy by strengthening skills, attracting capital, exploiting natural resources, and ensuring more Kenyans participate in economic growth, Labour and Skills Development Principal Secretary Shadrack Mwadime has said.
The ambition comes as the Kenyan economy continues to expand but faces persistent challenges around job creation, productivity, skills development and the dominance of informal employment.
Official data from the Kenya National Bureau of Statistics (KNBS) shows that Kenya's economy grew by 4.6% in 2025, down slightly from 4.7% in 2024. Nominal GDP rose from Sh16.23 trillion in 2024 to Sh17.58 trillion in 2025, while GDP per capita increased from Sh309,609 to Sh329,594.
The economy generated 822,100 new jobs in 2025, but 87.2% of them were created in the informal sector. Informal employment increased by 716,800 jobs to 18.1 million, compared with 3.3 million people in formal wage employment.
It is against this backdrop that Mwadime says Kenya must pursue an economic transformation that produces better-paying jobs, develops local expertise and gives young people greater opportunities to participate in the economy.
Speaking during an interview with Radio Generation on Monday, Mwadime said the government's objective was to move beyond repeated development plans and focus on improving living standards.
“The plan that the government has, and it's very sincere about it, is to convert our economy from a third world economy to a first world economy, and the whole idea is to improve on the standard of living of our people.”
The PS maintained that Kenya and Africa had considerable natural resources but lacked two critical ingredients needed to turn those resources into wealth — technical know-how and financial capacity.
He cited minerals such as iron ore, copper, gold, lithium and cobalt, arguing that Kenya needed technology and capital to process resources locally rather than simply exporting raw materials.
“We have the resources, but we don't know how to exploit them. We don't have the capacity as it is to exploit these resources to the maximum.”
The government, he said, was also examining whether foreign direct investment was transferring sufficient skills and knowledge to Kenyans.
Mwadime also questioned whether foreign companies were creating a pathway for Kenyan workers to move from basic jobs into management and ownership, arguing that investment should eventually strengthen local capacity.
He said the government wanted to encourage Kenyans living abroad to invest more directly in the domestic economy through incentives that could include tax holidays and duty-free importation of equipment.
Diaspora remittances provide a significant financial base for such efforts. CBK data shows monthly remittances remained above US$400 million for much of 2025, reaching Sh56.61 billion in October and Sh56.18 billion in December.
Mwadime maintained that Kenya also needed to address a skills mismatch between education and the labour market.
He said employers had raised concerns that some graduates do not possess the skills required in workplaces, prompting the government to work with industry practitioners and educational institutions to identify skills gaps and align curricula with occupational standards.
The PS also noted that educational institutions should increasingly become recruitment centres, allowing employers to identify promising students, offer internships and recruit them based on performance.
For young people unable to find adequate opportunities locally, Kenya could expand labour mobility through bilateral agreements and circular migration, allowing workers to acquire international experience, technology and capital before returning home.
Mwadime also highlighted three initiatives under the Nyota programme: Recognition of Prior Learning, the Fundi Locator and the Haba na Haba savings scheme.
Recognition of Prior Learning is intended to help people who acquired skills outside formal education have those competencies assessed and certified. Mwadime said 3,727 young people were targeted for certification.
The Fundi Locator seeks to connect customers with verified skilled workers, while Haba na Haba is intended to encourage savings among informal-sector workers.
The scale of the informal economy makes such interventions significant. KNBS estimates that 18.1 million people were engaged in informal employment in 2025, with wholesale and retail trade, hotels and restaurants accounting for more than half of informal-sector workers.
Mwadime said Haba na Haba allows people to save as little as Sh25 a day, with 30% of savings guaranteed for eligible business needs.
He maintained that national savings had increased from about Sh300 billion to approximately Sh650 billion over the past three years, with the government targeting Sh1 trillion.
For Mwadime, however, the transformation cannot be driven from Nairobi alone.
Economic empowerment must begin at the grassroots, with villages and wards becoming economic centres whose growth feeds into constituencies, counties and eventually the national economy.
“What I'm talking about is an economy that is growing from its very roots.”
The challenge for Kenya will be turning that ambition into sustained productivity, better jobs and higher household incomes as the country seeks to translate economic growth into a broader improvement in living standards.