NAIROBI, Kenya, Sep 10 — Kenya has spent decades becoming good at producing what the world wants.Its farmers grow some of the world’s most sought-after tea and coffee, its horticulture industry supplies European markets with flowers and fresh produce, its livestock sector provides raw materials for leather, while its soil contains minerals increasingly valuable to global industry.Yet there is a persistent weakness in this success story: Kenya often earns from the first stage of the value chain and leaves the more lucrative stages to other countries.Tea is grown here, coffee is produced here and hides are collected here. But processing, branding, packaging and manufacturing — activities that can multiply the value of those commodities — frequently happen elsewhere.Kenya’s next economic challenge, therefore, should not simply be to export more, but to capture more value from what it already produces.The argument comes at a critical time. Kenya’s domestic exports increased from Sh932.2 billion in 2024 to Sh967.9 billion in 2025, according to the Kenya National Bureau of Statistics. But imports reached Sh2.77 trillion, leaving the country with a merchandise trade deficit of about Sh1.65 trillion.The figures illustrate the structural problem: Kenya participates actively in international trade, but much of the value it consumes is manufactured elsewhere while some of the raw materials it produces are transformed elsewhere.Agriculture’s untapped potentialEconomist David King’ong’o argues that agriculture provides the clearest opportunity to change this equation.Kenya’s agriculture sector contributes about 17 per cent of GDP, he said, but that contribution could rise substantially if the country processed more of its agricultural produce locally.“If the gap for processing or value addition is bridged and raw products are not exported for processing elsewhere, the contribution to GDP would double to around 40–45 per cent if processing was done locally.”King’ong’o said Kenya was also losing significant employment opportunities by exporting raw produce.Agriculture supports about 70 per cent of informal employment in rural areas through direct and indirect activities, including transport and logistics, while about 1.5 million people are formally employed in the sector, according to his assessment.With greater local processing, he estimates agriculture could support close to seven million jobs.“Ultimately, exporting raw produce leads to a loss in potential GDP value as well as secondary losses in uncreated labour opportunities.”Tea’s unfinished journeyTea provides perhaps the clearest example of the opportunity Kenya is leaving on the table.The country earned Sh215.21 billion from tea in 2025, up from Sh154.09 billion in 2022. Production also increased from 535.04 million kilogrammes to 598.47 million kilogrammes over the same period.But much of Kenya’s tea continues to leave the country in bulk form, limiting the share of the final consumer price that returns to the local economy.A government assessment found that 99 per cent of Kenyan tea exports were historically sold in bulk, compared with just one per cent in value-added forms such as blended, packaged, instant and iced teas.It identified tariff escalation, limited packaging capacity, difficulties penetrating established retail markets and the high cost of packaging materials and machinery among the barriers to value addition.Independent Tea Producers Association of Kenya chairman Collins Cheruyoit said the economic cost of remaining a bulk tea exporter was significant.“For tea, the job losses are huge. In value terms, branded teas sell as high as six times local bulk pricing, which could be a further Sh900 billion foreign [exchange] opportunity.”But moving from bulk exports to branded products is not straightforward.Cheruyoit said shipping costs were higher for branded tea because packaged products take up more container space relative to their weight than loose tea in sacks.“When this freight cost is factored into the packet cost, it causes the branded product to be less competitive.”Kenyan exporters also face high import tariffs in some destination markets, while building consumer awareness requires substantial spending on advertising and brand development.The cost of packaging technology is another barrier, particularly for smaller companies.“Taxation and cost of teabags, packaging technology, especially the double-chamber type, is out of reach for the small emerging tea packer.”The government is seeking to change that. The 2026 Budget Policy Statement targets increasing the share of value-added tea exports to 50 per cent by 2027, with measures covering packaging, branding, blending, quality certification and production of flavoured and instant teas.Cheruyoit, however, argues that policy support must extend beyond production and taxation. He has proposed an export compensation fund to help Kenyan companies advertise and enter foreign markets, alongside lower government agency and regulatory levies on locally produced goods.From coffee to leatherThe same opportunity exists in coffee.Kenyan coffee has a strong international reputation and can command premium prices, yet the country has historically been more successful at producing and exporting green coffee than building globally recognised consumer brands.Expanding roasting, specialty coffee production, packaging and branding would allow Kenya to move further up the value chain.The objective should not merely be to sell Kenyan coffee to the world, but to build Kenyan coffee companies capable of selling directly to global consumers.Leather offers another illustration.Kenya has a substantial livestock sector, yet the economic journey of an animal does not have to end with meat and an exported hide.A hide can be tanned and transformed into leather, which can then become shoes, handbags, belts, furniture and other finished products.Each transformation creates another economic activity: a tannery employs workers, a shoe factory employs more, packaging creates another market, while transporters, designers and retailers participate in the chain.That is value addition in practical terms — turning one raw material into an entire chain of businesses.The industrialisation challengeKenya is not a mining giant, but it has commercially important resources including titanium minerals and soda ash.As the global race for minerals needed for batteries, electronics and renewable energy intensifies, Kenya will increasingly face the question of whether it should continue exporting minerals while importing finished products made from them.That does not mean every mineral must be processed locally. Some stages of beneficiation require enormous capital, specialised technology and economies of scale. Forcing industries into processing that is not commercially viable could be counterproductive.But where Kenya can competitively move one or two steps up the value chain, it should.That requires a business environment capable of supporting industry.Factories need reliable electricity, affordable finance, good roads, water, skilled workers and efficient ports. Investors also need predictable taxation and regulation.King’ong’o said structural challenges had slowed Kenya’s industrialisation ambitions despite Vision 2030 identifying industrialisation as a key pillar of economic transformation.“Another major challenge is infrastructure; roads and connections are required before setting up agricultural or industrial sites,” he said, adding that Kenya also needed to strengthen the technical capacity of its workforce.But infrastructure alone will not be enough.Branding, packaging and understanding international consumer demand are equally important when selling finished products abroad.King’ong’o said government agencies should undertake feasibility studies, research foreign consumer preferences and help local investors understand tariffs, logistics and market requirements.Opportunities could include placing Kenyan products on supermarket shelves in Japan or exporting finished coffee products to Italy.Trade fairs and government-to-government agreements could also help connect local producers with foreign buyers.Bringing industry closer to farmersCounty Aggregation and Industrial Parks could help if they succeed in bringing processing closer to producers.There is little economic sense in transporting raw agricultural produce hundreds of kilometres simply because processing capacity is concentrated in a few places.Tea-producing counties should have infrastructure to support tea-based industries. Coffee-growing regions should be able to develop roasting and processing businesses. Areas with abundant livestock should have stronger leather and meat-processing industries.That would change the relationship between rural Kenya and industrialisation.At present, many farmers sell their commodities and watch them disappear into supply chains whose most profitable stages are far removed from the farm.Value addition can bring some of those stages closer.King’ong’o sees agriculture as the starting point because the raw materials are already available. He said investment in research was needed to establish what consumers in different foreign markets want, including packaging standards and product preferences.“Agricultural industries should be prioritised because food consumption is an essential necessity,” he said, adding that technology, including artificial intelligence, could help connect Kenyan products to international markets.The objective is not simply to increase exports.It is to ensure that exports create more jobs, businesses, skills, tax revenues and incomes inside Kenya.For years, Kenya has asked how much it can produce.The more important question now is how much wealth it can create from what it produces.Because the real measure of an export economy is not just the value of goods leaving the country. It is how much value Kenya manages to keep before they leave.