2.4 million Kenyans risk falling into poverty by end of December 2026 - World Bank

In its latest edition of the Kenya Economic Update, the World Bank said its microsimulation estimates suggest the poverty rate could increase by between two and 4.5 percentage points in 2026.

This translates to nearly 2.5 million more Kenyans living below the poverty line, or unable to spend at least Ksh.387 per day, the equivalent of about three US dollars.

The latest warning by the World Bank that more than two million Kenyans could fall into poverty by the end of 2026 paints a grim picture of the country's economic outlook.

The institution noted that the conflict in the Middle East has intensified inflationary and external pressures.

Transport prices increased by 10 per cent year-on-year in April 2026 and remained elevated at 9.8 per cent in June, while food prices rose by 8.8 per cent in April and 8.6 per cent in June. The sustained increase in the cost of food is expected to worsen Kenya's fight against poverty.

"This conflict could push up the poverty rate in Kenya by a certain number of percentage points, which would translate to one million or even two million more Kenyans falling below the poverty line," said Tom Bundervoet, Lead Economist at the World Bank.

"At the moment, we are fortunate to be on the lower end of those estimates, meaning an increase of about one million people. With the recent developments in the Middle East, however, that remains to be seen." 

To mitigate the risk, the bank is calling for the creation of more formal jobs. It notes that of the roughly 800,000 Kenyans entering the labour market each year, only about 100,000 secure formal employment, with the rest joining the informal sector.

The World Bank argued that the situation could be improved by strengthening governance and creating a more conducive environment for private sector investment.

"While Kenya has maintained growth of about 4.5 per cent for more than a decade, it also has significant population growth, with many young people entering the labour market every year. That means the country needs faster growth, and we believe that is highly achievable," said Qimiao Fan, World Bank Division Director for Kenya, Rwanda, Somalia and Uganda.

"Kenya has demonstrated that it can grow faster. The key is ensuring that growth is inclusive and creates more jobs." 

Although the bank says Kenya's economy remains resilient, it also highlights growing pressure from domestic fiscal weaknesses and external shocks.

The challenges have prompted the World Bank to revise its 2026 growth forecast downward to 4.3 per cent, from the 4.6 per cent recorded in 2025.