The World Bank has sounded the alarm over Kenya’s growing state control in business, warning that President William Ruto’s administration is creating an uneven economic playing field.
In a new report titled Levelling the Playing Field, the multilateral lender called out Kenya’s extensive use of state-owned enterprises, which it claims are stifling private sector growth.
The report, released on June 24, points to a troubling trend where the government operates more than half of major businesses in sectors where private firms could thrive. This, the Bank says, is weakening Kenya’s economy and worsening its debt crisis.
World Bank Alarmed by Government Overreach in Business Amid Rising Debt
In its hard-hitting analysis, the World Bank directly questioned the Ruto administration’s involvement in critical sectors such as hospitality, manufacturing, wholesale, and retail trade. These areas, it argued, could be run more efficiently by private businesses if given a fair chance.
The report revealed that government-owned companies enjoy favourable regulations, giving them an edge over competitors. These advantages include easy access to capital, tax incentives, and policy protection—perks not extended to their private counterparts.
“Ethiopia, Kenya, and South Africa have examples of state-owned businesses that benefit disproportionately from favourable regulations, creating an uneven playing field for firms,” the World Bank said.
Such support systems, the Bank warned, distort the market and discourage private investment. In effect, Ruto’s government is crowding out entrepreneurs, locking out innovation, and weakening market competition.
The Bank observed that Kenya is not alone. Other countries like Ghana and Uganda also have high levels of state participation in the economy. But the case of Kenya is especially concerning because of its already struggling economy and high debt burden.
The World Bank stressed that the government must urgently rethink its strategy and focus on enabling the private sector, not competing with it. By continuing to run businesses that could be handled more efficiently by private companies, the Ruto administration risks slowing economic growth and frustrating job creation.
Debt Burden and Corruption Cast Shadow Over Ruto Dealings
The World Bank also raised a red flag on Kenya’s rising public debt. It listed Kenya, Ethiopia, and Ghana as countries grappling with unsustainable debt levels, warning that this has already reversed gains made in fighting poverty.
“In 2024, Ethiopia, Ghana, and Kenya are grappling with high levels of sovereign debt that has undone some of their past success and weakened the link between growth and the pace of poverty reduction,” the report stated.
Kenya’s debt has ballooned in recent years, with much of it going into servicing previous loans rather than productive investment. This has left little room for the government to address urgent needs like healthcare, education, and infrastructure.
In a separate report released on May 27, the World Bank went a step further and warned that Kenya risks defaulting on its debt unless corruption is addressed head-on. The global lender highlighted that unchecked graft could lead to a drop in GDP per capita and push poverty levels up by 6 percent.
The implications are dire. If Kenya defaults or faces higher borrowing costs, it will be harder for the government to fund basic services. Worse still, ordinary citizens—already burdened by inflation and joblessness—will bear the cost through higher taxes and reduced social spending.
Calls for Policy Reforms in Light of Ruto Dealings
The World Bank’s double-barrelled criticism—on business interference and debt mismanagement—should serve as a wake-up call for the Ruto administration. While the President has portrayed himself as a champion of the hustler economy, the Bank’s findings suggest that his government may be undermining the very people it claims to support.
To move forward, experts recommend that Kenya undertake immediate reforms. These include:
- Reducing the footprint of state-owned enterprises in competitive markets
- Leveling the regulatory environment to support private investment
- Improving debt transparency and public financial management
- Tackling corruption across all levels of government
Only then can Kenya unlock its full economic potential and ensure that growth benefits all citizens—not just the politically connected.
The World Bank’s message is clear: governments should facilitate business, not dominate it. If Ruto wants to steer Kenya out of its current economic storm, he must let the private sector drive and refocus state power on regulation, support, and oversight—not competition.
