Informal sector employment in Kenya 2023, by activity

The informal sector in Kenya employed roughly 16.7 million individuals in 2023. This corresponded with roughly 83.5 percent of the total number of people employed in the country. Service activities absorbed most individuals engaged in the informal sector: 9.7 million worked in wholesale and retail trade, hotels, and restaurants. Manufacturing came next, being the source of employment for roughly 3.4 million Kenyans. 

Kenya’s urban informal economy

Employment in the informal sector comprehends people working in informal enterprises, those not registered by the registrar of companies. This includes informal traders and artisans that produce goods and services meant for the market. As of 2019, Kenya had nearly five million informal enterprises, most of them located in urban areas. Wholesale and retail trade, as well as repair of motor vehicles and motorcycles, made up the predominant activity, accounting for over 60 percent of the Kenyan informal establishments.

Driver of employment generation

The informal sector is critical for job creation in Kenya. It generated roughly 768 thousand new jobs in 2019, against 78.4 thousand created in the formal sector. In this scenario, informal businesses have become the main labor market entry for young Kenyans. As of 2019, individuals aged 18-34 years formed the majority of employees in informal enterprises in the country, with a nearly equal proportion between men and women.