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The informal sector in Kenya employed over 18 million individuals in 2025. Service activities absorbed most individuals engaged in the informal sector, with nearly 11 million working in wholesale and retail trade, hotels, and restaurants. Manufacturing came next, being the source of employment for about 3.6 million Kenyans. 

Kenya’s urban informal economy

Employment in the informal sector comprises people working in informal enterprises, those not registered by the registrar of companies. This includes informal traders and artisans who 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.