Corruption, illegal money flows, and inefficient state spending are costing Kenya up to KSh194 billion a year, according to a recent assessment by the African Development Bank (AfDB).
The Nairobi launch of the African Economic Outlook Kenya Country Focus Report provides insight into how poor oversight, tax breaks, and poor management are reducing Kenya’s revenue base and making it more difficult for the country to fund vital economic sectors.
According to the research, the nation loses over Sh650 billion annually as a result of inefficiencies in public spending, or almost 5% of its GDP. Meanwhile, Sh105 billion is estimated to be lost each year as a result of tax advantages and exemptions.
Due to these ongoing financial leaks, Kenya’s debt issue is getting worse, and the government is now spending more money on interest payments than on basic services like healthcare and education.
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One of the biggest challenges to governance changes, according to the AfDB, is state capture, in which political elites influence laws and enforcement for their own or their party’s benefit. In addition to discouraging both international and domestic investment, this damages the legal system and fosters uncertainty.
“Investors fear biased rulings, delays, and lack of transparency, increasing operational risks and deterring investment,” the report notes. “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.”
Kenya’s Ethics and Anti-Corruption Commission (EACC) puts corruption-related losses at Sh608 billion, or 7.8% of GDP, a rate significantly greater than the AfDB’s $1.5 billion yearly estimate.
Additionally, Kenya continues to fare poorly on Transparency International’s Corruption Perceptions Index. With a score of 32 out of 100, the nation is ranked 121st out of 180 countries in the 2024 index. This is only one point higher than the previous year and still lower than the worldwide (43) and African (33) standards.
Historical data since 1996 indicates a continuous battle with corruption, with Kenya’s highest score of 52 in 1996 and its lowest position of 154 in 2010. A five-year study demonstrates little improvement.
