Overview

  • Overview

    A key regional player in East Africa, Kenya is a major communications and logistics hub, with an important Indian Ocean port and land borders with Somalia, Ethiopia, South Sudan, Uganda, and Tanzania. It has a population of about 48.5 million (2016). A new constitution in 2010 introduced a tenured judiciary and bicameral legislative house, and devolved county government, a move that has had a major impact on service delivery. Elections in August 2017 returned President Uhuru Kenyatta to office for a second term, but were nullified in September by Kenya's Supreme Court, paving the way for a run-off between Kenyatta and Raila Odinga, his closest rival. This was switched to a re-run for all the presidential candidates as rules governing the race were revisited.

    The prolonged period of political uncertainty following the elections, and the prospect of another round of polling, have contributed to an apparent slowing of the economy, with the possibility of unrest a worry for Kenya's neighbors, too. The port of Mombasa is a key transit point not just for imports and exports to and from Kenya, but also to and from Uganda, Rwanda, South Sudan, and the Democratic Republic of the Congo.

    Devolution is the biggest gain from the 2010 constitution, transforming political and economic governance, and strengthening accountability and public service delivery at local levels. Key development challenges remain, though, including poverty, inequality, and climate change. After faltering in 2008, economic growth has resumed, reaching 5.8% in 2016 to place Kenya as one of the fastest growing economies in Sub-Saharan Africa. This expansion was boosted by a stable macroeconomic environment, low oil prices, a rebound in tourism, strong remittance inflows, and government-led infrastructure development initiatives.

    Looking ahead, near-term GDP growth is expected to decelerate to 5.5% in 2017 because of drought, weak credit growth, security concerns, and a rise in oil prices. Medium-term GDP growth should rebound to 5.8% in 2018 and 6.1% in 2019 respectively, depending on the completion of ongoing infrastructure projects, the resolution of slow credit growth, and the strengthening of the global economy and tourism.

    In the long-term, the adoption of prudent macroeconomic policies will help safeguard Kenya’s robust economic performance. This includes the implementation of fiscal and monetary prudence and lowering the deficit down to 4.3% by FY19/20, as per the Medium Term Fiscal Framework. Fiscal consolidation needs to avoid compromising public investment in critical infrastructure key to unlocking the economy’s productive capacity.

    On social development, Kenya met some Millennium Development Goals (MDGs)  targets, including reduced child mortality, near universal primary school enrolment, and narrowed gender gaps in education. Interventions and increased spending on health and education are paying dividends. And, while the healthcare system has faced challenges, 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.

    Kenya's youthful and growing population, dynamic private sector, highly skilled workforce, improved infrastructure, new constitution, and pivotal role in East Africa, give it the potential to be one of Africa’s great success stories. Addressing poverty, inequality, governance, and the skills gap (between market requirements and the education curriculum) will be major goals, as well as problems of climate change, low investment, and low productivity. Only when these have been addressed can sustained growth rates transform lives of ordinary Kenyan citizens.

    Last Updated: Oct 10, 2017

  • The World Bank Group’s (WBG) strategy for Kenya is to support the government’s efforts to end extreme poverty and increasing shared prosperity. The Country Partnership Strategy (CPS) FY14–18, revised under the Performance and Learning Review (PLR) in June 2017, 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. The CPS/PLR period, extended to FY20, envisages investment of $1 billion a year through the International Development Association (IDA), International Bank for Reconstruction and Development (IBRD), International Finance Corporation (IFC), and Multilateral Investment Guarantee Agency (MIGA).

    The current IDA portfolio is about $6.7 billion in 27 national ($5.5 billion) and seven regional ($1.2 billion) projects. The biggest investments are in infrastructure, followed by the social sectors. Other sectors include: education, private sector development, information and communications technologies, agriculture, and justice.

    Recently approved projects include:

    The International Finance Corporation (IFC) supports private enterprise through direct investment, advisory services, and capital from global financiers. The IFC has invested over $1 billion in Kenya’s agribusiness, infrastructure, financial markets, health, and education sectors. It has invested in Bridge International Academies, National Cement, AAR Healthcare, Goodlife pharmacies, Gulf power plants, and Vegpro among others. Its partners include Equity Bank, Gulf African Bank, Bank of Africa, Diamond Trust Bank, and the Kenya Commercial Bank. Also, the IFC and the World Bank work closely with the government to improve business regulation through reforms. 

