The East African nation of Kenya has a population estimated at 46.1 million, which increases by an estimated one million a year. With support of the World Bank Group (WBG), International Monetary Fund (IMF) and other development partners, Kenya has made significant structural and economic reforms that have contributed to sustained economic growth in the past decade. Development challenges include poverty, inequality, and vulnerability of the economy to internal and external shocks.

Political Context

Devolution is rated the biggest gain from the August 2010 constitution, which ushered in a new political and economic governance system. It is transformative and has strengthened accountability and public service delivery at local levels. The government’s agenda is to deepen implementation of devolution and strengthen governance institutions, while addressing other challenges including land reforms and security to improve economic and social outcomes, accelerate growth and equity in distribution of resources, reduce extreme poverty, and youth employment.


The World Bank’s most recent Kenya Economic Update (KEU) March 2016 projected a 5.9% growth in 2016, rising to 6% in 2017. The report attributed the positive outlook to low oil prices, good agriculture performance, supportive monetary policy, and ongoing infrastructure investments.

According to the latest Kenya National Bureau of Statistics (KNBS) quarterly report, Kenya’s economy expanded by 6.2% in the second quarter compared to 5.9% in the same period in 2015. This growth was mainly supported by agriculture, forestry and fishing; transportation and storage; real estate; and wholesale and retail trade. Manufacturing, construction, financial and insurance sectors slowed down during this quarter while accommodation and food services, mining and quarrying; electricity and water supply; and information and communication sectors recorded improvements.

In August of 2016, the President of Kenya signed into law, an amendment to the 2015 Banking Bill which capped lending interest rates. The law caps the maximum lending interest rate at 4% above the base rate set by the Central Bank of Kenya. Interest rate spreads in Kenya in the past have been considered to be generally higher than that of its peers. The effects of the rate regulation remains to be seen and could vary from the intended affordable loans to the low income households and small businesses, to reduced profitability for the banking sector and increased charges on commercial bank products.

Inflation in 2016 has remained within the government target rate, largely driven by food inflation. Kenya continues to benefit from low fuel prices and good rains, a stable macroeconomic environment, and good monetary policy action, which has ensured inflation remained contained in the first half of 2016.

Social Developments

Kenya has met a few of the Millennium Development Goals (MDGs) targets, including reduced child mortality, near universal primary school enrolment and narrower gender gaps in education. Interventions and increased spending on health and education are paying dividends. Devolved health care and free maternal health care at all public health facilities will improve health care outcomes and develop a more equitable health care system.

Development Challenges

Kenya has the potential to be one of Africa’s great success stories from its growing youthful population, a dynamic private sector, a new constitution, and its pivotal role in East Africa. Addressing challenges of poverty, inequality, governance, low investment and low firm productivity to achieve rapid, sustained growth rates that will transform lives of ordinary citizens, will be a major goal for Kenya. 

Last Updated: Oct 25, 2016

The World Bank Group’s (WBG) strategy for Kenya is to support the government’s strategy of ending extreme poverty and increasing shared prosperity. WBG’s Kenya Country Partnership Strategy FY14-18 (CPS) focuses on improving the economy’s competitiveness and sustainability, protecting and helping the vulnerable to develop their potential, and building consistency and equity through devolution. During the CPS period, the WBG plans investment of $1 billion a year, through the International Development Association (IDA), International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA)

The current International Development Association (IDA) portfolio amounts to $6 billion in 29 national ($4.7 billion) and seven regional ($1.3 billion) projects. This includes new commitments: National Agricultural and Rural Inclusive Growth Project ($200 million); Transforming Health Systems for Universal Care Project ($150 million); Electricity Expansion Project - Additional Financing ($68 million); Eastern and Southern Africa Higher Education Centers of Excellence ($18 million), and the Kenya Youth Employment and Opportunities ($150 million). The biggest investments are in infrastructure namely; transport, energy, water, and urban development, followed by the social sectors (health and social protection). Other sectors comprise: education; private sector development; ICT; agriculture; and justice, law and order, knowledge, and analytic work. 

The biggest investments are in infrastructure followed by the social sectors. Other sectors comprise: education; private sector development; ICT, and agriculture, and justice, law and order.


IFC supports Kenya’s private enterprises through direct investments, advisory services and capital from global financiers.

Since it started operating in Kenya, IFC has invested $1 billion in the country’s agribusiness, infrastructure, financial markets, health and education. IFC has invested in Kenya Airways, the Kipeto wind farm, Bridge International Academies, National Cement, AAR Healthcare and Vegpro.

IFC’s clients and partners are tackling pressing development challenges, including access to power, healthcare and food. Small businesses are engines for Kenya’s growth, creating jobs and providing essential goods and services, but entrepreneurs are often unable to access finance.

IFC’s Africa Micro, Small, and Medium Enterprise Finance Program helps banks increase business with the SME sector. IFC invests directly in banks to increase lending to entrepreneurs, and advises them on how to tailor their financial services for SMEs.

Its partners in Kenya include Equity Bank, Gulf African Bank, Bank of Africa, Diamond Trust Bank and Kenya Commercial Bank. IFC and the World Bank also work closely with the government to improve business regulation through reforms in registering businesses, getting credit and other areas.

Multilateral Investment Guarantee Agency (MIGA)

MIGA is providing investment guarantees of $302 million in support of projects in Kenya’s infrastructure, power, agribusiness and service sectors. Working closely with the Bank and IFC, it helps to leverage financing for construction of privately operated power plants to diversify Kenya’s energy mix in line with the government’s least cost power development plan. MIGA is receiving increasing interest from other investors and sectors in the country.

Last Updated: Oct 25, 2016

The World Bank Group (WBG) has contributed to Kenya’s development in all major economic and social sectors including the following:


  • Through International Development Association (IDA) support, 280MW new geothermal capacity has been commissioned, increasing Kenya’s developed geothermal capacity to 579MW from 241MW in 2013
  • The current 400 MW of geothermal energy production on stream in Olkaria, and the new power is already reaching millions of homes, and the price of electricity has fallen by 30% over the past year. Besides, over half of Kenya’s energy is drawn from climate-friendly sources.
  • Over 2,146,701 new customers had been connected to electricity supply by June 2015 compared to the 285,000 targeted. 150,000 households in the informal settlements were connected to legal power in just one year (2015) up from 5,000 households in 2014.

Urban Sector

  • 200,000 Kenyans got access to paved roads, drainage systems, high mast flood lights, and improved water and sanitation services
  • 1.3 million people have access to improved water sources, and 100,000 of these live in informal settlements.

Social Protection


  • Independent roads entities have been created while aviation sub-sector institutions now have financial autonomy and strengthened oversight on aviation security and safety.
  • Construction of new terminal at Jomo Kenyatta International Airport with capacity of 2.5 million passengers annually doubled the capacity for existing facilities.
  • Kisumu airport was elevated to an international airport and can now handle 500,000 passengers annually.

Last Updated: Oct 25, 2016

The World Bank Group has established strong partnerships for knowledge and resources with other development partners, researchers and agencies that contribute to Kenya’s development. These include European Union, European Investment Bank, African Development Bank, France’s Agence Française de Développement, United Kingdom’s Department for International Development, German Development Bank, Japan International Cooperation Agency and China.

Last Updated: Oct 25, 2016


Kenya: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments