He commended President Uhuru Kenyatta and opposition leader Raila Odinga for agreeing to work together but challenged them to put more energy to end graft.
"If Kenya is anticipating real progress, the issue of corruption must be addressed. Different ethnicities must not be viewed as rivals and different tribes should be viewed as a strength to celebrate our diversity,' he said.
Obama said Kenya has made significant strides and with the new constitution much more can be done.
He said the barriers facing the current generation have existed for a long period of time and the government should seek alternative ways of helping youths raise their voice and hopes for bigger dreams.
Obama, while addressing guests at the launch of Sauti Kuu centre in Kogello, said every election has delayed Kenya's development process.
The foundation seeks to provide an outlook for the future to children around the world.
Obama added," economic growth should not be for a few people, it should be extended to all regions to reach everyone".
He said everyone should have access to education as this will play a key role in developing skills for the youth to be more self-reliant and job makers.
"This will go a long way in sustainable economic growth. Let youth be empowered on leadership and teamwork. If we instil positive behaviour in the young generation they will discover their strength and the tribal and ethnic clashes will be a thing of the past," he said.
Obama is expected to fly to South Africa later today for the Annual Nelson Mandela Lecture.
On Sunday, he held separate meetings with President Uhuru Kenyatta and opposition leader Raila Odinga where they discussed on the building the bridges initiative, war on corruption and the stability of South Sudan.