NAIROBI (Xinhua) --
High urbanization rate in Kenya’s upcountry towns
following five years of devolution has become a boon for the
East African nation’s retail sector.
Towns like Nakuru,
Nyeri,Kajiado, Kakamega, Meru and Eldoret have experienced an
influx of construction development amid rise in population since
2013, when devolution took effect.
consists of both commercial and residential buildings as people
move from rural areas to the towns, putting less pressure on the
The towns are now
awash with new malls and other shopping centers that have
attracted retail businesses that include supermarkets seeking to
cash in on the rising population.
In Kisumu, the
recently opened Lake Basin Development Mall is one of the latest
shopping centers in the town. And it holds a number of
businesses that are seeking to reap from the fast-growing
population in the lake side town.
The same scenario is
replicated in other county towns that include Naivasha in Nakuru
and Kitengela in Kajiado, Kakamega, Mombasa and Nyeri, where new
malls have been opened as the towns experience an urbanization
The malls have
attracted the several retails chains in the East African nation
as they expand from Nairobi and seek to tap into the new market.
Last week, local
retail chain Naivas announced plans to open a fourth outlet in
Mombasa at Mwembe Tayari, a once sleepy trading centre.
The outlet will
occupy 27,000 square feet at Mwembe Tayari Mall in Mombasa,
bringing to Naivas’ total store count in Kenya to 47. Other
supermarkets expanding include Tuskys, Eastmatt and Tumaini.
Cytonn, a Nairobi
investment firm, noted that the once smaller towns in the East
African nation are experiencing faster urbanization than the
instance, has an urbanization rate averaging 5.5 percent per
annum attributable to devolution compared to Kenya’s average
urbanization rate of 4.4 percent.
“The retail sector
in Kisumu recorded a 0.2 percent annualized increase in rental
yields between May 2016 and May 2018, attributable to a 1.7
percent per annum increase in occupancy rates over the same
The increase in
occupancy rates is mainly due to a high urbanization rate
following devolution which is the pull factor for growth in
population in the area,” noted Cytonn, on Monday.
On the other hand,
Mombasa is an attractive prospect for retailers due to minimal
supply of mall space compared to counties such as Nairobi, which
means less competition from other retailers.
“There is relatively
high demand for goods amid rising population. As per World Bank
data, Mombasa had the fifth highest gross domestic product per
capita in Kenya as at 2015 of 935 U.S. dollars compared to a
national average of 1,455 dollars and the region benefits from a
100 urbanized population, which boosts demand for formal
shopping outlets,” said Cytonn.
booms, young people who would otherwise have moved to Nairobi in
search of greener pastures are now moving to the towns, while
others are relocating from the capital to the counties to take
With jobs, both
formal and informal sectors, being created in the counties, the
spending power of residents has improved thus boosting the
Henry Wandera, an
economics lecturer in Nairobi, noted that towns in Kenya’s 47
counties are the future of the retail sector in Kenya.
“These towns have
room for urbanization as compared to Nairobi, the reason why
they are developing faster and are attracting huge populations
and thus retail chains. Besides, the county governments are
putting in much resource and attracting investors into the towns
that most of them are their headquarters for the areas to
develop,” he said.