To secure a Ksh156 billion (USD1.2 billion) loan from the World Bank, President William Ruto’s government has pledged to implement extensive reforms across the civil service and private sector.
The loan, issued on Thursday, May 30, comes with stringent conditions aimed at modernising Kenya’s economic and administrative landscape.
The government’s commitments include the operationalisation of the Treasury Single Account and a full transition to an e-Procurement system by the public sector, a measure backed by both the International Monetary Fund (IMF) and the World Bank. This shift to e-Procurement is expected to reduce procurement-related spending by 10 to 15 per cent, translating to an annual saving of approximately Ksh 90 billion.
All Ministries, Departments, and Agencies (MDAs) must complete their procurement using the e-Procurement system by 2027.
In addition, the government will consolidate the public sector wage bill through the approval of a Payroll Management Policy, eliminating manual payrolls and rationalising allowances for employees of state corporations.
These measures aim to reduce the public sector wage bill from 47 per cent of total revenue in 2023 to 35 per cent by 2027.
Furthermore, the government plans to increase the proportion of reviewed and verified declarations of personal interests of public officials to 85 per cent by 2027.
In the education sector, the government aims to boost the number of students enrolled in tertiary education, including Technical and Vocational Education and Training (TVET) institutions and universities, from 362,834 in 2023 to 500,226 by 2027.
Additionally, there is a target to increase revenue from e-Commerce from US$3.6 billion in 2023 to US$5.7 billion by 2027.
One of the most contentious aspects of the loan agreement involves the integration of refugees into the Kenyan economy.
President Ruto’s government has committed to simplifying procedures for issuing Class-M job permits and updating regulations to recognise refugee identification documents. The full implementation of the Refugee Act of 2021 is also a condition of the loan.
The World Bank estimates that up to 400,000 refugees could be integrated into the community by 2027, representing three-quarters of the population in Kenya’s two largest refugee camps.
The Bank highlights that while refugees account for almost one percent of Kenya’s population, their potential contributions to the economy remain underutilised.
According to the Refugee Act, all registered refugees will have the right to civil registration and identification, allowing them to be recognised as refugees or asylum seekers. They will also have access to permits enabling them to participate in gainful enterprise and employment, contributing to the economic development of their host communities. Those opting to return to their native countries will be able to do so after surrendering their documents to the government.
This shift aims to transform the funding model for refugees from aid dependency to development and self-reliance. County governments hosting refugees will benefit as their regions become eligible for support from development partners such as the World Bank and UN Habitat.
The government has previously announced plans to transform the Dadaab and Kakuma refugee camps into permanent urban centres. This change, expected to be completed within five years, will allow refugees to remain in Kenya with special IDs that enable them to engage in income-generating activities. This move is seen as a way to alleviate Nairobi’s security concerns while fulfilling humanitarian obligations.
In 2021, the government declared its intention to close Dadaab and Kakuma camps, which were hosting over 500,000 refugees, primarily from Somalia.
The World Bank projects that these reforms will provide refugees with increased access to efficiently delivered services integrated into national and county systems and greater access to the labour market. Improved access to water, sanitation, and hygiene (WASH) services will enhance health outcomes for refugees and address climate change-exacerbated water scarcity.
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