Corruption is costing Kenya approximately KSh370 billion every year, with the World Bank warning that weak governance is undermining economic growth, increasing government borrowing and making life more expensive for ordinary citizens.

In its latest November 2026 Kenya Economic Update, released on Wednesday, November 4, the global lender ranked Kenya among the most corrupt countries compared with its peers in the lower-middle-income category.

According to the World Bank, governance weaknesses are adding approximately KSh370 billion, equivalent to US$2.8 billion, to Kenya's fiscal deficit annually.

The amount represents approximately 2 per cent of the country's Gross Domestic Product (GDP), with the lender describing its estimate as conservative.

The losses arise from several challenges, including lost tax revenue, inefficient public spending, increased borrowing costs and corruption in government procurement.

Citizen Digital, in its November 4 coverage of the economic assessment, reported that corruption remains one of the biggest obstacles preventing Kenya from achieving its full economic potential.

The publication highlighted the World Bank's findings that corruption increases the cost of essential services, including electricity and logistics, while placing additional pressure on public finances.

The Standard also reported on November 4 that corruption is costing Kenya billions of shillings through lost revenue, inflated business expenses and reduced earnings for workers.

The World Bank further established that recovering just 10 per cent of losses associated with procurement inefficiencies could save the country approximately KSh120 billion annually.

The findings also expose the growing difficulties facing Kenyan businesses.

A World Bank survey established that 39 per cent of Kenyan firms considered corruption a major or severe obstacle to doing business in 2025, compared with 25 per cent in 2013.

Additionally, 36 per cent of businesses reported having experienced at least one bribery request during the preceding year.

KBC, in its November 4 report, highlighted the extent of bribery affecting businesses, revealing that approximately 22 per cent of firms were expected to pay bribes when dealing with tax officials.

The broadcaster also reported that businesses faced bribery demands when seeking electricity connections and construction permits.

People Daily provided further insight into the problem, reporting that 48.2 per cent of medium-sized businesses in Kenya were expected to offer gifts to public officials to obtain government services.

The figure was significantly higher than the 19 per cent average recorded among medium-sized businesses across Sub-Saharan Africa.

The World Bank also raised concerns about the high cost of electricity in Kenya, linking part of the problem to weaknesses in the procurement of power purchase agreements.

A 2021 assessment cited by the lender found that only 24 per cent of 42 examined power purchase agreements were known to have undergone a competitive procurement process.

Infrastructure spending also came under scrutiny, with the World Bank observing that the Nairobi-Mombasa railway cost approximately one-third more per kilometre than a comparable railway project in neighbouring Tanzania.

The Star had previously reported on the World Bank's concerns over corruption, excessive levies and regulatory challenges affecting private investment in Kenya.

In its October 5 coverage, the publication highlighted how multiple national and county-level charges, frequent tax changes and cumbersome administrative procedures were increasing the cost of doing business.

Despite the worrying findings, the World Bank believes Kenya has an opportunity to transform its economic prospects through stronger governance and anti-corruption reforms.

Its economic modelling suggests that moderate governance reforms could increase Kenya's GDP by approximately 8.7 per cent by 2035 compared with a scenario without the reforms.

More ambitious reforms could raise GDP by more than 20 per cent while supporting the creation of approximately 7.7 million additional and better-quality jobs.

Verena Fritz, the World Bank's lead governance expert for Kenya, told reporters that the country had the potential to become a regional economic leader if it addressed its governance challenges.

Among the measures recommended by the lender are stronger regulations addressing conflicts of interest involving politicians, the introduction of an electronic public procurement system and the passage of a Whistleblower Protection Bill that has faced prolonged delays.

The World Bank has also maintained pressure on the government to strengthen accountability and improve the management of public resources.

Meanwhile, the lender raised its 2026 economic growth forecast for Kenya to 4.6 per cent, up from its previous projection of 4.3 per cent, following stronger-than-expected economic performance during the first half of the year.

The latest assessment presents a significant challenge for the government as it seeks to attract investors, create employment and manage public debt while addressing concerns over corruption.

For ordinary Kenyans, the findings raise an important question about how much more could be achieved in infrastructure, healthcare, education and job creation if billions of shillings lost through corruption and inefficient public spending were recovered.