World Bank says over 2.4 million Kenyans risk falling into poverty in 2026

The World Bank projects 2.4 million Kenyans to be at risk of falling into poverty by the end of this year due to worsening economic conditions.

The bank's new report, dubbed Kenya Economic Update, projects that the country's national poverty rate could rise by two to 4.5 percentage points, primarily hitting urban households hardest.

This update comes at a time when the Kenyan economy is pressed by soaring inflation, high cost of living, transport and joblessness.

According to the World Bank, the Middle East tensions have intensified inflationary and external pressures.

Last April, transport and food prices rose year on year; as such, the sustained increase in the cost of food is expected to worsen Kenya's fight against poverty.

“Microsimulation estimates suggest that the poverty rate could increase between two and 4.5 percentage points in 2026 ($3 (Sh390) international poverty line), equivalent to an additional one million to 2.4 million Kenyans falling below the poverty line,” the report noted.

According to the Bretton Woods institution, the fiscal challenges have informed its downward revision of Kenya’s 2026 growth forecast to 4.3 per cent, from the 4.6 per cent recorded in 2025.

This marks o.6 per cent downgrade from its earlier forecast before the escalation of  geopolitical tensions in the Middle East.

In the report, higher global oil prices, rising transport costs, expensive imports and weaker remittance inflows have weakened Kenya's growth prospects.

“Middle East Conflict intensified external pressures. Leading indicators suggest a sharp monthly decline in exports alongside a significant increase in petroleum import costs,” the World Bank.

According to the update, the country also experienced one of the sharpest monthly declines in remittance inflows in recent years, with as much as Sh5.16 billion ($40 million) in monthly remittances potentially at risk.

International reserves declined from a peak of Sh1.88 trillion ($14.6 billion) in March 2026 to Sh1.69 trillion ($13.1 billion) in late June 2026, equivalent to 5.6 months of import cover.

Despite the introduction of tax administration measures and expenditure rationalisation in the financial year 2026/27 budget, the lender projects that the fiscal deficit is expected to remain elevated, and public debt will decline only gradually.

“Risks to the outlook remain tilted to the downside and include fiscal pressures, elevated debt servicing costs, climate-related shocks, political uncertainty related to the electoral cycle, and external risks from geopolitical tensions, commodity price volatility, and tighter global financial conditions,” the report states.

According to the World Bank, economic growth moderated slightly in 2025, with real GDP expanding by 4.6 per cent compared with 4.7 per cent in 2024. “This was despite favourable macroeconomic conditions such as easing inflation, accommodative monetary policy, and recovering private sector credit,” the global lender said.

The bank shows that the growth was weighed down by a severe drought in the final quarter of the year, which contracted agriculture value added by 1.3 per cent and thus moderated the sector’s yearly performance.

Services activity also slowed across trade, transport, finance, and social subsectors, while tourism-related activities continued to grow strongly, particularly in accommodation and food services.

“Industrial activity strengthened markedly as the construction sector sharply rebounded,” the World Bank noted, adding that public debt remains elevated at around 69 per cent of GDP, while interest payments consume more than a third of government revenues.