    Presently, MIGA is supporting four projects in the energy sector with a gross exposure of $208 million and net exposure of $185 million. All the projects are in the energy space, including one guarantee issued in FY14 for Gulf Power Limited for the development of an 80-megawatt heavy fuel oil diesel power plant, including a 66-kilovolt interconnector and backup-metering equipment on a 20-year, build-own-and-operate basis. The IFC provides financing for Gulf Power Limited, with the project further supported by a partial risk guarantee from IDA. 

    Last Updated: Oct 10, 2017

  • About 5 million people are estimated to have benefited from investments in infrastructure under the IDA-funded Kenya Municipal Programme (KMP), Kenya Informal Settlements Improvement Project (KISIP) and Nairobi Metropolitan Services Improvement Project (NaMSIP) programs. About 126.6 kilometers of storm water drains have been constructed, protecting 507,000 people from periodic flooding; 1590 persons have access to improved shared sanitation facilities; and 107,000 people have access to improved water sources. About 150 kilometers of road and 390 kilometers of foot and bicycle paths have been constructed. And 85 settlements of 14,450 beneficiaries have directly benefitted from interventions in enhanced tenure. Through support to the rail infrastructure, about 60,800 people are now within 1 kilometer of a commuter railway station. About 1,305 street and high-mast lights have been installed to improve security and boost economic activities in urban areas; 15 urban centers received modern fire engines; and three markets have been constructed.

    Through the Kenya Health Sector Support Project (KHSSP) and Transforming Health Systems for Universal Care Projects, 800 community health nurses are training in primary health care with a focus on midwifery. Health facility workers in 1,500 primary health care facilities have been  given incentives to improve the delivery of quality maternal and child health services.

    The IDA-funded Kenya Electricity Expansion Project (KEEP) and Global Output Based Aid (GPOBA) have supported power connections to 98,000 households in urban slums in 18 counties.

    The National Safety Net Program (NSNP) is reaching 4 million people in 765,000 households, an increase from 1.65 million in 2013, with plans to reach some 50,000 more households in the next two years. The NSNP has supported the strengthening of systems, such as: the electronic authentication payment mechanism; a Management Information Systems; and a Single Registry. All four cash transfer programs have been harmonized.

    The Kenya Livestock Insurance Program (KLIP) made two big payouts to respond to the effects of 2016/17 drought, one in February 2017 to 12,000 pastoral households for $2.1 million and another in August 2017 to 11,500 pastoral households for $3.1 million. This has helped reached 100,000 people, given the extended size of households in northern Kenya. 

    The IDA-funded Northern Corridor Transport Improvement Project has produced results: independent road entities have been created while aviation sub-sector institutions now have financial autonomy and strengthened oversight for aviation security and safety; the Civil Aviation Authority met International Civil Aviation Organization (ICAO) was granted Category 1 rating under the International Aviation Safety Assessment (IASA) program; Kenya Airways has obtained approval for non-stop flights to the United States; Kisumu airport was elevated to an international airport, and can now handle 500,000 passengers annually; the freight and passenger travel time by road from Mombasa to Malaba, on Kenya's border with Uganda, was reduced by 25%.

    Technical and Analytical Work

    The Kenya Petroleum Technical Assistance Project (KEPTAP) has supported the development of a Petroleum Sector Master Plan and the setup of a Petroleum Business Opportunities.

    The Kenya Accountable Devolution Programme’s (KADP) capacity building initiative in participatory budgeting (PB) saw citizens from five counties participate in structured, decision-making forums on development priorities, with the greater inclusion of women, youth, persons with disabilities and persons residing in remote regions. PB has resulted in the greater credibility of budget hearing processes. KADP has also supported the development of an Open County portal, and a sub-national Public Expenditure and Financial Accounting (PEFA) Framework Assessment was held in 6 counties, while 1,217 government primary health care facilities in 20 counties have been mapped onto a new web application as part of the Results-Based Financing initiative to streamline cashless payment for decentralized health services.

    Last Updated: Oct 10, 2017

  • 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 the European Union, the European Investment Bank, the African Development Bank, France's Agence Française de Développement, United Kingdom Department for International Development, the German Development Bank, the Japan International Cooperation Agency, and China.

    Last Updated: Oct 10, 2017

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Additional Resources

Country Office Contacts

Main Office Contact
Delta Center
Menengai Road, Upper Hill
PO Box 30577-00100
Nairobi, Kenya
+254-20-293-6000
Nairobi, Kenya
Keziah Muthembwa
Communications Officer
+254-20-293-6000
kmuthembwa@worldbank.org
Washington
Trichur K. Balakrishnan
Country Program Coordinator
1818 H Street NW
Washington DC 20433
Kenyainfo@worldbank.org