Presentation
This Study addresses the case of Kenya, a country facing financing gaps despite attracting many development partners and being active in international reform debates, yet struggling to substantially transform its trajectory. It examines how Kenyan priorities are financed, how the main development finance institutions respond to identified needs, and what institutional set-up ensures coordination and long-term sustainability.
Key Messages
- Kenya’s sustainable development ambition still requires a significant share of external financing which is shifting toward multilateral loans. Concessional loans and other official flows reached 64% of external disbursements to Kenya in 2024, while debt service absorbed close to 70% of of the country’s ordinary revenues.
- The connection between planning strategies, financial instruments and institutional arrangements remains underspecified to truly deliver. Kenya’s strategies remain insufficient to connect to sources of finance, and a siloed approach hampers implementation, down to the lowest level.
- Stated alignment with national priorities masks conflicted approaches that also include donor driven practices. Sector selection often responds to the priorities of donor governments and DFI shareholders as well as to, or instead of, Kenya’s stated needs, a dynamic likely to intensify under the G7’s renewed narrative of “mutually beneficial partnerships”.
- Climate ambition is creating a new dynamic but is not yet matched by the financing instruments at hand. 81% of Kenya’s Nationally-Determined Contribution estimated cost is conditional on international support, while renewable energy receives the smallest share of DFI financing.
- Coordination among DFIs remains the exception and predominantly informational. No shared framework tracks the collective impact of DFI interventions on Kenya’s stated priorities.
- Kenyan governance mechanisms for long-term monitoring and impact remain scattered. Beyond mobilizing financing volumes, Kenyan authorities are seeking to improve internal coordination, across sectors and units of intervention to better drive external support and investment and to monitor impact down to county level. Impact does not yet fully reach the subnational and county-level, where access to affordable longterm financing remains limited despite the central place of counties in the Bottom-up Economic Transformation Agenda.
