Kenya El Niño: How maize shortages and flood risks are driving inflation and business risks

Kenya's 2026 El Niño season is threatening the economy with two major issues: a 39% drop in maize production and the risk of widespread flooding. The country is entering the peak of rainy season in November, raising concerns over food availability, transport disruptions, and business costs. USDA data shows Kenya's 2026/27 maize production is forecasted at 2.2 million metric tonnes, 39% below the five-year average.

The Kenya National Bureau of Statistics reported a 10.2% annual food inflation rate in October 2026. The Kenya National Disaster Operations Centre estimates 1.5 million people could be affected by flooding, causing further financial losses for businesses and households. Kenya's agricultural sector enters the short-rains season after a severe drought affected major food-producing regions from June to August 2026.

The drought caused widespread crop failures in the northern Rift Valley and western counties, significantly reducing the projected maize harvest, which could be the lowest since 2000/01 if realized. The timing is challenging as November rainfall could improve soil moisture but excessive precipitation could lead to crop damage via waterlogging, soil erosion, and flooding.

The IFPRI notes many parts of western Kenya experienced their driest or second-driest June-August period since at least 1981. The agricultural disruption impacts are emerging alongside higher consumer prices, putting pressure on household budgets and business expenses. KNBS reported October 2026 inflation at 7.3%, up from 6.8% in September.

Food and non-alcoholic beverages increased by 10.2% annually, while transport costs rose by 17.1%. Housing, water, electricity, gas, and fuel prices climbed by 3.7%. Higher transport costs make it more expensive to move produce from farms to markets, and rising food prices lower consumers' purchasing power, potentially affecting sales for businesses.

The Consumer Price Index increased from 156.47 in September to 157.60 in October, a 0.7% monthly rise. The expected heavy rainfall poses another economic risk, particularly for businesses in flood-prone urban areas and regions with vulnerable transport infrastructure. Nairobi's informal settlements like Mathare and Kibera are at heightened risk due to their proximity to waterways, inadequate drainage, and vulnerable housing.

Flooding can disrupt commercial activity through damaged premises, destroyed stock, transport interruptions, and temporary closures. Government agencies have intensified drainage and river-cleaning operations, but Nairobi's flood vulnerability is tied to wetland loss, poor urban planning, and weak land-use regulations. The November rainfall outlook presents both agricultural opportunities and significant infrastructure risks.

The combined effects of El Niño-related agricultural disruption and higher international fuel and fertilizer prices could weaken Kenya's economic performance. IFPRI's economic modeling projects national GDP losses of 1.1% to 1.5%, with agricultural GDP declining by 4.5% to 6.1%. Agricultural commodity prices could increase by 6.7% to 10.2%.

Under a combined-shock scenario, an additional 756,000 people could fall into poverty, and 4.9 million could become undernourished. The poverty impact is expected to be most significant in urban areas, which account for 59.8% of the additional people projected to fall into poverty. For businesses, the challenges include weaker consumer purchasing power, higher input costs, and potential interruptions to distribution networks.

Kenya faces the immediate challenge of managing the economic consequences of the drought while preparing for excessive rainfall, with the scale of recovery, infrastructure disruption, and food-price pressures crucial in determining the El Niño shock's impact on households and businesses through 2026.