Facebook Twitter (X) Instagram Somali Magazine - People's Magazine
Strong currency, rising exports, and record remittances push Kenya ahead of Ethiopia in regional economic rankings
Kenya is set to overtake Ethiopia as East Africa’s biggest economy in 2025, according to new forecasts from the International Monetary Fund (IMF). This marks a major shift in the region’s economic power.
Kenya’s economy is expected to grow to $132 billion (about Ksh 17 trillion) in 2025, up from $121 billion (Ksh 15.6 trillion) in 2024. Meanwhile, Ethiopia’s economy is expected to drop to $117 billion, down sharply from $143 billion last year.
Ethiopia’s drop is mainly due to major changes in its economy. The government made big reforms, including letting the Ethiopian Birr (its currency) lose value in order to attract international support. The Birr has dropped by more than 55% against the US dollar.
Although this helped Ethiopia get $3.4 billion from the IMF and $16.6 billion from the World Bank, the sudden change has caused serious short-term problems. The country is also trying to restructure nearly half of its $28.9 billion debt.
While Ethiopia faces these challenges, Kenya has taken a more stable route — and it’s showing results.
In 2024, the Kenyan shilling was the best-performing currency in the world, strengthening by nearly 21% against the US dollar. The country also raised $1.5 billion by selling a Eurobond in February, which boosted investor confidence and increased foreign reserves.
Another key factor in Kenya’s success has been money sent home by Kenyans living abroad. In 2024, diaspora remittances reached a record Ksh 651.7 billion ($4.94 billion), an 18% increase from the previous year. December alone saw $445.4 million (Ksh 57.6 billion) sent back home, with more than half of that coming from the United States.
On top of that, Kenya’s exports also reached a new high. In 2024, the country exported goods worth $8.25 billion (Ksh 1 trillion), especially in the agriculture and manufacturing sectors. July was the best month for exports, bringing in $747.4 million (Ksh 96.7 billion).
Even though Kenya is doing well in many areas, it hasn’t been smooth sailing. The government’s Finance Bill for 2024 faced huge resistance, with protests breaking out across the country. People were upset about new tax proposals, and the government eventually withdrew the bill.
Because of this, Kenya missed its revenue targets and had to exit a $3.6 billion IMF program, which meant losing out on $850 million in financial support. However, the country is now working on negotiating a new deal with the IMF.
The IMF has also lowered its global growth forecast. It now expects the world economy to grow by only 2.8% in 2025, down from the earlier estimate of 3.3%. In Sub-Saharan Africa, growth is expected to be 3.8% — the lowest since the Covid-19 pandemic. Rising trade tensions around the world are partly to blame.
Despite the global economic slowdown and local challenges, Kenya seems to be making a comeback as a leading economic force in East Africa. With a growing economy, strong exports, and increasing diaspora support, Kenya is in a strong position to lead the region.
But the big question is — can Kenya keep up this progress and make sure that economic growth leads to real benefits for ordinary citizens?
Only time will tell, but for now, Kenya is clearly on the rise.