Kenya has moved a step closer to unlocking Sh97 billion ($750 million) frozen by the World Bank Group after President William Ruto on Wednesday assented to a Bill that seeks to put curbs on politicians and public officials doing business with the government to enrich themselves.
The multilateral lender had blocked disbursement of the loan after Kenya failed to pass the Conflict of Interest Bill, 2023 –a revamped legislation to contain corruption in public service.
President William Ruto failed to assent to an earlier version of the proposed law in June after expressing reservation over 12 clauses he deemed as watered down by the Senate.
The refusal was on the premise that a weaker conflict of interest legislation would not pass the World Bank’s litmus test. The Senate, which initially dismissed the President’s call for a ‘high bar’ in the Bill adopted an aligned version on June 23 after mediation involving MPs.
The financing from the World Bank is critical at a time when the government has found itself under mounting fiscal pressures demonstrated by missed revenue targets and the lack of a standing arrangement with the International Monetary Fund (IMF).
“Following its referral by the President with reservations, the Bill was passed by the National Assembly on June 3, 2025 with amendments fully accommodating the President’s reservations,” the National Assembly said in a brief on the assent of the Bill which now becomes an Act of Parliament.
“The principal object of the Bill is to consolidate the laws relating to conflict of interest by repealing the Public Officer Ethics Act (Cap. 185B) and establishing a framework for managing conflicts of interest in the discharge of public duties under the general supervision of the Ethics and Anti-Corruption Commission (EACC).”
Passage and assent of the Bill now paves the way for the multilateral lender to proceed with the approval of the Sh97 billion ($750 million) loan through its executive board.
The funding will be critical given its relatively lower interest cost and less-stringent terms compared to financing from the international capital markets and the International Monetary Fund (IMF) respectively.
The National Treasury initially expected funding from the World Bank by June 30, but the disbursement was withheld as the conflict-of-interest Bill remained stuck in the legislative process.
Last week, the World Bank Group said disbursement of the financing would be hinged on Kenya meeting all trigger actions agreed under the multilateral development policy operations (DPO).
“World Bank development policy operations (DPOs) are contingent on the completion of prior actions and adequate macroeconomic and fiscal policy framework,” said Qimiao Fan, the World Bank Division Director for Kenya, Rwanda, Somalia and Uganda.
“We are continuing to prepare the second operation (second tranche) and the timing and presentation of the operation to our board hinges on the government meeting the agreed prior actions and having an adequate macroeconomic policy framework for budget support.
Last year, Kenya received Sh155 billion ($1.2 billion) from the Word Bank as the first of three expected tranches by the end of June 2026.
Restoration of funding by the World Bank will be critical at a time when Kenya is keen on maintaining cheap/concessional funding sources in the absence of a new IMF arrangement even as it negotiates for a fresh one.
Credit ratings agencies have warned that Kenya is tied at the hip with the World Bank and the IMF with regards to accessing funding from the international capital markets and protecting its foreign currency reserves buffer. According to Moody’s funding from the pair is crucial in Kenya’s ability to meet its debt obligations.
“Meeting these obligations without eroding the central bank’s reserve buffer will require continued access to concessional and market-based external financing,” Moody’s said in a note last week.
“An IMF programme would aid this strategy of meeting external debt service obligations without drawing on the stock of reserves. Beyond providing direct support, an IMF programme would help unlock funding from the World Bank and other development partners and reinforce market confidence, helping to lower external borrowing costs.
The IMF terminated its lending programme with Kenya in March after the country missed key performance metrics including revenue targets and the restructure of key State-owned enterprises (SEOs).
Kenya has applied for a new programme from the fund but has failed to project new disbursements from the IMF in upcoming fiscal cycles.
