Kenya could unlock more employment opportunities by reducing the cost of doing business and creating a friendlier environment for micro, small and medium-sized enterprises (MSMEs), the World Bank has said.
In its November 2026 Kenya Economic Update, the lender identified governance reforms targeting informal businesses as an important pathway towards improving incomes and expanding employment.
The proposed measures include reducing bribery demands by traffic police and county inspection officers, simplifying regulations and introducing clearer rules governing informal economic activities. The World Bank also recommended fully implementing reforms to decriminalise minor traffic offences and introducing an instant fines system.
It said reducing unnecessary interference by frontline enforcement officers would allow small businesses and informal workers to operate with fewer disruptions. The report noted that improved business conditions would enable micro and small enterprises to invest in assets, expand their operations and eventually employ additional workers.
For instance, small traders could invest in better market stalls and increase their stock, while motorcycle operators could upgrade their motorcycles and improve their businesses. Such investments would potentially increase household incomes, create employment opportunities and strengthen the resilience of families against economic shocks.
The World Bank further observed that expanding small businesses could generate additional tax revenue and increase social insurance contributions. It recommended closer cooperation between national and county governments, alongside engagement with associations representing traders, drivers and other informal workers.
The lender noted that counties with committed leadership could take the lead in implementing the proposed changes and demonstrating improvements.
