The World Bank in Kenya

The recently concluded general elections have set the stage for Kenya’s next development chapter. The country has made significant political and economic reforms that have contributed to sustained economic growth, social development, and political stability gains over the past decade. However, its key development challenges still include poverty, inequality, youth unemployment, transparency and accountability, climate change, continued weak private sector investment, and the vulnerability of the economy to internal and external shocks. 

Kenya’s economy achieved broad-based growth averaging 4.8% per year between 2015-2019, significantly reducing poverty (from 36.5% in 2005 to 27.2% in 2019 ($2.15/day poverty line).

In 2020, the COVID-19 pandemic shock hit the economy hard, disrupting international trade and transport, tourism, and urban services activity. Fortunately, the agricultural sector, a cornerstone of the economy, remained resilient, helping to limit the contraction in GDP to only 0.3%. In 2021, the economy staged a strong recovery, with the economy growing at 7.5% although some sectors, such as tourism, remained under pressure. GDP growth is projected at 5.5% in 2022 and the poverty rate has resumed its trend decline after rising earlier in the pandemic. Although the economic outlook is broadly positive, it is subject to elevated uncertainty, including through Kenya’s exposure (as a net fuel, wheat, and fertilizer importer) to the global price impacts of the war in Ukraine.  

World Bank support to Kenya’s pandemic response includes emergency funding to strengthen medical services and reduce the spread of the virus, as well as budget support to help close the fiscal financing gap while supporting reforms that help advance the government’s inclusive growth agenda.   

In addition to aligning the country’s long-term development agenda to Kenya’s Vision 2030−which aims to transform Kenya into a competitive and prosperous country with a high quality of life−the new government’s bottom-up economic model prioritizes agriculture, healthcare, housing, and manufacturing.

Last Updated: Mar 31, 2023

The FY23-FY28 Country Partnership Framework (CPF), endorsed by the World Bank Group (WBG) Board of Executive Directors in November 2022, sets out the strategy to support Kenya’s transformation into a middle-income economy that achieves inclusivity and resilience and builds on the WBG’s comparative advantages in Kenya. The new CPF draws from the WBG’s Country Partnership Strategy (CPS) FY14-FY20 for Kenya, lessons from the CPS Completion and Learning Review (FY22), the FY20 Systematic Country Diagnostic, a Country Private Sector Diagnostic (FY19), over 34 stakeholder consultations, and is aligned to the Kenya Vision 2030. It also aligns directly with the World Bank’s Africa Strategy, focused on jobs and economic transformation, digital economy, human capital, universal access to electricity, climate change mitigation and adaptation, addressing fragility, conflict, and violence, and achieving gender equality.

The International Development Association (IDA) and International Bank for Reconstruction and Development (IBRD) portfolio stands at $6.7 billion in 34 projects: 23 national and 10 regional projects. The transport sector takes the largest share of investments at 19%, followed by energy and extractives at 13%, water and agriculture at 12%. Other investments are in the following sectors: macroeconomics, trade, and investment, education, Information and Communication Technology (ICT) sectors, social sectors, urban, devolution, governance, forced displacements, private sector development, and statistical capacity building.

As of June 30, 2022, the International Finance Corporation’s (IFC) investment portfolio in Kenya totaled $1.04 billion across a number of key sectors including manufacturing, agribusiness, financial services, infrastructure, and technology. IFC also has an advisory portfolio of $57.6 million. The advisory program complements IFC’s investments and is growing in key strategic areas such as healthcare, affordable housing, and financial inclusion. Over the years, IFC has also been working with financial institutions to increase lending to small businesses and those focused on addressing climate change.

As of February 28, 2023, the Multilateral Investment Guarantee Agency (MIGA) is actively engaged in Kenya with $484.2  million in guarantees covering the energy, financial, fintech, and road sectors. The nine existing projects include two legacy thermal power projects, an off-grid energy access project, a financial services contract, a mobile money project across 14 countries of which Kenya is included, a project in the tourism sector under Kasada's Master Contract, and three projects in the roads sector with some located in the northeast part of the country, covering four conflict-affected counties of Mandera, Wajir, Isiolo, and Garissa. MIGA has also supported the regional development bank−Trade and Development Bank (TDB)−of which Kenya is a member. MIGA’s support mobilized $424 million of commercial financing for TDB to expand its trade finance activities in member countries including support of COVID-19-related trade finance transactions. MIGA is also supporting the sponsors of, and working with the World Bank and IFC, on the Nairobi-Nakuru-Mau Summit Highway project.

Recently approved projects

• Additional Financing for Primary Education Equity in Learning Program ($ 278 million), approved on February 5, 2023, aims to reduce regional disparities in learning outcomes, improve the retention of girls in upper-primary education, and strengthen systems for delivering equitable education outcomes.
• De-risking, Inclusion and Value Enhancement of Pastoral Economies in the Horn of Africa ($140 million), approved on June 21, 2022, aims to use a regional implementation approach to enhance pastoralists' access to financial services for drought risk mitigation, include them in the value chains, and facilitate the livestock trade in the Horn of Africa.
• Kenya, Ethiopia, Somalia, Djibouti, and South Sudan - Horn of Africa Groundwater for Resilience ($135 million), approved June 1, 2022, is a regional program in the Horn of Africa that seeks to increase sustainable access and management of groundwater using a Multiphase Programmatic Approach.

Last Updated: Mar 31, 2023

The World Bank has accompanied Kenya on the devolution journey since the start (2013) with almost $2 billion of financing committed and under implementation in formally devolved operations and another $3 billion in operations with some geographic focus in counties.

These investments have:

• Mobilized 848,000 farmers in 45 counties into 35,000 Common Interest Groups and supported their investments for improving productivity, profitability, and climate resilience improving yields in maize, bean, and potato by 23, 16, and 30%, respectively.
• Prepared 25,105 titles benefiting 125,000 people of which 22% were women and accelerated tenure security regularization in 80 informal settlements in 15 urban areas. Based on this experience, the Government of Kenya is developing guidelines for a community-based approach to tenure regularization.
• Created over 26,000 jobs in 27 informal settlements across eight counties worst hit by the COVID-19 movement restrictions.
• Provided over 1.6 million women with access to improved water sources and expanded agricultural land under irrigation from 143,500 hectares in 2010 to 203,508 hectares.
• Expanded access to a basic package of health, nutrition, and reproductive services to over 6.7 million people, and financed the pilot universal health coverage pilots in four counties.
• Catalyzed the establishment of 59 municipalities across 45 counties, prepared 57 urban integrated development plans, 49 urban spatial plans, and provided over 3.5 million people with improved urban infrastructure.
• Supported the implementation of the National Capacity Building Framework and helped counties achieve a County Annual Capacity and Performance Assessment score of 71% exceeding the targeted 55% in September 2021.
• Rolled out participatory budgeting in 20 out of 47 counties, published a braille version of public participation guidelines, supported the development of a devolution hub and an online/repository for devolution related documents.

Last Updated: Mar 31, 2023

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

Last Updated: Mar 31, 2023