Photo: Monicah Mwangi/The Star

Kenyan shilling.

Kenya has improved the policy environment for poverty reduction, according to an assessment released by the World Bank yesterday.

The latest Bank review of policies and institutions in Sub-Saharan Africa shows a positive trend for poverty reduction, despite difficult economic environment in the global economy. The overall 2011 Country Policy and Institutional Assessment score for Kenya was 3.8, the same as in 2010. The assessment shows Kenya recorded improvements in key indicators including debt management, legal, regulatory and infrastructural framework to support financial outreach and services, and also in ratings for social protection and labor, fiscal reporting and access to information on public affairs.

The report said the main challenges for Kenya during the year was monetary policy, which lagged in responding to the internal and external shocks that the economy experienced. "The new scores on economic management, social safety nets and labor market policies demonstrate Kenya's determination to create an economic environment that will support its growth to Middle Income Country status," Johannes Zutt, Country Director for Kenya said in a statement. "But more needs to be done to improve the scores on public sector management to consolidate these gains."

Kenya's current CPIA score is above the average for all International Development Association countries and among the top 25% of the IDA countries in Sub-Saharan Africa. IDA countries are borrowers from the World Bank Group's International Development Association which benefit from extended grace periods, long repayments periods, and low interest rates.

The review is part of the annual CPI assessment that rates the performance of all developing countries in 16 indicators covering four areas economic management, structural policies, public sector management and institutions, and policies for social inclusion and equity. Countries are rated on a scale of 1 as the lowest and 6 as the highest for each of the 16 indicators rounded into an average score.