#World Bank

Ethiopia's economy is growing fast, but renewed fighting in the north could put that growth at risk, DW reported. AllAfrica and The Eastleigh Voice also carried the report. The International Monetary Fund (IMF) forecasts real growth of 9.2% for the 2025-26 fiscal year. Reconstruction costs and climate-related crop problems add to the strain. "If there is a major conflict [...] the current economic growth will not be sustainable," London-based financial analyst Abdulmenan Mohammed told DW. He said a new war would force the government to spend more on soldiers, equipment and logistics. At the same time, tax revenue from the affected regions could fall. In his view, money meant for infrastructure, education and social services would instead be tied up in military spending. Prices are another worry. The IMF forecasts average inflation of 11.7% for 2025-26. Mohammed said inflation would likely rise if the conflict escalates. More domestic borrowing could squeeze private firms out of the credit market. Military demand for foreign currency could also weaken the birr and make fuel, imported goods and industrial inputs more expensive. Mohammed named agriculture, tourism and hospitality as the most exposed sectors. He…

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.…

Kenya could have saved up to $900 million, about KSh116 billion to KSh117 billion, on building the Mombasa-Nairobi Standard Gauge Railway (SGR), Nairobi Wire reported. The World Bank says the saving would have been possible had Kenya matched Tanzania's cost per kilometre. The finding appears in the lender's November 2026 Kenya Economic Update. The report examines how weak governance affects public spending, growth and jobs. The SGR cost $7.6 million per kilometre, according to the report. Tanzania's Dar es Salaam-Dodoma line cost $5.7 million per kilometre, and the Djibouti-Addis Ababa railway cost $5.3 million. Kenya therefore paid about KSh247 million more per kilometre than Tanzania, a 33% premium. Against the Djibouti-Addis Ababa line, the gap was KSh299 million per kilometre. The World Bank says governance problems account for at least 30% of the potential saving. It points to direct contracting instead of competitive tendering, land speculation, and suspected fraud in land titles, valuations and compensation. The lender warns that weak competition reduces scrutiny of contract prices. "Once contracts are awarded to connected companies, this also raises the likelihood of further collusion and cost markups during project execution," the…

The degradation of more than 96 million acres of Kenya's land is costing the country about $1.3 billion (KSh 167.7 billion) a year, The Star reported, citing the latest government statistics. The losses stem from declining soil health, reduced water supplies and shrinking ecosystem services. Degraded land steadily loses its ability to grow crops, hold water and sustain nature. According to the report, the effects include soil erosion, weaker watersheds and greater exposure to droughts and floods. About 88.6 per cent of Kenya's land is reported to be at risk of degradation. That risk deepens poverty, food insecurity and climate vulnerability. In response, the State Department for Forestry has launched the Kenya Watershed Services Improvement Project (KEWASIP). The World Bank is financing the five-year programme, worth $200 million (KSh 26 billion). It covers five priority landscapes: Marsabit, Marmanet, Nyambene Hills, Chyulu Hills and Shimba Hills. The 12 counties involved are Marsabit, Isiolo, Meru, Tharaka Nithi, Laikipia, Samburu, Baringo, Makueni, Kitui, Garissa, Tana River and Kwale. The project aims to produce 240 million tree seedlings. Of these, 220 million will be indigenous and 20 million agroforestry seedlings. It will also support 10 tree-crop value chains and seeks to rehabilitate 200,000 hectares over five years. The Star reported that…

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…