By Benadeta Mwaura - Reporter
Kenya, November 24, 2025 - In its latest economic update, the World Bank highlights that construction activity in the first half of 2025 is showing strong signs of recovery. Projects that were stalled, or slowed during previous years are now gaining momentum. The Bank notes that these gains are helping to cushion the wider economy against a drag from the manufacturing sector, which has been under pressure.
The revised forecast of 4.9% is not just a short-term blip. According to the Bank, this level of growth could be sustained over the next two years, but only with policy discipline and continued investment.
Risks Are Far From Gone
The World Bank is not overly optimistic: it highlights several persistent risks that could derail this growth rebound. Public debt remains a severe constraint. According to its analysis, high debt service costs are consuming a large share of Kenya’s revenue, squeezing room for more developmental spending.
International trade uncertainty is another major concern. In particular, the Bank cites the impending expiry of a U.S. trade deal with the region, a move that could hurt Kenya’s exports just as it looks to expand infrastructure-led growth.
Additionally, fiscal consolidation efforts, meant to reduce deficits, may inadvertently dampen the infrastructure push. If government spending is cut too aggressively, the same construction recovery that’s driving growth could falter.
The Bank also calls for serious structural reforms. It points to the dominance of more than 200 state-owned enterprises in Kenya’s economy, arguing that these firms stifle competition and scare off foreign investment. Easing regulatory constraints, the Bank suggests, could unlock long-term investment and stronger, more inclusive growth.
What This Means for Kenya, For Real People
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For many Kenyans, the growth upgrade brings a glimmer of hope. The construction rebound could translate into more jobs, in building, real estate, and allied services, and more concrete infrastructure like roads, housing, and public transport. At the same time, increased investment could bolster local economies and spur spill-over into smaller towns.
But the flip side is serious. Without careful debt management, the infrastructure push may result in a higher risk of fiscal strain. There’s also the risk that the very projects boosting growth rely on financing that could become unsustainable.
From a policy perspective, Kenya now faces a critical balancing act. It must go all-in on the infrastructure momentum, but not at the cost of financial stability. That means securing financing, but also controlling debt, and ensuring that projects deliver long-term value, not just short-term headlines.
What Comes Next, A Delicate Road Ahead
To sustain this momentum, Kenya needs a clear roadmap. The government must strengthen fiscal discipline while preserving sufficient investment in critical sectors. It also needs to accelerate structural reforms, especially around the regulation of state firms, to make Kenya more attractive to private and foreign investors.
There’s also a case for new financing strategies. With debt under pressure, Kenya may need to deepen its engagement with development financiers and explore innovative funding tools. The Bank’s own assessment suggests that smart borrowing, combined with greater efficiency, could help preserve growth without tipping debt into distress.
At the same time, public communication will matter. Citizens need to see how the construction boom is being translated into real economic gains. If growth is to remain inclusive, the benefits must be visible and widespread.
The World Bank’s upgrade of Kenya’s growth forecast is a vote of confidence, but not a guarantee of long-term success. The recovery in construction offers a powerful boost, yet debt risks, global uncertainty, and domestic reforms will ultimately determine whether this moment becomes a turning point or a fragile blip.
