At the heart of Kenya’s ambition to create productive and sustainable jobs at scale for its population is manufacturing. The sector remains the largest creator of formal employment in the country, making it a crucial contributor to the growth of our economy.
The groundbreaking of the East Africa Oil Refinery by Nigerian business magnate Aliko Dangote marks a landmark moment for Kenya, with the $16 billion (approximately Sh2.2 trillion) project representing the country’s largest single investment since independence.
For Kenya, this investment is more than a refinery. It presents an opportunity for more jobs, skills development, enhanced local supply chains, new markets, complementary investments, and increased productivity for the economy.
If it delivers on its commitments, it can demonstrate the possibilities that arise when large-scale investment, industrial ambition and an enabling business environment come together.
The investment has the potential to significantly reduce capital outflows associated with Kenya’s reliance on imported refined petroleum products.
Currently, Kenya imports about 10.88 million cubic metres of petroleum products annually, with about 55 percent consumed locally and the remaining 45 percent exported to regional markets, according to the Energy and Petroleum Regulatory Authority (Epra.
With the refinery projected to process up to 700,000 barrels of crude oil per day, a greater share of domestic and regional fuel demand will be met from within the region.
This will help retain millions of dollars that would otherwise be spent on refined petroleum imports and subsequently, ease pressure on Kenya’s foreign-exchange reserves and the shilling.
The savings generated from lower import and logistics costs could also free up valuable foreign exchange for other productive uses, including the importation of industrial machinery, technology and other critical inputs.
This would then create a broader macroeconomic benefit by supporting investment and productive capacity across the economy. At the regional level, the refinery could position Kenya as a major energy and petroleum products hub.
East Africa remains heavily dependent on imported refined fuel, and a facility designed to supply petrol, diesel, jet fuel and Liquefied Petroleum Gas (LPG) to markets including Uganda, Tanzania, Rwanda, South Sudan and the Democratic Republic of Congo could substantially strengthen regional supply chains.
By leveraging the African Continental Free Trade Area (AfCFTA), Kenya will be better positioned to expand its role as an exporter of refined petroleum products, increase intra-African trade and strengthen regional energy security while reducing exposure to disruptions in external markets.
Energy accounts for a significant share of production costs in the manufacturing process. Kenya has made significant progress in renewable energy, particularly solar, wind power and geothermal energy.
These developments have been instrumental in reducing industrial reliance on fossil fuels. The emergence of a local refinery, therefore, provides us with an opportunity to strengthen our energy security as we continue the transition towards cleaner and more efficient energy sources for the local manufacturing sector.
On the job creation front, the project is expected to generate tens of thousands of jobs during the construction phase, including opportunities for engineers, technicians, construction workers and logistics professionals.
Estimates of more than 60,000 direct jobs, with associated wages running into billions of shillings each month, would provide a significant boost to household incomes and economic activity, particularly among Kenya’s large population of young people seeking employment opportunities.
At an industrial level, the investment shall also accelerate the growth of manufacturing and related industries. Economists have projected that the refinery could contribute to an increase in the manufacturing sector’s share of GDP, while the development of associated petrochemical industries could create additional value and stimulate demand for locally produced inputs.
This is particularly significant given the decline in the manufacturing sector’s contribution to Kenya’s GDP over the past decade from approximately 11.1 percent to about 7.1 percent in 2025.
The impact would also extend to the regional economy, particularly along the Coast. Beyond the direct economic activity generated by the refinery, the development could stimulate investment in logistics, transport, housing, services and other supporting industries.
For Lamu County, this could translate into a substantial expansion of its economic base, with projections indicating that its Gross County Product could rise from its current level of about Sh50 billion and significantly improve its position among Kenya’s counties once the facility becomes operational.
Overall, the refinery represents more than an energy investment. Its potential impact cuts across foreign exchange management, industrialisation, employment, regional trade and economic development.
The extent of these benefits will ultimately depend on the project’s implementation, the development of supporting infrastructure and the extent to which Kenyan businesses and workers are integrated into the emerging value chains.
A competitive manufacturing sector is heavily reliant on key enablers such as efficient transport and logistics systems, low cost of industrial inputs, affordable energy, stable and predictable policies and regulations, access to quality, reliable and affordable energy, among others. The Dangote Refinery, therefore, serve as a reminder that competitiveness is built across the entire value chain.
This moment calls for us as a country to nurture a resilient, innovative, competitive and energy efficient manufacturing sector.
Ultimately, the refinery’s impact on Kenya’s manufacturing sector will be measured on how we, as a country, respond to an increasingly interconnected and more competitive continental industrial economy.