Kenya’s ability to draw private investment is being hampered by high business costs, regulatory uncertainty, unreliable utilities and corruption, according to the World Bank’s Country Private Sector Diagnostic.

Electricity tariffs average about $0.26 per kilowatt‑hour, placing Kenya among the region’s most expensive power markets.

Around three‑quarters of firms report frequent power outages, which raise operating expenses and disrupt production.

More than 37 % of businesses cite insufficient water supply, a figure far above the 17.2 % average for lower‑middle‑income countries.

Licensing and permit procedures are a major hurdle, with 25.3 % of firms rating them as a severe constraint.

Frequent tax changes and complex administration, together with multiple national and county levies, increase compliance costs for companies operating across counties.

One‑third of surveyed firms say they have been asked to pay bribes, highlighting governance weaknesses that affect the business climate.

Access to finance remains limited; private‑sector credit fell from 36.7 % of GDP in 2015 to 29.1 % in 2024, and MSMEs face a financing gap estimated at over Sh2.5 trillion.

The World Bank recommends long‑term, economy‑wide reforms and sector‑specific measures to lower costs and reduce uncertainty, aiming to boost private investment, productivity and formal job creation.