Foreign direct investment into Kenya rose 170.5 per cent to a record $2.74 billion, or Sh354 billion, in the 12 months to September 2026. The figures come from the World Bank's latest economic update for Kenya, the Star reported. The lender credited sustained investor confidence. It said this supported economic growth of 5.2 per cent, up from 4.9 per cent a year earlier.
Portfolio inflows rose 54.6 per cent over the same period. The World Bank said that stronger non-resident investment in government and corporate bonds drove most of the rise, along with state privatisation proceeds. It said the stronger capital inflows helped shield Kenya from higher fuel import costs and disruption linked to the Middle East conflict.
Industry and services did most of the work, offsetting slower growth in agriculture. Construction grew 6.3 per cent in the first half of 2026. Industrial growth sped up to 4.9 per cent and manufacturing to 3.3 per cent. Accommodation and restaurant services grew 11.1 per cent, while information and communication expanded 6.1 per cent. Private-sector credit growth more than doubled to 10.6 per cent in September 2026, from five per cent a year earlier.
The Nairobi Securities Exchange also had a strong year. Market capitalisation reached a record Sh4.17 trillion, up from Sh2.68 trillion a year earlier. The NSE 20 Share Index ended August at 4,325.6 points. It had crossed 4,000 in July for the first time in nearly a decade. The report linked the rally to higher bank valuations and better macroeconomic stability. It also cited the partial privatisation and listing of Kenya Pipeline Company.
The report flagged corruption as a major brake on private investment. In 2025, 39 per cent of businesses called corruption a major or severe obstacle, up from 25 per cent in 2013. Some 36 per cent of firms had faced at least one bribe request in the previous year. Firms exposed to bribery were more than 30 per cent less likely to innovate. The World Bank estimates that bribe demands from traffic police and municipal inspectors can eat up to 20 per cent of informal workers' daily earnings.
According to the report, stronger anti-corruption reforms could lift Kenya's GDP by 8.7 per cent by 2035. More ambitious reforms could raise it by 22.3 per cent. That could mean better jobs for up to 7.7 million people. The bank urged the government to tighten procurement oversight and fully roll out electronic procurement. It also called for more transparent state-owned firms and lower electricity and logistics costs.
Public finances remain under strain. The fiscal deficit widened to 6.8 per cent of GDP in 2025-26, against a target of 4.7 per cent. Public debt stood at 69.9 per cent of GDP at the end of June 2026. The World Bank warned that high debt-servicing costs and heavy domestic borrowing could limit development spending and crowd out private lending. Inflation rose to 7.3 per cent in October 2026, from 4.6 per cent a year earlier.