NAIROBI, Kenya – July 28, 2025 – Leading global research groups, including Moody’s, Fitch Ratings, Standard Chartered, Allianz, and Citigroup, have downgraded Kenya’s 2025 economic growth forecast to 4.9%, down from an earlier projection of 5.0%, citing deadly anti-government protests and shaken investor confidence. The revised outlook, reported by Business Daily and echoed across posts on X, reflects mounting concerns over political instability, fiscal challenges, and external pressures that threaten Kenya’s position as one of Sub-Saharan Africa’s fastest-growing economies.
The downgrade follows a wave of violent protests that erupted across 27 of Kenya’s 47 counties in June and July 2025, triggered by public outrage over police brutality, soaring living costs, and governance concerns. The Kenya National Commission on Human Rights (KNCHR) documented 38 deaths and over 3,000 arrests during the July 7 Saba Saba Day protests, with the Independent Policing Oversight Authority (IPOA) reporting systemic impunity. These events, coupled with the custodial death of activist Albert Ojwang, have fueled widespread unrest, causing an estimated daily economic loss of KES 3 billion ($23 million), according to the Kenya Private Sector Alliance.
Moody’s, in a July 23 report, highlighted Kenya’s “grim fiscal outlook,” pointing to surging interest costs, underperforming revenue, and ballooning external debt obligations. The agency maintained Kenya’s Caa1 credit rating but noted that high domestic borrowing costs and a 65% debt-to-GDP ratio—well above the International Monetary Fund’s (IMF) 50% threshold for developing nations—could further strain fiscal stability. Fitch Ratings, which affirmed Kenya’s B- rating with a stable outlook in January 2025, warned that a fiscal deficit projected at 4.7% of GDP for the financial year ending June 2025, combined with investor wariness, could hinder growth. Standard Chartered, Allianz, and Citigroup echoed these concerns, citing a “downbeat investor sentiment” and delays in securing $750 million in World Bank funding, frozen over governance issues.
Kenya’s economy grew by 4.9% in Q1 2025, outpacing the regional average of 3.7%, driven by services (69%) and agriculture (23%). However, the World Bank cut its 2025 growth forecast to 4.5% in May, citing high debt levels (65.5% of GDP), negative private sector credit growth (-1.4% in December 2024), and restrictive lending rates. The IMF’s delay of a $600 million disbursement, expected in September 2024, further complicates Kenya’s fiscal position, as the funds are tied to stalled tax reforms following the scrapping of the controversial 2024 Finance Bill after deadly protests. The bill’s failure led Moody’s to downgrade Kenya’s credit score to Caa1 in July 2024, signaling heightened credit risk.
External pressures, including U.S. tariffs set to impact Kenya from August 1, 2025, and a potential La Niña weather pattern threatening agricultural output, add to the challenges. The Kenyan shilling, projected to weaken to 135–150 units against the U.S. dollar by year-end, faces pressure from a narrowing interest rate differential with the U.S. and a persistent current account deficit. Despite these headwinds, recent policy actions, such as the February 2025 Eurobond buyback, have bolstered investor confidence, with Moody’s revising Kenya’s outlook to positive in January 2025.
The Nairobi Securities Exchange (NSE) has shown resilience, with the NSE All Share Index climbing 22.41% from June 2024 to January 2025, but analysts warn that continued instability could deter foreign direct investment (FDI), which dropped by $3 million in June 2025. Technology and agriculture remain bright spots, with Kenya’s “Silicon Savannah” attracting $638 million in venture capital in 2024.
The Central Bank of Kenya (CBK) projects a 5.1% growth for 2025, slightly above the revised 4.9% consensus, banking on easing inflation (3.6% in September 2024, the lowest since 2012) and robust consumer spending. However, analysts urge structural reforms, including targeted tax policies and enhanced disaster preparedness, to sustain growth and reduce poverty, which remains at 34% at the international poverty line. As Kenya navigates these challenges, the government’s ability to restore stability and secure multilateral funding will be critical to reversing the downgrade and rebuilding investor confidence.
