Corruption is holding back Kenya's economy, the World Bank said on Wednesday. The lender said graft discourages private investment and limits job creation. The warning came in its latest Kenya Economic Update, The Eastleigh Voice reported. The report says governance weaknesses are now a major obstacle to faster and more inclusive growth. This comes despite Kenya's relatively resilient economy and its progress on macroeconomic stability.
The report names corruption as the biggest governance constraint. It points to three problems: favours for politically connected businesses, non-competitive public procurement and opaque government contracts. The lender said these weaken competition and slow economic transformation. Corruption also cuts revenue collection, makes public spending less efficient and raises the cost of government borrowing.
The World Bank estimates that corruption and governance weaknesses add two percentage points of GDP to Kenya's annual fiscal deficit. Part of that comes from tax evasion and preferential tax treatment. Another part comes from inefficient infrastructure procurement.
Businesses feel the squeeze too. In 2025, 39% of firms called corruption a major or severe constraint, up from 25% in 2013. Another 36% said they had faced at least one bribery request in the previous year. Medium-sized firms are the most exposed, with 48% expected to offer gifts to get things done. That compares with 36% of small firms and 31% of large ones. Firms exposed to bribery are more than 30% less likely to innovate, the report says. They also post slower growth in sales and labour productivity.
Informal workers make up 83.8% of Kenya's workforce. The report says they can lose up to 20% of their daily earnings to bribes demanded by traffic police and municipal inspectors.
The lender also sees large gains from reform. Moderate anti-corruption reforms could raise GDP by 8.7% by 2035, compared with a scenario in which current weaknesses persist. Stronger reforms could lift GDP by 22.3%. They could also cut the debt-to-GDP ratio by up to 18% compared with the status quo. "Better control of corruption would also translate into sizable impacts of more and better jobs for up to 7.7 million people, and up to 27 per cent greater household consumption," the World Bank said.
To get there, the report calls for sustained political leadership and stronger accountability in public procurement. It also urges more transparent government contracts and digitised administrative processes to reduce the scope for bribery.