Kenya recorded solid and sustained economic growth rates during the last two decades, which brought increased incomes, poverty reduction, and improved well-being to its citizens. However, the effects of the COVID-19 pandemic, rising macroeconomic vulnerabilities, and disappointing job creation trends reveal deeper structural constraints in the economy that undermine Kenya’s longer-term growth prospect and potential for promoting jobs and prosperity.

Before the COVID-19 pandemic, Kenya’s robust growth was driven by increased public sector borrowing, which has resulted in debt vulnerabilities and crowded out private investment. The government has committed to fiscal consolidation to restore fiscal space and reduce debt, but revenue underperformance remains a challenge to achieving fiscal targets.

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