World Bank sounds alarm over Kenya as taxes, bribery and power cuts hit businesses

Businesses operating in Kenya are facing a range of obstacles including multiple taxes, frequent regulatory changes, bribery demands, high utility costs and limited access to finance, according to a new World Bank report.

The World Bank’s Private Sector Diagnostic identifies a series of challenges that it says are making it harder for private-sector firms to invest and expand in Kenya.

While the country’s corporate income tax rates are broadly comparable with those of regional peers, businesses face additional national and county-level levies, according to the report.

“While corporate income tax rates are broadly aligned with regional peers, investors face multiple national and county-level levies, frequent tax changes, cumbersome administration, and perceptions of unequal treatment,” the World Bank stated.

The report also highlights concerns over governance and corruption.

According to the World Bank, about one-third of companies surveyed reported being asked to pay a bribe. The institution said weaknesses in governance were undermining investor confidence, while noting that Kenya ranks in the bottom third of the Transparency International Index.

Licensing and regulation

Obtaining licences and permits was also identified as a significant obstacle for businesses.

Data from the 2025 World Bank Enterprise Survey showed that 25.3 per cent of companies identified licensing and permits as a major constraint to doing business in Kenya.

The findings come as businesses contend with regulatory requirements at both national and county levels, adding to the administrative costs associated with operating in the country.

The World Bank’s assessment also points to infrastructure and utility challenges despite improvements in Kenya’s transport network.

“Although Kenya has made progress in transport infrastructure through expressways, port modernisation, and the development of Lamu Port, firms continue to face high utility costs and unreliable services,” the report stated.

Power costs and outages

Electricity emerged as another concern for companies.

The World Bank reported that businesses pay about KSh33.74 per kilowatt-hour, while 75 per cent of firms surveyed said they experienced frequent power outages.

For companies that depend heavily on electricity, unreliable supply can add to operating costs and complicate production and investment decisions.

Water availability was also identified as a significant constraint.

More than 37 per cent of companies reported insufficient water supply in the 2025 Enterprise Survey, compared with 17.2 per cent among lower-middle-income countries, according to the report.

Land and access to finance

The World Bank further identified land-related issues as a barrier to investment.

Unclear land ownership and outdated land records were cited as factors that can increase costs and discourage investment, particularly in industries that require substantial amounts of land.

Access to finance was another major concern.

The report said increased government borrowing has reduced the availability of credit for private businesses. Private-sector credit declined from 36.7 per cent of GDP in 2015 to 29.1 per cent in 2024, according to the World Bank.

The findings highlight the range of factors businesses must contend with beyond headline corporate tax rates, including the cumulative cost of taxation, regulation, utilities, infrastructure, land administration and access to credit.

The World Bank’s assessment comes as Kenya continues efforts to attract private investment and expand economic activity, with the report identifying reforms in these areas as important to improving the operating environment for firms.

Other News: Jambojet Resumes Daily Nairobi–Entebbe Flights After Six-Year Break