World Bank Reveals How Much Corruption Costs Kenya’s Economy

According to the report, corruption alone increases the fiscal deficit by about 2 percent of gross domestic product (GDP). While many Kenyans may find the finding unsurprising, the report offers a stark estimate of corruption’s economic cost.

The report says corruption also raises the cost of basic services, including electricity and logistics, to more than twice the levels seen in other parts of the world. Businesses rank corruption among their top concerns, with 39 percent of firms identifying it as the main constraint on their operations.

Households also bear the burden. The World Bank says Kenya will need to address governance problems to achieve faster economic growth.

“The economic gains from stronger governance can be quite substantial, and the report suggests that 2025, if marked by governance reforms, could raise GDP by almost 9 percent relative to the current path, while more ambitious reforms could raise GDP by more than 20 percent,” said Qimiao Fan, World Bank Country Director for East Africa.

“Control of corruption lags behind our peers, adding costs to public finances, raising the cost of doing business, and burdening firms and informal workers. Second, the payoff from reform is large: modelled anti-corruption reforms could raise GDP by 8.7 percent by 2025,” added Treasury Principal Secretary Chris Kiptoo.

The World Bank estimates that ambitious anti-corruption reforms could help create more than 7.7 million additional, higher-quality jobs across sectors by 2035 while reducing public debt as a share of GDP.

The report links the potential benefits of tackling corruption to stronger economic growth, more jobs, and improved public finances, which could ultimately raise living standards.

“These improvements are achievable, and I want to emphasize that most of these reforms actually do not require additional fiscal spending,” Fan added.

“Citizens are worried about the economic cost of corruption, seeing it as even more critical than the impact on service delivery and how it hampers the improvement of living standards,” said the World Bank’s Lead Governance Specialist.

The bank said it remains optimistic that the Treasury will act on the report’s recommendations and pursue the opportunities and benefits of tackling corruption.