The World Bank has raised concerns about the government's involvement in multiple business ventures, which it argues creates unfair competition for the private sector.
In its Levelling the Playing Field report, published on Tuesday, June 24, the World Bank revealed that state-owned enterprises disproportionately benefit from favourable regulations, thereby creating an uneven playing field for other firms.
According to the multilateral lender, more than half of the major businesses in Kenya are operated by the government, often in sectors where private firms could provide goods and services more efficiently.
The report highlighted that sectors such as hospitality, manufacturing, and wholesale and retail trade could have been better served by private enterprises.
However, Kenya is not the only country facing such a challenge. The report also highlighted a similar issue in other African nations, including Ethiopia, South Africa, Uganda, and Ghana.
“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 report noted.
“State participation in markets that can be effectively served by the private sector further limits prospects. In countries such as Ghana, Kenya, and Uganda, close to or more than half of the sectors had businesses with state ownership operating in them,” it added.
Another major concern raised by the World Bank is the country's growing debt levels. According to the lender, Kenya, Ethiopia, and Ghana were among the countries grappling with high levels of sovereign debts.
In its report, the World Bank disclosed that Kenya’s inability to sustain its debt levels had reversed some of the country’s previous gains and hindered the pace of poverty reduction.
“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 highlighted.
The latest announcement comes barely three weeks after the World Bank warned of the likelihood of Kenya defaulting on its loans if it fails to address corruption decisively.
In a report released on May 27, the global lender also warned of far-reaching consequences, including a reduction in GDP per capita and a rise in poverty levels by 6 per cent should the government fail to curb graft.
