Why pro-competition reforms are key to Kenya's growth, jobs goals

When I first arrived in Nairobi, I was struck by the energy of its entrepreneurs. In the bustling markets of Gikomba, the co-working spaces of Westlands, and the farmlands of Nakuru, the spirit of enterprise was unmistakable. 

Yet beneath that vibrancy lay a quieter frustration. While Kenyan talents and ideas seemed abundant, opportunities did not always follow. Many business owners spoke of obstacles that had little to do with creativity or effort, and everything to do with how markets are structured.

It is this gap between potential and reality that a new joint report by the World Bank Group and the Competition Authority of Kenya seeks to address.

'From Barriers to Bridges: Pro-Competitive Reforms for Productivity and Jobs in Kenya' highlights the simple but powerful message that when markets are open, fair and competitive, Kenyans thrive.

When they are not, well-connected interests and dominant firms entrench their advantages at the expense of consumers, emerging entrepreneurs, and job-seekers. The result is higher prices, fewer jobs, and slower innovation, with costs ultimately borne across the economy.

Kenya has made considerable progress over the past decade, diversifying its economy and attracting strong investment in sectors ranging from horticulture to Information and Communications Technology. However, new evidence shows that structural barriers to competition remain widespread.

Kenya’s Product Market Regulation index — an international benchmark measuring how conducive policy and regulation are to business entry and competition — remains among the most restrictive globally. Key drivers include extensive State participation in commercial markets, opaque rule-making processes, and constraints on trade and foreign investment.

These challenges have tangible, everyday consequences. When fertiliser distribution is concentrated among a few entities with preferential access, farmers pay more, yields stagnate, and food security is weakened. Under the current subsidy programme, farmers must travel three times farther than before to reach distribution points, doubling their transportation costs.

When electricity generation contracts are not awarded through transparent competition, power remains expensive, hindering business growth and burdening households. Kenya’s electricity tariffs are 53 per cent higher than Uganda’s, 88 per cent higher than Tanzania’s, and more than double South Africa's and Ethiopia’s.

Fortunately, these barriers are not inevitable. They are the result of policy choices which can change.

This is why pro-competition reforms matter. They are not about withdrawing regulations, but about ensuring regulations work in the public interest. This involves reforming State-owned enterprises so they compete on a level playing field, promoting transparency in policy-making, and lowering restrictions on foreign trade and investment.

It also involves reforms at the sector level. These include implementing open auctions for power purchase contracts, improvements to the fertiliser subsidy scheme to better leverage last-mile private retailers, and stronger efforts to identify and remedy dominance and market power in telecommunications.

Importantly, such reforms are not only about removing barriers but are also about building bridges; bridges between regulators and innovators, so that policy responds to technological change; bridges between local firms and international investors, so that capital and know-how can scale; bridges between the public and private sectors, grounded in shared commitment to jobs and inclusive growth.

Kenya’s global leadership in digital financial services demonstrates what is possible. The success of mobile money and fintech innovation did not happen by chance. It emerged from forward-looking regulation that allowed new entrants to challenge legacy models. A similar transformation is possible in agriculture, energy, telecommunications, and professional services.

The potential is considerable. Our analysis suggests that reducing regulatory barriers to competition could increase GDP growth by more than half a percentage point annually. It could also drive the growth of job opportunities equivalent to 400,000 jobs per year. 

For a country where nearly one million young people seek work annually, such gains are not merely statistical; they are life-changing.

Yet competition reform is not only technical. It is inherently political. It challenges entrenched interests and requires governments to take bold, sometimes difficult decisions. 

Success demands leadership, coordination across ministries, and sustained implementation. It also requires ongoing dialogue with industry and consumers as partners in the pursuit of shared national priorities.

The World Bank Group is committed to supporting Kenya along this path. Through programmes focused on job creation, enterprise development, State-owned enterprise reform, and strengthening key sectors, and through global partnerships that bring lessons from other economies, we stand ready to help turn barriers into bridges.

Ultimately, competition is not an end in itself. It is a pathway to dignity through work, fairness in opportunity, and hope for the next generation. Kenya has the talent, creativity, and entrepreneurial spirit to achieve this.

With the right reforms, the most dynamic chapters of Kenya’s growth story are still to come.