NAIROBI, Kenya — Kenya could see as many as 2.4 million additional people pushed below the poverty line by the end of 2026 as rising food, fuel and transport costs squeeze household incomes, according to the World Bank.
In its latest Kenya Economic Update released on Thursday, July 9, the World Bank warned that escalating global economic pressures, particularly linked to instability in the Middle East, risk reversing years of progress in poverty reduction and slowing economic growth.
The lender said higher energy prices triggered by geopolitical tensions have increased the cost of fuel imports, creating a ripple effect across the economy by driving up transport and food prices.
According to the report, Kenya’s poverty rate could rise by between two and 4.5 percentage points, translating into an estimated one million to 2.4 million additional people falling below the international poverty line if inflationary pressures persist.
Rising cost of living threatens poverty reduction gains
The World Bank noted that transport costs remained significantly elevated throughout the first half of 2026, rising by 10 per cent year-on-year in April before easing marginally to 9.8 per cent in June.
Food inflation also remained stubbornly high, standing at 8.8 per cent in April and 8.6 per cent in June, further straining household budgets, particularly among low-income families who spend a larger share of their earnings on basic necessities.
The report warns that urban households are especially vulnerable because many rely on purchased food and public transport, making them more exposed to price shocks than rural households.
Speaking during the report’s launch, World Bank Lead Economist for Kenya, Rwanda, Somalia and Uganda, Tom Bundervoet, said prolonged economic disruptions could significantly increase poverty levels across the country.
“This conflict could push the poverty rate in Kenya by a certain number of percentage points, which then leads to one million or two million more Kenyans below the poverty line in absolute numbers,” Bundervoet said.
Economic growth forecast lowered
The World Bank also revised Kenya’s growth outlook downward, reflecting concerns over inflation, external shocks and domestic uncertainties.
The lender now expects Kenya’s economy to grow by 4.3 per cent in 2026 and 4.4 per cent in 2027, lower than projections issued in late 2025.
The downgrade signals growing concern about the country’s ability to sustain the stronger growth rates required to generate jobs, reduce poverty and improve living standards.
While Kenya remains one of East Africa’s largest and most diversified economies, the report cautions that global volatility continues to pose significant risks.
Job creation challenge remains critical
A major concern highlighted in the report is Kenya’s persistent inability to generate sufficient formal employment opportunities.
The World Bank estimates that approximately 800,000 young people enter the labour market each year, yet only around 100,000 secure formal sector jobs.
The majority are therefore forced into informal employment, often characterised by low wages, unstable incomes and limited social protection.
The lender argued that stronger private-sector investment is essential if Kenya is to create enough quality jobs to absorb its growing workforce.
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According to the report, reforms aimed at improving governance, reducing regulatory barriers and creating a more predictable business environment would help attract investment and stimulate employment growth.
Climate risks and election uncertainty
Beyond inflation and global instability, the World Bank identified climate-related shocks and political uncertainty ahead of Kenya’s 2027 General Election as additional threats to economic performance.
Extreme weather events, including droughts and floods, continue to affect agricultural production and food supply chains, while heightened political tensions could undermine investor confidence.
The lender warned that maintaining macroeconomic stability, protecting vulnerable households and accelerating structural reforms will be critical if Kenya is to withstand the combined pressures of global shocks, climate risks and domestic political dynamics.
The report comes as many Kenyan households continue grappling with a high cost of living despite recent efforts by the government to stabilise the economy and ease inflationary pressures.
