The World Bank has set more than 10 conditions to unlock a new round of funding for Kenya, including the disclosure of the personal interests of public officials and the publication of regulations to restrict unsolicited public-private partnership (PPP) deals, such as the flopped proposal by the Adani Group to upgrade the Jomo Kenyatta International Airport (JKIA).
Kenya has access to a third instalment of funding under the World Bank’s Development Policy Operations (DPO) programme to help plug its budget deficit if it meets the multiple conditions. The DPO is a fast-disbursing loan facility for developing countries that provides direct budget support tied to the implementation of key policy and institutional reforms, including fiscal consolidation and climate action.
The World Bank approved Sh97 billion ($750 million) in financing to Kenya last week, the second of three operations, after initially disbursing Sh155 billion ($1.2 billion) in June 2024.
Disclosure push
To secure the next disbursement, Kenya faces a series of demands from the World Bank. For example, it will have to enact the proposed Whistleblower Protection Act, which seeks to ensure fair competition, value for money and increase the detection of misused funds.
The adoption of the law is expected to anchor declarations of personal interests by public officials, reviewed and verified by the responsible commissions, from a baseline of zero to 85 percent by 2028.
Kenya is also expected to publish PPP regulations to curb unsolicited project proposals, commonly known as Privately Initiated Proposals (PIPs). A PIP is an unsolicited technical and financial proposal submitted by a private entity to the government to develop an infrastructure or public service project.
The World Bank previously cautioned Kenya against unsolicited PPP deals following the cancellation of proposed Sh2.7 billion contracts linked to Adani Group companies for the JKIA upgrade.
The multilateral has expressed concern that PIP deals could undermine public confidence in the search for private investors to build infrastructure and trigger backlash, including street protests.
The World Bank has urged Kenya to pursue competitively sourced PPPs amid concerns that unsolicited deals are shrouded in secrecy, leading critics to argue that they do not offer taxpayers value for money.
“I think with PPPs, it’s very clear. International good practice leans on competitive tendering, and I think the same applies to Kenya,” Marek Amush, the lead economist for the World Bank’s economic policy division in Kenya, said previously.
“Going forward, the country’s success in PPP projects will depend on putting in place good governance, oversight, planning and accountability… including strengthening practices around unsolicited project proposals to foster predictability and confidence in PPP project development,” the World Bank said in its December 2024 Kenya Economic Update report.
The World Bank, however, views PPPs as key to helping Kenya close its infrastructure gap.
Kenya must also meet multiple other conditions to continue accessing financing under the World Bank’s DPO programme, including amending the Companies Act, 2015 to align the beneficial ownership registry with updated Financial Action Task Force (FATF) standards.
The multilateral also requires changes to the Public Finance Management (PFM) Act to ensure that any budget adjustments during implementation are strictly aligned with the fiscal aggregates approved by Parliament.
Kenya must also consolidate human resources and payroll data for all ministries, departments and agencies, counties, non-commercial State corporations, commissions and independent offices.
Reform agenda
The first set of conditions for the third DPO disbursement seeks to promote the efficiency, transparency and equity of public finance, while the second aims to foster more competitive and inclusive product and labour markets.
The final set of conditions focuses on strengthening climate action and includes the enactment of the Railways Bill, as well as regulations for the urban transport policy and the e-mobility policy.
Under this pillar, Kenya must also integrate green building standards into the Kenya Affordable Housing Policy and adopt the Green Building Standard, which establishes mandatory minimum performance requirements for new buildings and major renovations.
The country had to meet a related set of conditions to unlock the latest World Bank funding.
Kenya’s efforts to meet three pending conditions at the eleventh hour helped it secure a Sh97 billion ($750 million) World Bank loan last week, ending a freeze that had been in place for nearly two years.
The World Bank Group approved the funding on Tuesday as part of the second Kenya Fiscal Sustainability and Resilience Growth Development Policy Operation (DPO), which supports reforms aimed at making public resources more transparent, efficient and equitable while reducing corruption.
Last-minute reforms
The country met at least two of the three pending conditions in the past month, including passing amendments to the Forest Conservation and Management Act on May 29 and publishing the sovereign sustainability-linked financing framework in late June.
The State Department for Social Protection also submitted the Social Protection (General) Regulations, 2026, to Parliament at the end of April — the remaining condition required to unlock the funding.
On April 23, the World Bank Group identified the three reforms as outstanding as it maintained the freeze on the Sh97 billion ($750 million) loan, which had initially been expected in the 2024/25 financial year.
The approved financing comprises a Sh44 billion ($340 million) loan from the International Bank for Reconstruction and Development (IBRD) and Sh53 billion ($410 million) in highly concessional financing from the International Development Association (IDA), part of the World Bank Group.
Kenya risked missing out on the funding for a third consecutive year had it failed to meet the three prior actions.
The National Treasury published the delayed sovereign sustainability-linked financing framework in the final week of June, aligning cheaper borrowing costs with commitments to reduce forest cover losses and improve rural electrification.
The framework helped clear the final hurdle for the World Bank financing while laying the groundwork for the issuance of sustainability-linked bonds (SLBs) and loans.
Kenya had initially planned to raise Sh64.7 billion ($500 million) from its debut sustainability-linked bond (SLB) in the 2025/26 financial year.
The World Bank will help underwrite the issuance by providing a guarantee of a similar amount for the expected sustainability-linked loan (SLL), which will take the form of a syndicated commercial loan.
Forest reforms
President William Ruto signed amendments to the Forest Conservation and Management Act, 2016 on May 29, strengthening Kenya’s forest governance and climate action.
Among the landmark reforms is the establishment of the Directorate of Forest Regulation, Kenya’s first dedicated forest regulator responsible for developing national standards, operational guidelines and compliance mechanisms within the sector.
The law also enhances the role of the Kenya Forest Service (KFS) in ecosystem management, technical support and collaboration with county governments and local communities.
Additionally, it promotes agroforestry and off-reserve tree growing as part of efforts to achieve the national target of growing 15 billion trees by 2032.
Funding returns
The fresh disbursement marks the return of multilateral funding after both the World Bank and the International Monetary Fund (IMF) failed to disburse funds to Nairobi in 2025.
The World Bank froze the same disbursement in the 2024/25 financial year after Kenya failed to pass seven laws and four policy reforms.
Kenya has since last year missed out on IMF and World Bank funding and has largely relied on domestic borrowing to plug its fiscal deficit.
The World Bank funding will be timely in helping Kenya bridge its fiscal deficit as the country continues discussions with the IMF on the scope of a funded programme for the 2026/27 budget cycle.
The World Bank’s financing flows directly into the budget to support government expenditure, including the payment of civil servants’ salaries.
The funding will also be crucial as Kenya deals with the effects of the US-Israel war on Iran, which has weakened macroeconomic conditions, including growth and revenue projections.
The World Bank expects the financing to help reduce revenue leakage and generate savings for the Exchequer.
“By supporting reforms to address conflict of interest, strengthen procurement systems, improve public financial management, and expand social protection, this operation will help Kenya reduce leakage, generate fiscal savings and ensure that public resources deliver better results and reach the people who need them most,” said Qimiao Fan, World Bank Division Director for Kenya.
“It is also helping establish the foundational business-enabling environment that is necessary to support higher and more inclusive growth and for the private sector to create jobs.”
