Corruption has emerged as the single largest constraint preventing Kenya from achieving faster and more inclusive economic growth, according to the latest World Bank Kenya Economic Update, released on 4 November 2026.
The report identifies weak governance and corruption as key binding constraints that strain public finances, raise the cost of doing business and limit job creation.
“Governance challenges are increasingly limiting Kenya’s prospects for faster and more broadly shared growth, with corruption as the key binding constraint,” the World Bank stated in the report.
Qimiao Fan, World Bank Division Director for Kenya, Rwanda, Somalia and Uganda, said corruption costs Kenya 2 percent of annual GDP.
“With corruption and collusion in this report, we estimate that corruption and collusion actually widens the fiscal deficit by about two percentage points of GDP,” he said.
The findings show that 39 percent of firms cited corruption as a major or serious constraint to their businesses in 2025, compared to 25 percent in 2013. Corruption increases the cost of basic services such as electricity and logistics, affecting both formal businesses and informal workers.
The Bank’s modelling shows there is much to gain from anti-corruption reforms. If moderate anti-corruption reforms are implemented, GDP could increase by 8.7 percent by 2035. Under a more ambitious reform scenario, GDP could increase by 22.3 percent by 2035. The reforms could also create up to 7.7 million additional quality jobs and help reduce the debt-to-GDP ratio.
“The benefits to the economy from better governance can be large, with many of these reforms not requiring large amounts of extra fiscal spending. Improved control of corruption can lead to better economic growth, employment and living standards,” said Fan.
Chris Kiptoo, Principal Secretary to the National Treasury, acknowledged the findings at the launch, highlighting reforms being implemented by the government. These include digital procurement, conflict-of-interest laws and improvements in public financial management.
The World Bank has increased its growth forecast for Kenya to 4.6 percent in 2026, up from 4.3 percent. It highlighted that, despite strong performance in the first half of the year, Kenya continues to face governance challenges, fiscal pressure and uncertainty surrounding the 2027 elections. Accelerating reforms could help mitigate these challenges.
– By John Murunga
