Kenya may miss out on Sh96.9bn World Bank loan over key anti-corruption law

Kenya’s delay in passing the Conflict of Interest Bill, 2023 has not only postponed the release of the World Bank loan but also created a significant funding gap for the National Treasury, just weeks before the end of the financial year.

According to Treasury Cabinet Secretary John Mbadi, if Parliament succeeds in revising and passing the bill in a form acceptable to both the government and the lender, the earliest the funds could be released would be July.

“The WB funding seems to be going to July because some of the legislations (Conflict of Interest Bill) that were precedent to the release of these funds were delayed,”

“The Conflict of Interest Bill was a key Bill for the WB to give us the funding, and when it was unlocked, there was no time to take it to the WB board for approval. We are going to June 30 with a Sh97 billion hole that, as the CS, I did not prepare for.” Mbadi said.

As of today, Kenya faces a Sh97 billion shortfall in its 2024/25 budget, a gap the World Bank loan was intended to help close.

The Conflict of Interest Bill, 2023 aims to strengthen ethical conduct in Kenya’s public service by curbing self-dealing, contract manipulation, and unregulated business interests among officials.

President William Ruto declined to sign the bill after MPs weakened 12 critical clauses, arguing that the amendments undermined its ability to combat corruption.

While the bill addressed conflict of interest, Ruto called for stronger provisions on transparency and enforcement to align with constitutional values.

“It is unacceptable for the Houses of Parliament to deny the country a much-needed instrument in the war on corruption by continuing to sabotage the passage of the Conflict-of-Interest Bill… unless, my friends, there is a conflict of interest in the passing of the conflict-of-interest legislation,” he said in a State of the Nation address last year.

Supporters see his move as a stand for reform, but critics warn the delay could worsen fiscal challenges.

As of June 5, the National Assembly passed amendments addressing Ruto’s concerns, clearing the way for the bill to move to the Senate.

Provisions objected to by the President included vague definitions of conflict of interest, permission to accept gifts while in office, and lenient disclosure requirements.