World Bank’s 11 Loan Conditions for Kenya

Kenya must satisfy more than 10 policy and governance conditions set by the World Bank before it can access the final installment of a multiyear budget support program, including requiring public officials to disclose personal interests and tightening rules governing unsolicited public-private partnership proposals that have drawn public scrutiny.

The conditions are attached to the third tranche of the World Bank’s Development Policy Operations (DPO), a fast-disbursing budget support facility that provides financing in exchange for policy and institutional reforms. The lending program is intended to support fiscal consolidation, strengthen governance and advance climate-related reforms.

The World Bank last week approved $750 million in financing for Kenya, the second of three planned operations, after disbursing $1.2 billion in June 2024. To qualify for the final disbursement, the government must implement a broad package of legislative and regulatory reforms spanning public finance, procurement, governance, labor markets and climate policy.

Here are the conditions: 

1. Enact the Whistleblower Protection Act and Verify Officials’ Conflict of Interest Declarations

The World Bank wants Kenya to pass the proposed Whistleblower Protection Act to strengthen anti-corruption enforcement and improve oversight of public spending. The law is expected to protect individuals who report fraud and abuse while providing the legal foundation for verifying conflict of interest declarations by public officials.

The bank has set a measurable target, requiring the share of verified declarations of personal interests by public officials to rise from 0 percent to 85 percent by 2028. That represents one of the most ambitious governance benchmarks in the reform program.

The requirement reflects concerns that Kenya’s existing asset declaration framework has focused largely on filing forms rather than independently verifying whether officials have undisclosed business interests that could influence procurement and public spending decisions.

2. End the Era of Unsolicited PPP Deals

The World Bank is requiring Kenya to publish regulations restricting Privately Initiated Proposals (PIPs), unsolicited infrastructure proposals submitted directly by private companies.

The reform follows the collapse of the proposed $2.1 billion Adani Group agreements involving the expansion of Jomo Kenyatta International Airport and electricity transmission infrastructure. Those deals sparked public protests and renewed scrutiny over how large infrastructure concessions are awarded.

For years, the World Bank has argued that unsolicited proposals reduce competition because governments negotiate with a single investor rather than allowing rival firms to bid for the same project. Competitive tenders typically produce lower costs, greater transparency and better value for taxpayers.

“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 World Bank’s lead economist for 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 of 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.

The reform does not discourage private investment. Instead, it seeks to ensure that future projects are awarded through open competition rather than direct negotiations.

3. Tighten Corporate Ownership Transparency

Kenya must amend the Companies Act, 2015, to align its beneficial ownership registry with updated Financial Action Task Force (FATF) standards.

Beneficial ownership registers identify the natural persons who ultimately own or control companies, even when ownership is hidden through shell firms or nominee shareholders.

The World Bank views transparent ownership records as critical for combating money laundering, tax evasion, procurement fraud and illicit financial flows. The reform also improves Kenya’s standing with international investors and financial institutions that increasingly require stronger anti-money laundering safeguards.

4. Stop Budget Changes That Bypass Parliament

The government must amend the Public Finance Management Act so that budget revisions made during the financial year remain within the fiscal limits approved by Parliament.

The World Bank believes frequent reallocations weaken fiscal discipline and reduce parliamentary oversight over public spending.

The reform is intended to ensure that supplementary budgets cannot substantially alter government priorities without legislative approval, making expenditure more predictable and transparent.

5. Create a Single Government Payroll Database

Kenya must consolidate payroll and human resource records across ministries, counties, commissions, constitutional offices, state corporations and government agencies.

The reform targets one of the government’s longest-running governance problems: fragmented payroll systems that make it difficult to identify duplicate employees, ghost workers and unauthorized salary payments.

Integrating payroll information allows the Treasury to monitor staffing costs across the public sector while improving expenditure control.

6. Improve Public Finance Transparency

The first pillar of the World Bank’s Development Policy Operation focuses on making Kenya’s public finances more efficient, transparent and equitable by strengthening how government revenues are collected, managed and spent. The reforms go beyond passing new laws and seek to improve public financial management through stronger procurement systems, tighter budget controls, enhanced oversight of public expenditure and measures to prevent conflicts of interest. 

Together, these changes are intended to ensure that taxpayer money is allocated according to national priorities and that government institutions are more accountable for how public funds are used.

The World Bank argues that stronger public financial management is essential as Kenya faces rising debt-servicing costs and limited fiscal space. By reducing revenue leakages, curbing waste and corruption, and improving value for money in public procurement, the reforms are expected to generate fiscal savings that can be redirected to priority sectors such as health, education, social protection and infrastructure. The lender views improved governance of public finances as a prerequisite for restoring investor confidence, strengthening fiscal sustainability and supporting long-term economic growth.

