World Bank: Reforms Kenya Can Undertake to Bolster Its Economic Growth

The World Bank has downgraded Kenya's projected economic growth, further warning of a slowdown in the country's main economic pillars.

As detailed in the Kenya Economic Update report released Tuesday, December 10, Kenya's Gross Domestic Product (GDP) is projected to grow by 4.7 per cent, a drop of 0.9 per cent from the projections issued in 2023.

In 2023, the global financial body had projected Kenya's GDP to grow by 5.6 per cent.

The downgrade was attributed to several factors including economic policies and the floods which were witnessed between March and May.

"The 30th Edition of the Kenya Economic Update notes that while the agricultural and services sectors remain resilient, they are slowing and there are risks of further deceleration," read the report in part.

"In the short term, this slowdown has been driven by various factors such as a tighter macroeconomic policy framework. Another driver has been the subdued business confidence as sentiment in the private sector has been declining, even before the June protests."

Reforms Needed

While Kenya's GDP is expected to pick up in the coming years, the World Bank underpinned that various reforms would be prudent to bolster the country's economic growth.

This includes significantly reducing budget deficits that often require the government to take up loans from the international and domestic markets.

Further, the World Bank called for prudent use of public resources alongside transparency in government expenditures.

 “We remain strongly committed to supporting the people and Government of Kenya to improve the economic environment and create more and better jobs," Qimiao Fan, World Bank Country Director for Kenya, Rwanda, Somalia, and Uganda stated.

"This can be done by addressing corruption and overall governance, tackling the high fiscal vulnerabilities, and improving the business environment."

Women’s Economic Empowerment

The report also highlighted Kenya's stride in creating opportunities for women to participate in the country's economic transformation.

According to the World Bank, Kenya had made significant strides in the area adding that women's participation in economic growth would boost Kenya’s productivity.

The reforms that can help promote the inclusivity of women in economic growth include financial empowerment of girls and women, and ensuring education is accessible for all.

"It is crucial to prioritize enhancing access, quality, and retention of education in these counties, recognizing education's vital role as a safeguard against adverse economic outcomes and a foundation for future empowerment," read the report in part.

"Scholarship programs and cash or in-kind transfer schemes targeted to the most vulnerable girls in disadvantaged counties can increase retention and graduation."