Why Kenyan enterprises are stuck in the hustle stage

Weak aggregation, limited growth in capital, and fragmented markets are among the reasons why Kenya’s business ecosystem is stuck in the hustle stage, even as entrepreneurs are largely left to fend for themselves.

According to a new report, while there are some pockets of structured markets in some sectors such as dairy and agro-processing, the larger part of the economy is hustle-driven.

The Kenya Opportunity Index Report 2026, published last month, categorises economies in four tiers: survival, hustle, transition and structured opportunity.

The report, which ranks counties in terms of opportunity readiness, lists Nandi and Kisumu as the only ones at the structured opportunity tier with scores of 61.2 and 61.0, respectively.

Garissa County has a score of 23.6 operating as a survival economy. The rest of the counties are operating as either transition or hustle economies.

The report describes a hustle economy as one where entrepreneurs are highly active and resilient, but markets remain fragmented, and demand is often unpredictable. For such an economy, effort is high, but opportunity systems are still developing.

A transition economy is where businesses begin to experience clearer market signals. In such cases, entrepreneurs are experimenting with growth, customer relationships, and more deliberate business practices.

In a structured opportunity economy category where Nandi and Kisumu counties fall, market systems are organised, and demand is more predictable. Entrepreneurs can scale operations and participate in broader value chains.

For a survival economy, like the case of Garissa, enterprises exist solely for sustenance. Markets are also highly uncertain, and businesses operate with minimal structure.

“The national score observed in this report suggests that Kenya is currently operating within a hustle-driven economic environment with merging signals of transition toward more structured opportunity systems,” the report says.

The report has identified five structural bottlenecks that deny businesses the opportunity to scale. These are: fragmented markets, weak aggregation, limited growth capital, skills and productivity gaps, and weak coordination across opportunity systems.

On capital, the report says, while it exists in some places, finance for scaling, equipment, and contract fulfilment remains shallow.

For skills and productivity gaps, the scenario is that many businesses need better planning, quality control, digital tools, and operational systems.

Weak aggregation is evidenced by small producers reaching buyers individually rather than through organised cooperative or supplier systems, while fragmented markets are portrayed by many entrepreneurs still selling into tiny, unstable, highly localised demand systems.

Weak coordination across the opportunity systems is explained by programmes, financiers, buyers, and training institutions operating in silos.

The report states that one of the most powerful insights from the index is that Kenya is not lacking in entrepreneurial energy.

It says citizens are starting businesses, adapting to difficult market conditions, finding creative ways to earn a living, and supporting families and communities through their enterprises.

“In many ways, Kenya is already one of the most entrepreneurial societies in the world,” the report says. “What this report suggests, however, is that much of this energy is still operating within what can be described as a hustle economy.”

In a hustle economy, it explains, effort is high, but structure is limited.

“Entrepreneurs work hard to secure daily income, often navigating unpredictable demand, informal pricing systems, fragmented supply chains, and markets that are largely localised. Businesses adapt quickly, but long-term planning can be difficult because the surrounding systems are still developing,” the report says.

It adds that the hustle economy reflects resilience and creativity. It says this is a sign of determination and demonstrates the willingness of entrepreneurs to keep moving forward even when conditions are uncertain.

“But hustle alone cannot sustain long-term national transformation,” it says. “Every country that has successfully expanded prosperity eventually makes an important transition: it moves from a hustle-driven economy to a structured opportunity economy.”

The report says in a structured opportunity economy, entrepreneurs still work hard, but they operate within systems that make growth more predictable.

 “Markets become clearer. Demand signals become more stable. Supply chains are better organised. Enterprises can access information, finance, and buyers more easily. Standards improve, planning horizons expand, and businesses begin to scale,” the report says.

Speaking during the official launch of the report, Principal Secretary in the State Department for Micro, Small and Medium Enterprises (MSMEs) Development, Susan Mang’eni, said entrepreneurship is not only about financing.

“At its core, it begins with an idea that drives business, identifies opportunity, and, most importantly, understands the market,” she said.

“Formalising MSMEs should not be viewed merely as a compliance requirement, but as a powerful opportunity to map businesses, understand their nature, scale, and location, and ultimately design policies and support systems that respond to their real needs.”