The World Bank said corruption and other governance challenges have gravely affected Kenya’s growth prospects, amplifying the East African country’s borrowing needs.
In a report released on Wednesday, the World Bank the challenges are adding pressure to an already strained debt servicing burden that swallows roughly 60 percent of government revenue. It estimated that the country could incur a cost of 2 percent of GDP a year through higher fiscal deficit.
Kenya’s economy grew 5.1 percent in the first half of 2026, a higher rate than the same period last year. But persistent deficits and rising debt service costs still leave the economy vulnerable, the World Bank said.
“Governance challenges are increasingly limiting Kenya’s prospects for faster and more broadly shared growth, with corruption as the key binding constraint,” the lender said in the latest edition of its biannual Kenya Economic Update report.
Corruption and collusion cost the country an estimated 2% of GDP a year through higher fiscal deficits, the World Bank said.
“This translates into substantial additional borrowing needs accumulating over time,” it said in the report.
Kenya has been struggling with heavy annual debt repayments in recent years after ramping up borrowing from 2013 to finance infrastructure. It has also been missing its fiscal deficit targets in recent years.
“Corruption risks contribute to a higher cost of borrowing,” the World Bank said in the report, citing a “governance premium” on sovereign borrowing.
The lender lifted Kenya’s economic growth forecast for this year to 4.6 percent, from an earlier forecast of 4.3 percent, citing faster-than-projected growth in the first six months of this year.
The International Monetary Fund said in June it had shared a draft report designed to flag governance weaknesses and corruption vulnerabilities with the Kenyan government, following a request from Nairobi to look into the issue.
MG/as/APA