The World Bank has lowered Kenya’s 2024 economic growth forecast to 4.7%, down from the earlier projection of 5.0%, citing the impact of floods, anti-government protests, and weak fiscal reforms.
In its latest Kenya Economic Update, the World Bank on Tuesday, December 10, acknowledged the country’s efforts to stabilize the foreign exchange rate, boost the central bank’s hard currency reserves, and curb inflation. Despite these achievements, Kenya remains at high risk of debt distress due to elevated debt servicing costs, unresolved pending bills, and declining government revenues.
Although the revised growth rate falls below last year’s 5.6%, it still surpasses the sub-Saharan Africa average of 3.0%. The World Bank projected that Kenya’s growth could climb to 5.1% in the medium term if fiscal challenges are effectively addressed.
“Revenue shortfalls led to additional spending cuts, while rising financing needs pushed the government to increase domestic borrowing,” the report noted.
Kenya’s economy also faces growing financial risks and social unrest. Violent protests in June forced President William Ruto to abandon proposed tax hikes aimed at raising over $2 billion in additional revenue, dampening investor sentiment. These protests came shortly after widespread flooding in April and May, which disrupted economic activities.
The banking sector is also under pressure, with non-performing loans increasing as borrowers struggle to meet obligations amid high interest rates and slower economic activity.
The World Bank urged the Kenyan government to address structural imbalances that hinder sustained and inclusive growth. The report emphasized that resolving these challenges is essential to creating higher-quality jobs and ensuring long-term economic stability.
This call to action comes as Kenya faces mounting economic hurdles that threaten its development prospects.
