The lender says corruption raises borrowing needs and threatens growth, while anti-graft reforms could deliver substantial economic gains.
The World Bank has warned that Kenya corruption risks could weaken economic growth and deepen debt pressures. The warning comes as the country prepares for the August 2027 General Election.
In its latest Kenya Economic Update, the lender identified corruption as a major barrier to faster, more widely shared growth. It urged the government to tackle governance problems that constrain economic progress.
The bank estimates that corruption and collusion cost Kenya about 2 per cent of GDP annually through larger fiscal deficits. As a result, the government needs additional borrowing to cover the shortfall.
Kenya corruption risks add to borrowing costs
Beyond increasing borrowing needs, corruption also makes sovereign debt more expensive, the World Bank said. It cited a governance premium that raises the cost of borrowing for Kenya.
Meanwhile, Kenya faces heavy debt repayments after years of borrowing to finance infrastructure projects. The country has also repeatedly missed its fiscal deficit targets, adding to the challenges facing public finances.
However, the lender’s modelling points to substantial gains from tackling graft. Moderate anti-corruption reforms could lift GDP by 8.7 per cent by 2035 compared with a scenario without reforms.
Stronger measures could increase GDP by 22.3 per cent over the same period. The bank described the potential economic and social benefits as substantial, while noting that the required improvements were achievable.
Growth outlook improves despite election pressures
The World Bank also raised Kenya’s economic growth forecast for 2026 to 4.6 per cent, from 4.3 per cent. It attributed the revision to stronger-than-expected economic performance in the first half of the year.
Despite that improved outlook, the lender warned that fiscal slippage could increase the debt burden. It also flagged the August 2027 election as a risk to economic stability and investment.
Election-related uncertainty could discourage investment and tourism, while creating further pressure on government spending, the bank said. Those risks accompany the governance challenges highlighted in its economic assessment.
Meanwhile, the government has been rolling out an electronic procurement platform to reduce opportunities for graft and wastage. It has also signed a conflict of interest bill aimed at addressing governance concerns.
