Petroleum and mineral resources could contribute more than 5 per cent to the Kenya's GDP in the medium term and surpass traditional exports such as coffee as key foreign exchange earners, analysts said on Wednesday.
An investment report by PineBridge Investments East Africa reveals that the sector's noticeable contribution to the economy is expected to be felt when oil production and larger scale exports of rare earths minerals commences over the next three to four years.
"Oil production has the potential to radically change the structure of the Kenyan economy," said Nicholas Ithondeka, Investment Manager of PineBridge Investments.
"Oil will allow Kenya to diversify export earnings, slow down the rising import bill and act as a catalyst for infrastructural spending, especially on the transport network," he said during a media briefing in Nairobi.
The first shipment of titanium is expected at the tail end of 2013, according to Base Resources, the company mining the resource in Kwale County.
Exports of rare earth minerals could take another three years to commence once the current exploration licensing issues are settled. Preliminary estimates from various experts indicate that Kenya holds approximately 64.2 billion U.S. dollars worth of rare earth.
There is a growing global demand for rare earth minerals especially due to global urbanization trends.
Rare earth minerals are a group of 17 chemically similar elements crucial to the manufacture of many hi-tech products including energy efficient bulbs, powerful magnets, wind turbines, hybrid cars, refining of crude oil among other many uses.