Kenya Losing Billions Yearly to Corruption and Poor Spending, AfDB Report Reveals
A report from the African Development Bank (AfDB) has highlighted a staggering loss of at least Ksh297 billion in Kenya due to corruption, tax exemptions, and inefficiencies in public spending.
Released on Wednesday, July 2, the report pointed out that around $1.5 billion (roughly Ksh193 billion at current exchange rates) is lost each year because of corruption and illicit financial flows. This amount alone has the potential to significantly improve health, education, and infrastructure in the country.
Additionally, the report notes that tax exemptions and incentives across various sectors account for another loss of $800 million (about Ksh103 billion at current exchange rates), while inefficiencies in public spending drain an extra 5 percent of the gross domestic product.
“Combined, these losses undermine Kenya’s capacity to finance its development and reduce reliance on external aid,” AfDB stated.
According to the African Development Bank, Kenya really needs to address corruption and the political influence that affects the government’s decisions if it wants to revive its economy.
They pointed out that state capture, where political elites have a tight grip on lawmaking and enforcement, is a major issue that undermines the rule of law and creates uncertainty. This uncertainty can scare off potential investors and hinder the mobilization of capital.
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The AfDB highlighted that this widespread issue tends to drive investors away, as they usually prefer to operate in environments with a more stable and transparent legal system.
“Investors fear biased rulings, delays, and lack of transparency, increasing operational risks and deterring investment,” it said.
“Ultimately, the rule of law, upheld by robust law enforcement and an independent judiciary, remains the foundation for sustained economic growth, social equity, and public trust in governance.”
It’s unfortunate, but Kenya isn’t exactly shining when it comes to transparency, landing in the bottom third of Transparency International’s global corruption perception index for 2024.
On a brighter note, the African Development Bank (AfDB) has forecasted that Kenya’s economic growth will pick up speed, rising to 5 percent this year from 4.7 percent in 2024. This growth is expected to be driven mainly by the agriculture and services sectors.
That said, the ongoing issues of poverty, high unemployment, and inequality could hold back this economic progress, potentially bringing growth down to 4.8 percent by 2026, according to the bank.
Kenya Losing Billions Yearly to Corruption and Poor Spending, AfDB Report Reveals
