The World Bank has warned that Kenya could increase its gross domestic product (GDP) by more than a fifth within a decade if the government implements stronger anti-corruption reforms, potentially improving the country's economic performance and reducing public debt.
In a report on Wednesday, the lender said Kenya could record substantial economic and social gains by addressing corruption, strengthening public institutions and improving governance.
The projections indicate that implementing moderate anti-corruption reforms could increase Kenya's GDP by 8.7% by 2035 compared with a scenario in which no reforms are introduced.
However, the economic gains could be significantly higher if the government adopts stronger measures, with GDP potentially rising by 22.3% over the same period.
"Modeling suggests that the potential economic and social payoffs from anti-corruption reforms are substantial — and the required improvements are reachable," the World Bank said.
"By 2035, implementation of moderate anti-corruption reforms could increase GDP by 8.7% relative to a non-reform scenario, rising to 22.3% with stronger measures."
The lender also estimated that corruption and collusion cost Kenya approximately 2% of GDP annually by increasing government deficits and creating additional borrowing requirements.
The additional borrowing needs accumulate over time, putting further pressure on public finances as the government struggles to meet its spending obligations and debt repayments.
In its latest Kenya Economic Update, the World Bank identified corruption as a major constraint to faster and more inclusive economic growth, warning that governance weaknesses were limiting the country's development prospects.
"Governance challenges are increasingly limiting Kenya's prospects for faster and more broadly shared growth, with corruption as the key binding constraint," the lender said.
The World Bank also warned that corruption increases the cost of government borrowing by creating a governance-related risk premium, making it more expensive for Kenya to access financing.
This comes as the country continues to grapple with elevated public debt, high interest payments and repeated challenges in meeting fiscal deficit targets.
The lender revised its economic growth forecast for Kenya upwards to 4.6% in 2026, from an earlier projection of 4.3%, following stronger-than-expected economic performance during the first half of the year.
The World Bank attributed the improved outlook to stronger activity in the industrial and services sectors, which offset slower growth in agriculture. It projects that the economy will expand by 4.8 per cent in 2028.
However, the lender cautioned that weaknesses in public financial management, rising debt, and uncertainty ahead of the August 2027 General Election could undermine the benefits of economic growth.
The World Bank's concerns come as Kenya continues to face significant fiscal pressures, with public debt standing at approximately 69.9% of GDP at the end of June 2026.
Interest payments alone accounted for 5.8% of GDP, limiting the government's ability to allocate resources to infrastructure, essential services and other development priorities.
Domestic borrowing accounted for 56.2% of the country's total debt, raising concerns that government borrowing could crowd out private sector access to credit.
The lender also identified corruption as a major obstacle for businesses, with 39% of surveyed firms identifying it as a significant constraint to their operations.
It warned that governance weaknesses increase the cost of essential services, including electricity and logistics, making it more expensive for businesses to operate and expand.
The report also highlighted employment challenges, noting that nearly 84% of jobs in Kenya are informal, while between 120,000 and 150,000 formal-sector jobs are created annually against nearly one million young people entering the labour market.
To address the challenges, the government has been implementing reforms targeting public procurement, financial management and conflicts of interest.
Among the measures is the rollout of an electronic government procurement platform intended to improve transparency, reduce opportunities for corruption and minimise wastage of public resources.
Kenya has also enacted a Conflict of Interest law and gazetted regulations establishing rules to prevent public officials from using their positions for private gain.
World Bank has previously supported Kenya's governance and accountability reforms through a $750 million development policy operation announced in June 2026. The financing includes $340 million from the International Bank for Reconstruction and Development and $410 million in concessional funding from the International Development Association.
The lender maintains that stronger institutions, transparent public spending and effective enforcement of anti-corruption measures will be critical to unlocking Kenya's economic potential.
Its latest projections suggest that tackling corruption could deliver substantial gains in economic growth, employment and public debt sustainability by 2035.