Overview

  • Kenya has made significant political, structural and economic reforms that have largely driven sustained economic growth, social development and political gains over the past decade. However, its key development challenges still include poverty, inequality, climate change, continued weak private sector investment and the vulnerability of the economy to internal and external shocks.

    Kenya’s recent political reform stemmed from the passage of a new constitution in 2010 that introduced a bicameral legislative house, devolved county government, a constitutionally tenured Judiciary and electoral body. The first election was in 2013. The August 8, 2017 presidential elections were nullified on September 1, 2017 by the Supreme Court, and a new presidential election was held on October 17, 2017. Kenyan President Uhuru Kenyatta was sworn in for a second and final five-year term on November 28, 2017.

    Devolution remains the biggest gain from the August 2010 constitution, which ushered in a new political and economic governance system. It is transformative and has promoted greater investments at the grassroots, strengthened accountability and public service delivery at local levels.

    While economic activity faltered following the 2008 global economic recession, growth resumed in the last five years reaching 5.7% in 2019 placing Kenya as one of the fastest growing economies in Sub-Saharan Africa. The recent economic expansion has been boosted by a stable macroeconomic environment, positive investor confidence and a resilient services sector.

    Looking ahead, medium-term gross domestic product growth (GDP) is expected to rise to 5.9% in 2020 and 6.0% in 2020 underpinned by private consumption, a pick-up in industrial activity and still strong performance in the services sector. Inflation is expected to remain within the government’s target range while the current account deficit is projected to remain manageable. Growth will also be driven by ongoing key investment to support implementation of the Big 4 development agenda and improved business sentiment. Growth could have been stronger in the absence of interest rate caps that continue to derail recovery in private credit growth.

    In addition to aligning fostering economic development through the country’s development agenda to the long-term development plan; Vision 2030, the President in December outlined the “Big Four” development priority areas for his final term as President. The Big Four will prioritize manufacturing, universal healthcare, affordable housing and food security. Social Development

    Kenya has 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. While the healthcare system has faced challenges recently, 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 has the potential to be one of Africa’s success stories from its growing youthful population, a dynamic private sector, highly skilled workforce, improved infrastructure, a new constitution, and its pivotal role in East Africa. Addressing the challenges of poverty, inequality, governance, the skills gap between market requirements and the education curriculum, climate change, 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: Sep 30, 2019

  • The World Bank Group’s (WBG) strategy for Kenya is to support the government’s strategy of ending 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), The International Bank for Reconstruction and Development (IBRD), International Finance Corporation (IFC), and Multilateral Investment Guarantee Agency (MIGA).

    The current IDA portfolio is approximately $7.38 billion in 38 projects: 30 national ($6.15 billion) and 8 regional ($1.23 billion) projects. The biggest investments are in infrastructure followed by the social sectors. Others include; agriculture; devolution; governance; justice, law and order; disaster risk management; forced displacements; private sector development; and statistical capacity building.

    Recently approved projects include:

    • Inclusive Growth and Fiscal Management Development Policy Financing ($750.0 million) approved in May 2019. It aims to: crowd in private investment and financing for affordable housing; enhance farmer incomes and food security; create fiscal space to allow the government to invest in key development programs; and crowd in private investment and leverage digitization to support the government’s inclusive growth agenda.
    • Kenya Affordable Housing Finance Project ($250 million) approved in April 2019. Its objective is to expand access to affordable housing finance to targeted beneficiaries. Notably, the project will support to the establishment, capitalization and operationalization of the Kenya Mortgage Refinance Company which will contribute to developing the mortgage and housing finance markets.
    • Kenya Social and Economic Inclusion Project ($250.0 million), which will help strengthen delivery systems for enhanced access to social and economic inclusion services and shock-responsive safety nets for poor and vulnerable households.

    IFC’s committed investment portfolio in Kenya stands at $884 million as of June 30, 2019. 67.3% of IFC’s portfolio is attributable to the financial sector, followed by manufacturing, agribusiness and services (20%) and infrastructure (12.7%). Kenya remains critical to IFC’s operations in Africa because this is IFC’s fourth largest country portfolio in Sub Saharan Africa (10% of total). IFC remains committed to scaling up Investment and Advisory support especially in the current fiscal climate and within the context of the President Kenyatta’s Big Four focus areas – Manufacturing, Affordable Housing, Universal Healthcare and Food Security. On the advisory side, total funds under management amount to approximately $45.6 million as of June 30th, 2019, supporting work across all four advisory business lines - access to finance, sustainable business, public-private partnerships (PPPs) and investment climate.

    Multilateral Investment Guarantee Agency (MIGA) has a gross exposure of $148 million in the portfolio including three projects to support private investments in the energy sector. The pipeline includes one large project (to cost roughly $1 billion) in the transport sector and is currently underwriting two projects in the energy sector. MIGA is engaged with the PPP Unit within the Ministry of Finance to work upstream on high priority projects, particularly in the infrastructure space as well as university housing. 

    Last Updated: Sep 30, 2019

  • Under the Kenya Informal Settlements Improvement Project, 98.2km of settlement access roads have been constructed; 84.549 kilometers of footpaths; 107.535 kilometers of drainage canals; 63.048km of sewer pipeline and 4,788 sewer connections; 110km of water pipeline and 7,306 water connections; 21 number ablution blocks and 134 30-meter-high mast security lighting. In addition, a total of 1,361,320 people have benefitted from tenure (127,200) and infrastructure and service delivery (1, 234,120).

    The National Safety Net Program (NSNP) is reaching nearly five million people in over one million households, an increase from 1.65 million people in 2013, and will be scaling up to an additional 50,000 households in the next two years in the most drought affected areas of the north and northeast region.

    A $1 billion investment in International Development Association (IDA) financing over 13 years has have realized extensive roads rehabilitation, triggered major institutional and policy reforms that have transformed Kenya’s roads and the aviation sector.

    • 162,000 kilometers of Kenya’s roads are documented since 2005.
    • The investment also led to creation of transport agencies and strengthened others namely: the Kenya National Highways Authority, the Kenya Urban Roads Authority, the Kenya Rural Roads Authority and the Kenya Civil Aviation Authority
    • Modernization and expansion projects in the aviation sector has:
      • Boosted economic growth and has created thousands of jobs.
      • Promoted regional trade and tourism
      • Jomo Kenyatta International Airport is ready to handle non-stop flights to and from the United States for the first time and its passenger capacity has increased to 7.5 million from 2.5 million

    Last Updated: Sep 30, 2019

  • 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, Frances Agence Française de Développement, United Kingdom Department for International Development, the German Development Bank, the Japan International Cooperation Agency, and China.

    Last Updated: Sep 30, 2019

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LENDING

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

*Amounts include IBRD and IDA commitments



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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
For general information and inquiries
Keziah Muthembwa
Communications Officer
+254-20-293-6000
kmuthembwa@worldbank.org
For project-related issues and complaints
kenyaalert@worldbank.org