Kenyan businesses exposed to bribery are more than 30 per cent less likely to introduce innovations, while also recording weaker productivity and sales growth, according to the World Bank’s November 2026 Kenya Economic Update. The report links corruption to reduced competitiveness and investment, warning that the burden is particularly heavy on medium-sized firms.
The report draws on successive Enterprise Surveys to show that corruption has become a growing concern for businesses. In 2025, 39 per cent of firms considered corruption a major or severe constraint to doing business, up from 25 per cent in 2013.
It also found that 36 per cent of firms had experienced at least one request for a bribe in the preceding year. The World Bank said businesses exposed to bribery were more than 30 per cent less likely to introduce innovations and recorded lower growth in labour productivity and sales, with the latter indicators trailing by between two and four percentage points.
Medium-sized enterprises appeared particularly exposed. The report found that 48 per cent of these firms expected to give gifts to get things done, compared with 36 per cent of small businesses and 31 per cent of larger enterprises.
The World Bank noted that the proportion among medium-sized firms was more than twice the Sub-Saharan African average, placing an additional burden on a segment of the economy with potential to drive employment, investment and innovation.
The findings suggest that bribery does more than increase the immediate cost of operating a business. When firms must make unofficial payments to navigate public services, licensing and regulation, resources that could support expansion or new products may instead be diverted to securing routine services.
The report also identifies collusion and preferential treatment of politically connected businesses as barriers to fair competition. Such practices can limit investment in productive sectors and weaken the ability of more efficient firms to grow.
The World Bank argues that improving the business environment will require stronger transparency and accountability in public institutions, alongside simpler administrative processes. Its recommendations include fully rolling out electronic government procurement and digital revenue systems, strengthening beneficial ownership transparency and implementing the 2025 Conflict of Interest framework.
The report says these measures could help reduce opportunities for corruption and create a more level playing field for businesses.
For Kenyan firms, the challenge is not only securing finance or managing operating costs, but also competing in an environment where unofficial payments can undermine innovation and growth. Effective implementation of governance reforms will be important in determining whether businesses can operate and expand on more predictable and fair terms.