7. Make Kenya’s Economy More Competitive

The second pillar of the World Bank’s reform program seeks to foster more competitive and inclusive product and labor markets by reducing barriers that limit private sector growth. The reforms aim to improve the business environment by strengthening competition, making it easier for firms to enter and operate in the market, and addressing regulatory bottlenecks that increase the cost of doing business. They also seek to improve labor market functioning by supporting policies that encourage formal employment, enhance workforce participation and make it easier for businesses to hire and expand.

The World Bank considers these reforms critical because Kenya’s high public debt and persistent fiscal deficits have reduced the government’s capacity to drive economic growth through public spending. Instead, the lender argues that sustained growth will increasingly depend on a stronger private sector capable of attracting investment, boosting productivity and The reforms are intended to stimulate domestic and foreign investment, expand employment opportunities and strengthen Kenya’s long-term economic resilience.

8. Pass the Railways Bill

The government must enact the Railways Bill as part of its climate and infrastructure reforms.

The proposed Railways Bill seeks to overhaul Kenya’s outdated railway legal framework by separating the roles of policymaking, regulation and operations while creating a modern system for licensing railway operators and attracting private investment. The bill provides for an independent railway regulator to oversee safety, technical standards, consumer protection and fair access to rail infrastructure, while promoting interoperability between different railway networks, including the Standard Gauge Railway (SGR) and Meter Gauge Railway (MGR). It also aims to strengthen safety oversight and support regional rail connectivity across East Africa.

The World Bank considers the legislation a key climate reform because rail transport produces significantly lower greenhouse gas emissions than road transport, particularly for freight. By encouraging a shift of cargo from trucks to rail, the bill is expected to reduce fuel consumption, ease highway congestion, lower road maintenance costs and improve logistics efficiency. The lender also sees the reforms as critical to creating a more competitive railway sector capable of attracting private capital while supporting Kenya’s broader transition to a low-carbon economy.

9. Publish Urban Transport and E-Mobility Regulations

Kenya must publish regulations to operationalize the National Urban Transport Policy and the National E-Mobility Policy, moving both frameworks from policy documents to legally enforceable regulations. The rules are expected to define standards for electric vehicles, charging infrastructure, licensing, safety requirements, grid connectivity and the integration of electric mobility into public transport systems. They will also provide greater regulatory certainty for investors, manufacturers and transport operators seeking to expand electric buses, motorcycles, cars and charging networks.

The World Bank views the regulations as a cornerstone of Kenya’s low-carbon transport strategy. Transport is one of the country’s largest consumers of imported petroleum products, making it a significant source of greenhouse gas emissions and pressure on the import bill. By creating a clear regulatory framework for electric mobility, the reforms are intended to accelerate the adoption of cleaner vehicles, reduce dependence on imported fossil fuels, improve urban air quality and lower long-term transport costs. The regulations also support Kenya’s broader climate commitments by encouraging private investment in clean transport infrastructure while making cities more sustainable and resilient.

10. Make Green Building Standards Mandatory

The government must integrate green building standards into the Affordable Housing Policy and adopt mandatory Green Building Standards for all new buildings and major renovations.

Buildings account for a significant share of energy consumption worldwide. The World Bank believes mandatory efficiency standards can reduce electricity demand, lower emissions and decrease long-term operating costs.

The standards establish minimum requirements for energy efficiency, water conservation and environmentally sustainable construction.

11. Strengthen Kenya’s Climate Governance Framework

This final pillar extends beyond individual laws and requires Kenya to strengthen institutions supporting climate action.

Recent reforms include amendments to the Forest Conservation and Management Act, which established the country’s first Directorate of Forest Regulation and expanded the role of the Kenya Forest Service in ecosystem management.

The reforms also complement Kenya’s new sovereign sustainability-linked financing framework, which connects future borrowing costs to measurable environmental targets such as reducing forest loss and improving rural electrification.

Together, these measures demonstrate how the World Bank is increasingly tying budget support not only to fiscal reforms but also to governance, climate policy and institutional accountability.

Why the Conditions Matter

Instead of focusing solely on macroeconomic indicators, the institution is using policy-based lending to reshape governance across procurement, anti-corruption, public finance, climate policy and investment regulation.

For Kenya, the reforms are particularly significant because DPO funds flow directly into the Treasury and help finance recurrent government expenditure, including civil servants’ salaries. Failure to meet the conditions could delay hundreds of millions of dollars in budget support at a time when the country continues to face elevated debt-servicing costs, persistent fiscal deficits and negotiations with the International Monetary Fund over a new financing program.

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