World Bank withholds Sh97bn from Kenya citing delays in key governance reforms, including the stalled Conflict of Interest Bill.
The World Bank has frozen Sh96.93 billion (approx. $750 million) in budget support to Kenya, citing delays in implementing critical governance reforms. The withheld funds were part of the Development Policy Operations (DPO) programme, which is conditional on transparency and anti-corruption commitments.
According to a report by Business Daily, a key trigger was Kenya’s failure to pass the Conflict of Interest Bill, which aims to bar public officials from engaging in state tenders or accepting gifts—measures that are vital for curbing corruption.
President William Ruto declined to sign the bill in June 2025, arguing that certain clauses were excessive. The National Assembly had watered down the bill, while the Senate rejected those amendments, leading to a legislative impasse. This standoff prompted the World Bank to withhold disbursement.
Treasury Cabinet Secretary John Mbadi confirmed the development to Parliament, noting a Sh97 billion shortfall in the 2025/26 budget due to the freeze. “This was a result of our failure to meet the agreed-upon policy measures under the programme,” he admitted.
The blocked financing comes at a time when Kenya’s fiscal space is tightening, and IMF disbursements have also slowed due to unmet conditions. Kenya had hoped to secure Sh170.5 billion annually from the World Bank over the next four years.
Among the other reform conditions were:
- Full automation of government procurement via IFMIS
- Establishing a Single Treasury Account (STA) to enhance cash management
- Enforcing stricter rules on state-owned enterprises (SOEs)
These measures are part of a broader effort by multilateral lenders to ensure accountability and transparency in public finance.
💡 What This Means for Kenya
- Budget Pressures: The Treasury may turn to cost-cutting or commercial borrowing, possibly at higher interest rates.
- Policy Deadlock: Governance reforms are now politically sensitive and could face further delays in Parliament.
- Investor Sentiment: Continued freeze may dampen confidence among foreign lenders and investors.
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