The World Bank Group has urged Kenya to fix tax unpredictability, electricity costs and regulatory overlap, saying targeted reforms in three sectors could unlock up to KSh 194.6 billion in private investment and about 80,000 jobs over the medium term.
The findings come from the Kenya Country Private Sector Diagnostic (CPSD), prepared by the World Bank Group and dated September 2026. Business Daily and other outlets reported the recommendations on 1 October 2026.
The official CPSD summary says the three focus sectors together could reach up to about US$1.5 billion in incremental private investment and 80,000 more and better-paid direct jobs relative to a business-as-usual path, if practical near-term reforms are implemented.
Three Sectors in Focus
The diagnostic concentrates on avocado and mango value chains (including processing), manufacturing of medical consumables, and coastal tourism. According to Business Daily’s account of the report, the combined reform package is linked to about KSh 194.6 billion in investment potential and roughly 80,000 jobs.
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| Sector | Key reform highlighted in reporting | Investment / jobs (as reported) |
|---|---|---|
| Fruit processing / horticulture | VAT deferment on processing equipment; ease cash-flow strain from delayed VAT refunds | About KSh 21.7bn; ~36,000 jobs (media summary of report) |
| Medical consumables | Suspend certificate of conformity; cut overlapping PPB and KEBS approvals | About KSh 103.8bn; ~33,000 jobs (media summary) |
| Coastal tourism | More stable tax and regulatory setting for the sector | About KSh 46.7bn; ~14,000 jobs (media summary) |
| Combined (three sectors) | Package of near-term reforms | Up to ~KSh 194.6bn / ~US$1.5bn and ~80,000 jobs |
Sector-level shilling and job splits above follow Business Daily and related local coverage of the diagnostic. The World Bank Group’s own public summary frames the overall opportunity as up to US$1.5 billion and 80,000 jobs over the medium term if reforms succeed. Figures are scenario estimates, not firm commitments.
What VAT Deferment Would Mean for Processors
Business Daily reports that the Bank backs a VAT deferment scheme on fruit processing equipment. Under that kind of relief, eligible importers can postpone import VAT on qualifying capital goods at the port of entry instead of paying the full amount upfront.
The report links delayed VAT refunds from the National Treasury to working-capital stress for mango and related processors. Easing that cash-flow bottleneck is presented as a way to encourage more local value addition rather than raw exports alone.
Medical Devices: Cut Double Approvals
For medical consumables such as hospital beds, surgical masks and disposable gloves, the diagnostic points to overlapping regulatory steps, including between the Pharmacy and Poisons Board and the Kenya Bureau of Standards.
Business Daily says the Bank recommends suspending the certificate of conformity requirement in this context and simplifying approvals. The official CPSD summary also flags streamlined, reliance-oriented compliance and VAT treatment that does not trap manufacturers’ cash as priorities for building a competitive local industry.
Wider Barriers Holding Back Firms
Beyond the three sectors, the diagnostic and related World Bank Enterprise Survey material paint a tough operating climate.
- Tax system: Corporate income tax rates are described as broadly in line with regional peers, but firms face multiple national and county levies, frequent tax changes, heavy administration and perceptions of unequal treatment. Enterprise Survey data cited in reporting put tax rates as a major or very severe constraint for 64 percent of firms, and tax administration for 38.6 percent.
- Electricity: Firms pay about KSh 33.74 per kilowatt-hour in the figures cited, and 75 percent of businesses report frequent outages, despite progress on transport infrastructure and ports.
- Governance and bribery: About one-third of surveyed companies reported requests for bribes. Licensing and permits were a major constraint for 25.3 percent of firms in the 2025 Enterprise Survey results referenced by the Bank.
- Credit: Bloomberg’s coverage of the report also notes concern that heavy state borrowing crowds out private borrowers.
The Bank’s message is that aggressive revenue mobilisation has delivered some tax growth, but uncertainty and high operating costs still weigh on private investment, household demand and firm expansion.
Read also:World Bank Releases Ksh97.1 Billion Loan to Kenya After Reform Push
What the Report Is and Is Not
The CPSD is a diagnostic for policy dialogue between government, business and development partners. It does not itself change tax law, power tariffs or product standards.
Any VAT deferment, conformity-certificate change or tourism tax measure would still need Kenyan legal and administrative action, including through Treasury, KRA, energy regulators and sector agencies.
Kenya has already moved on several investor-facing tax and licensing items in recent years. The Bank’s point is that remaining frictions in the three priority sectors, plus electricity and governance, still leave large private investment on the table.
Bottom Line
The World Bank Group’s Kenya Country Private Sector Diagnostic says practical reforms on VAT for processing equipment, medical-device compliance and coastal tourism, together with a more stable tax environment and cheaper, more reliable power, could unlock up to about KSh 194.6 billion (around US$1.5 billion) in private investment and some 80,000 jobs over the medium term.
Those numbers are reform scenarios, not automatic gains. Delivery depends on how quickly Kenya stabilises tax rules, clears refunds, streamlines standards and brings down energy costs for manufacturers and tourism operators.
Sources:
IFC / World Bank Group – Kenya Country Private Sector Diagnostic (September 2026);
Kenya CPSD full report PDF;
Business Daily – World Bank calls for Kenya tax changes to unlock Sh195bn investment (1 October 2026);
Kenyans.co.ke – World Bank flags multiple taxes, bribery among problems facing Kenyan firms;
Bloomberg – World Bank urges Kenya to cut power prices, stabilize tax regime.
Investment and job figures are estimates from the diagnostic and media reporting of it. This article is for information only and is not investment, tax or policy advice.