World Bank urges Kenya to tighten spending and broaden tax base to boost fiscal space

The World Bank’s Kenya 34th Economic Update flags bloated wage bills, weak procurement and governance gaps, and recommends tighter expenditure controls and stronger property‑tax systems to expand revenue.

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In its Kenya 34th Economic Update, the World Bank identified a series of fiscal policy gaps that are limiting revenue collection and reducing the impact of public spending.

The analysis points to bloated wage bills, fragmented cash‑management systems and weak controls over payroll and procurement as major drains on public resources.

County‑level governance also emerged as a factor, with higher reported bribery rates linked to lower spending efficiency and poorer service delivery outcomes.

To curb these inefficiencies, the report calls for tighter expenditure controls, improved procurement frameworks and stronger accountability mechanisms across both national and county governments.

On the revenue side, the Bank recommends expanding the tax base, especially by improving property‑tax valuation rolls and collection systems, and by making the tax structure more progressive.

The Bank estimates that moderate anti‑corruption reforms could raise Kenya’s GDP by 8.7% by 2035, while deeper reforms could generate up to 7.7 million jobs.

These recommendations come as Kenya faces elevated debt‑service obligations and pressure from a growing public wage bill, underscoring the urgency of structural reform.