World Bank: fighting graft could lift Kenya’s GDP by up to 22.3% by 2035
Corruption widens Kenya's fiscal deficit by about 2% of GDP a year, the World Bank said in its latest Kenya Economic Update, released in Nairobi on Wednesday. The lender also raised its 2026 growth forecast to 4.6% from 4.3%.
Corruption and collusion are holding back Kenya's economy, the World Bank said in its latest Kenya Economic Update. The global lender launched the report in Nairobi on Wednesday, The Star reported. It argues that governance reforms offer a relatively low-cost way to speed up growth. "Addressing governance constraints represents a significant and low-cost opportunity for accelerating growth as needed to achieve upper-middle income status," the report says. According to the bank, graft widens the fiscal deficit by about two percentage points of GDP every year. That creates extra borrowing needs that pile up over time. Corruption risks also add a "governance premium" to sovereign debt, the bank said, because investors demand higher returns to cover the risk. Higher borrowing costs then raise interest payments and squeeze development spending. The bank's country overview puts public debt at about 70.6% of GDP. Interest payments absorb roughly a third of government revenue. The bank says the gains from reform could be large. Moderate anti-corruption reforms could make GDP 8.7% higher by 2035 than if current weaknesses persist. Under stronger reforms, GDP could be 22.3% higher, and the debt-to-GDP ratio could fall by up to 18% against the baseline. Better corruption controls could also create more and better jobs for up to 7.7 million people. They could raise household consumption by as much as 27%. The bank stressed that these are long-term gains, not annual growth rates.…
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