The tea industry remains one of the most strategic agricultural sectors globally, ranking as the second most consumed beverage after water and serving as a critical foreign exchange earner for producer nations. In Kenya, tea has long been a cornerstone of the economy, contributing approximately 26% of export earnings, 4% of national GDP, and supporting over 600,000 smallholder farmers alongside large-scale multinational estates. This study sought to evaluate the role of the tea industry in Kenya’s economic development and foreign exchange earnings, with specific attention to its global positioning, macroeconomic influences, export–growth linkages, household welfare impacts, and persistent structural challenges. Employing a desk review methodology, the study synthesized peer-reviewed articles, government reports, and institutional publications into five thematic areas. The findings reveal that Kenya occupies a central global position in tea production, but competitiveness is declining due to climate change, price volatility, and rising costs. Macroeconomic factors such as exchange rate fluctuations, inflation, and interest rates significantly erode profitability, even when production remains strong. Tea exports are confirmed as a backbone of GDP growth and foreign exchange earnings, though over-reliance on bulk exports and traditional markets undermines long-term sustainability. At the household level, tea farming contributes substantially to rural income, education, and healthcare, though profitability is constrained by weak farmer institutions, limited credit, and high input costs. Persistent risks—including climate change, governance issues, and lack of value addition—threaten the sector’s future. In conclusion, the study affirms tea’s indispensable role in Kenya’s economy while underscoring its vulnerabilities. It recommends adopting climate-smart practices, stabilizing macroeconomic policies, diversifying into premium and specialty markets, strengthening farmer cooperatives, and investing in value addition and innovation to ensure the tea industry remains a sustainable driver of Kenya’s economic growth and foreign exchange stability. Keywords: Economic Development and Foreign Exchange Earnings, Desk Review of Literature, Kenya
Richard Koech (Sat,) studied this question.