Kenya must urgently address corruption and financial mismanagement that are depleting public resources and stalling economic progress, the African Development Bank (AfDB) warns in a new report.
The country loses up to $1.5 billion annually to corruption and illicit financial flows—money that could significantly improve health care, education, and infrastructure. In addition, public spending inefficiencies cost the economy another 5% of GDP, while tax exemptions and incentives drain about $800 million every year.
“Combined, these losses undermine Kenya’s capacity to finance its own development and reduce reliance on external aid,” the AfDB said.
In 2023, Kenya ranked in the bottom third of Transparency International’s Corruption Perception Index, grouped alongside countries like Sri Lanka, Angola, and Uzbekistan.
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The report also flagged state capture—where political elites control legislative and enforcement systems—as a major threat to the rule of law and investor confidence.
“Investors fear biased rulings, delays, and lack of transparency, increasing operational risks and deterring investment,” the bank noted. “Ultimately, the rule of law, upheld by robust law enforcement and an independent judiciary, remains the foundation for sustained economic growth, social equity, and public trust in governance.”
The AfDB projects Kenya’s economy will grow by 5.0% in 2025, up from 4.7% in 2024, driven by agriculture and services, before slightly easing to 4.8% in 2026.
However, the lender warns that rising poverty, high unemployment, and inequality are signs that Kenya’s growth remains far from inclusive.
