The African Development Bank Group (the Bank) has proposed key reform measures to enhance Kenya's ability mobilize its own capital for development in its newly-released Country Focus Report (CFR) for the Republic for Kenya.
Released under the theme "Making Kenya's Capital Market Work Better for its Development", the report shares the latest data and analysis on Kenya's economic performance, highlighting key growth opportunities and risks. The report presents strategies to better mobilize and utilize Kenya's fiscal, natural, business, financial, and human capital for inclusive and sustainable development. It aims to foster dialogue among policymakers and stakeholders to drive forward impactful reforms for better capital deployment in Kenya.
The report revealed that Kenya's real economic growth in 2024 grew by 4.6% despite recent macroeconomic stability, but slowed due to weak industrial activity, low investment, and climate shocks. The report calls for well-sequenced reforms that will broaden fiscal revenue, formalize the informal sector, deepen financial markets, and maximize the country's human resource dividend to achieve higher growth rates.
"The Kenyan economy has remained resilient," Dr Kenrick Ayot, a senior deputy director at Kenya's National Treasury, said at the launch, speaking on behalf of the Cabinet Secretary. "The strong growth, above the average global growth rate of 3.3%, reflects the impact of sound and deliberate policies as well as the resilience of our well diversified economy."
Ayot explained how steps taken by the government so far had helped to strengthen macro-economic indicators, leading to a decline in inflation to 3.8% in May 2025 from a peak of 9.6% in 2022, and appreciation of the Kenya shilling from Ksh159.7 to the US dollar in January 2024 to Ksh129.3 by end-May 2025.
The Kenyan economy is projected to improve in 2025, with the report forecasting a 5.3% growth rate, driven by enhanced agricultural productivity, growth in the services sector and the implementation of the government's policies aimed at increasing growth through the country's Bottom-Up Economic Transformation Agenda.
In highlighting the findings of the CFR, the Bank's Country Economist for Kenya, Caroline Ntumwa observed that despite Kenya's progress in infrastructure, finance, and services, Kenya's capital quality remained weak, with fiscal capital burdened by debt, limited business innovation, uneven financial access, declining natural capital, and poor learning outcomes and skills gaps within human capital. Structural challenges persist across all forms of capital exacerbated by capacity and regulatory gaps.
"To unlock Kenya's capital for development, we must all work differently," urged George Kararach, the Bank's East Africa lead economist representing the Bank's Director General for East Africa, Alex Mubiru, said.
He detailed several pragmatic recommendations on fiscal capital, business and financial capital, natural capital and human capital. "Broaden the tax base and improve compliance, especially through informal sector integration and digital tax administration; Expand access to affordable credit, deepen capital markets, and crowd in green and blended finance; Scale up value-addition in agriculture and mining, while enhancing carbon market readiness and natural capital accounting; Align skills development with future jobs in green growth, digital innovation, and manufacturing," Kararach said.
The CFR advocates for a coordinated, inclusive, and sustainable capital strategy, anchored in tax reform, public-private partnerships, and institutional strengthening for Kenya's equitable long-term development.
Speaker remarks were followed by a panel discussion including representatives from Kenya's National Chamber of Commerce and Industry, Kenya Capital Markets Authority and Kenyatta University. Topics spanned how to channel Kenya's $5 billion diaspora remittances into productive investments, deepening capital markets, and strengthening university-industry collaborations to tackle youth unemployment and skills gaps. Inputs from audience members stressed the need to build investor trust, empower women as key players in capital mobilization, promote collective investment schemes, create a structured diaspora investment program, lower capital costs, support MSMEs, and align education with market needs.
Download here the Country Focus Report for Kenya 2025.
Kenya Country Focus Report launch event photos here.
