Kenya

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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Kenya’s economy is maintaining relative macroeconomic stability, with inflation under control and international reserves at record high. GDP growth is expected to remain resilient in 2026, despite global economic uncertainties, and it’s estimated to grow by 4.7%. Labor market outcomes remain weak; employment growth declined from 4.4% in 2023 to 3.9% in 2024, while the share of formal jobs remained low at around 15%. Fiscal consolidation remains a major challenge as Kenya is assessed in high risk of debt distress.

Real GDP growth is projected to continue between 4.7–5.0% in the short to medium term. Private consumption will remain a key driver of growth, while private investment is expected to recover gradually.

Unless growth translates more efficiently to higher incomes for the poor, poverty is unlikely to decline rapidly. At the international poverty rate ($3.00 in 2021 PPP), poverty in Kenya is projected to decline by 0.6 percentage point to 41.9% in 2026. Structural reforms that raise the productivity of the private sector, support domestic revenue mobilization, expand access to skills, increase access to capital, and strengthen households’ resilience to climate shocks are key.

The economic outlook is subject to elevated uncertainty. The continuous failure to achieve fiscal consolidation targets could exacerbate Kenya’s debt vulnerabilities and undermine private sector-led growth. Climate hazards could resume inflationary pressures and food insecurity, affecting growth. Lower than anticipated global growth could undercut growth in tourism, exports, and remittances. Geopolitical tensions and elevated commodity prices would further tighten financial conditions, weaken external balances, and impact inflation.

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Portfolios:

International Development Association (IDA) and  International Bank for Reconstruction and Development (IBRD)  (March 22, 2026):

• $ 7.03 billion in 32 active projects, 25 national, and 7 regional.

Shares of investments:

• Water: 13%
• Finance, Competitiveness and Innovation: 12%
• Education: 11%
• Transport: 11%
• Energy and Extractives: 10%
• Urban, Resilience and Land: 7%
• Agriculture and Food: 7%
• Governance: 6%
• Digital Development: 6%
• Social Policy: 5%
• Health, Nutrition and Population: 5%

Other investments include environment, poverty, social sustainability and inclusion.

International Finance Corporation’s (IFC) (as of 2/28/26):

$1.3 billion is led by financial institutions, followed by manufacturing, agribusiness, services, and infrastructure. A $63.7 million advisory portfolio spans 28 projects, supporting private investment, MSME and climate finance, and capital market development. Kenya serves as IFC’s East Africa hub for finance, innovation, logistics, healthcare, and technology, and hosts IFC’s global gender and GBV hub. The country is also a platform for pioneering private‑sector solutions in fragile and refugee‑hosting contexts, including the Kakuma Kalobeyei Challenge Fund, which mobilizes investment to create jobs, build resilience, and drive sustainable growth.

Multilateral Investment Guarantee Agency (MIGA) (as of 2/28/26):

The WBG Guarantee Platform has an active exposure of $661.5 million (MIGA – $559.9 million, IDA – $101.6 million), across 13 projects spanning energy, finance, fintech, road infrastructure, tourism, clean cooking, and manufacturing sectors. MIGA has also supported the Trade and Development Bank, of which Kenya is a member, mobilizing $747 million in commercial financing to expand trade finance across member countries. Under the Platform, MIGA will deepen collaboration across the group to de-risk foreign investment and focus on projects that drive economic growth and job creation, scale impact, and mobilize private capital.

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

The WBG 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 the United Kingdom’s Foreign, Commonwealth & Development Office, known as FCDO.

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Electrification programs have boosted access from 25%-75%, connecting 4.6 million households and benefiting 18 million people. Geothermal energy now makes up 45% of Kenya’s energy mix, with the WBG supporting 530MW of the 950MW capacity. Kenya is a priority country under the WBG's Mission 300.

Agricultural Value Chain Development, Agricultural & Rural Inclusive Growth and the Climate Smart Agriculture results include:

• National farmer registry of over 6 million, aiding the government's e-subsidy program
• Digitization enhancing 440 savings cooperatives and 558 Farmer Producer Organizations, improving credit access and market linkages
• 528,000 smallholder farmers advisory services to adopt climate-smart, market-oriented farming
• 326,000 farmers adopting tech and practices that enhance productivity
• Sustainable management practices cover 84,930 hectares of land and 2.3 million livestock

Transforming Health Systems for Universal Care improved use of primary healthcare services and quality of care: 15 million received essential health services, births attended by skilled personnel–share increased from 57%-75% (7.7 million births), immunization of 7.6 million children.

Secondary Education Quality Improvement and Primary Education Equity in Learning:

• grants to 5,000 schools for improvements
• trained 30,000 teachers
• helped 17,000 disadvantaged girls complete secondary education
• school meals to 2.6 million pupils.

Water Security & Climate Resilience

• reached 158,791 (24% above target) protecting from flooding, improving irrigation access, and connecting to water distribution network. Water Resources Authority was established and Kenya's Water Act and sector regulations were adopted.

2nd Informal Settlements Improvement improved urban living conditions for 215,000, constructed 74 km of stormwater drains, installed 1,768 streetlights, improved 45.7 km of roads.15,829 vulnerable people—54% women—were IDed and linked to social safety net programs (exceeding target of 10,000).

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The Kenya Analytical Program on Forced Displacement (KAP-FD) is a multi-year initiative generating comprehensive socioeconomic panel data on refugee and host communities in Kenya. This interactive dashboard features research from the World Bank, UC Berkeley, and UNHCR, showcasing survey data (2018-2023) on education, employment, food security, health, and household welfare. Users can visualize indicators by location and population type, download data and charts, and access evidence-based insights to inform policies and programs that enhance livelihoods for both refugees and host communities across camp and urban settings.

Open Dashboard

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