Kenya’s foreign direct investment inflows rose 170.5 per cent to a record $2.74 billion (KSh354 billion) in the 12 months to September 2026, according to a World Bank update.
The multilateral lender linked the jump to sustained investor confidence that helped push economic growth to 5.2 per cent, up from 4.9 per cent in a comparable period last year.
“Portfolio inflows increased by 54.6 per cent during the same period, driven mainly by stronger non-resident investment in government and corporate bonds, as well as state privatisation proceeds,” said the World Bank.
The Bank added that stronger capital inflows have cushioned Kenya against external pressures such as higher fuel import costs and disruptions tied to the Middle East conflict.
Industrial activity accelerated, with overall industrial growth reaching 4.9 per cent and manufacturing expanding 3.3 per cent, while construction grew 6.3 per cent in the first half of 2026.
The services sector benefited from robust tourism and digital activity, with accommodation and restaurant services up 11.1 per cent and information and communication activities rising 6.1 per cent.
Private-sector credit more than doubled to 10.6 per cent in September 2026, compared with five per cent a year earlier, giving businesses greater financing access.
The Nairobi Securities Exchange’s market capitalisation hit a record KSh4.17 trillion, up from KSh2.68 trillion a year earlier, and the NSE 20 Share Index closed August at 4,325.6 points after crossing the 4,000-point mark in July for the first time in nearly a decade.
The Bank attributed the market rally to rising equity valuations, especially in banking, improved macro-economic stability, heightened investor confidence and the partial privatisation and listing of Kenya Pipeline Company.
Corruption remained a major obstacle, with 39 per cent of firms rating it as a major or severe barrier in 2025, up from 25 per cent in 2013, and 36 per cent reporting at least one bribery request in the preceding year.
Companies facing bribery were more than 30 per cent less likely to introduce innovations and recorded slower labour-productivity and sales growth, while informal workers could lose up to 20 per cent of daily earnings to bribe demands.
The Bank warned that corruption weakens tax collection, inflates infrastructure costs and reduces public-spending efficiency, contributing to wider budget deficits and higher borrowing costs.
It estimated that stronger anti-corruption reforms could raise Kenya’s GDP by 8.7 per cent by 2035, with more ambitious measures potentially adding 22.3 per cent, creating up to 7.7 million jobs and boosting household consumption by as much as 27 per cent.
The World Bank urged the government to tighten public-procurement oversight, fully implement electronic procurement, improve State-owned-enterprise transparency, enforce conflict-of-interest rules, enhance accountability in public-investment projects, simplify business regulations and cut electricity and logistics costs.
Fiscal pressures persisted, with the deficit widening to 6.8 per cent of GDP in the 2025-26 financial year against a target of 4.7 per cent, and public debt reaching 69.9 per cent of GDP at the end of June 2026.
“Elevated debt-servicing costs and continued reliance on domestic borrowing could limit the government’s ability to finance development projects and potentially crowd out private-sector lending,” the Bank cautioned.
Inflation rose to 7.3 per cent in October 2026 from 4.6 per cent a year earlier, driven mainly by higher food and energy prices, and the Bank warned that ongoing geopolitical tensions could further raise fuel and shipping costs, weaken household purchasing power and deter investment.
Nevertheless, the Bank maintained that stronger private-sector credit, foreign investment and infrastructure spending could lift growth above current projections if investment and exports outperform expectations.
