World Bank approves Ksh.161.8 billion loan for Kenya

Of the amount, Ksh.97.1 billion (USD 750 million) will be financed as a Development Policy Operation (DPO) to create jobs, attract private investment, and improve livelihoods.

In a statement on Monday, the lender said that the DPO is financed by a Ksh.44 billion (USD 340 million) loan from the International Bank for Reconstruction and Development (IBRD) and another Ksh.53 billion (USD 410 million) from the International Development Association (IDA).

IBRD provides financial products and policy advice to help countries reduce poverty, while IDA provides concessional grants and loans to low-income countries.

The support program will focus on strengthening governance and preventing corruption, as the World Bank expects Kenya to introduce stronger penalties and improved disclosure requirements.

Kenya will also receive an additional Ksh.64.75 billion (USD 500 million) as a Sustainability Linked Loan (SLL), which will link the DPO's borrowing cost to green targets — deforestation reduction & rural energy access.

Supported by a Sustainability Linked Framework under the DPO, the SLL will give Kenya more flexibility on the use of proceeds compared to green bonds, while binding financing costs to performance.

This will mean that if Kenya hits its green goals, the loan gets cheaper. If it fails, the loan gets pricier.

World Bank reckons that the DPO was granted to Kenya due to its acute fiscal and development challenges, warranted by an elevated public debt, a wide fiscal deficit, and a high risk of debt distress.

World Bank Division Director for Kenya Qimiao Fan said that it will also help establish a suitable business-enabling environment to support inclusive growth and for the private sector to create jobs.

"By supporting reforms to address conflicts 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," he said.

This comes as Kenya has enacted a Conflict-of-Interest law under the Conflict-of-Interest Regulations 2026 that provides for enhancing accountability and upholding integrity among public officers in the execution of their duties.

World Bank has insisted on the need for Kenya to observe the single Bank account policy for all Ministries to reduce idle cash in fragmented accounts, limit costly overdrafts, and reduce the risk of leakage and misuse of public funds.

The program supports the use of Kenya's Enhanced Single Registry as the main platform for identifying beneficiaries, helping ensure support reaches the poorest households while reducing duplication.