1.      Introduction

The Government of Kenya, with support from the World Bank, is implementing the Kenya Jobs and Economic Transformation (KJET) Project (2024–2029). The Project Development Objective (PDO) is to catalyse private-sector investment, expand access to markets, and scale sustainable finance across key sectors to promote inclusive economic growth and job creation.

The KJET project is designed around four mutually reinforcing components, implemented by several government agencies. These interventions aim to support private sector growth, enhance MSME competitiveness, promote green financing, and strengthen project management and evaluation systems.

Component 1: Strengthening Business and Investment Enabling Reforms

This component addresses barriers to private sector growth through business regulatory reforms, investment policy improvements, institutional capacity development, and the integration of a digital One Start One Go (OSOG) platform. Its implementation is led by the State Department for Investments Promotion (SDIP) and the Kenya Investment Authority (KenInvest) within the Ministry of Investments, Trade and Industry (MITI), with technical assistance provided where necessary through the Investment-Enabling Environment (IEE-ACP) advisory services.

The first activity involves sector scan analysis and segmentation. This will enable KenInvest to target priority sectors with the highest potential to attract foreign direct investment and support exporters. The analysis will define the value propositions of selected sectors and inform the preparation of sector-specific promotional materials. To complement this, KenInvest will also be supported to undertake investor outreach activities aimed at securing concrete investment deals.

The second activity centres on reviewing and streamlining both horizontal and sector-specific investment and business regulations. By applying a risk-based approach, particularly through the B-READY methodology, SDIP and KenInvest will identify regulatory inefficiencies and reduce administrative burdens in priority sectors. This legal and regulatory reform process will be supported by accompanying economic analysis, helping to prioritize which procedures are most suited for digitalization.

The third activity involves the establishment of the OSOG platform. This will provide a centralized digital portal that consolidates information on business procedures and, in phased implementation, digitalizes registers and selected administrative processes. It will reduce costs, improve predictability for investors, and ensure interoperability with existing government systems. Cybersecurity and data protection measures will be central to the system’s design.

Capacity development is another important area. This will involve preparing standard operating procedures, organizing training sessions, and facilitating study visits for staff of SDIP, KenInvest, and sectoral regulators. The training will focus on the adoption of risk-based regulatory approaches and ICT applications to sustain reforms. Finally, reform monitoring and communication activities will be undertaken. These will publicize improvements in Kenya’s investment climate, with targeted campaigns to reach foreign investors. Participation in international conferences will showcase reforms and highlight services available through OSOG.

Component 2: Enhancing MSME Cluster Competitiveness

This component responds to the challenges facing micro, small, and medium enterprises (MSMEs), particularly their limited linkages with larger firms and weak capabilities. It will build capacity for cluster-based development, provide business development services, and support co-investment in equipment and machinery. The component is led by the State Department for MSMEs Development (SDMSME) and the Micro and Small Enterprises Authority (MSEA). It will complement existing government initiatives such as Constituency Industrial Development Centres and link MSMEs with downstream private sector partners.

The first subcomponent focuses on technical assistance for competitive cluster development initiatives. It will build the institutional capacity of the Ministry of Co-operatives and MSMEs Development, SDMSME, and MSEA to design reforms that remove policy constraints and market failures. The initial step is a mapping exercise of five priority value chains across the country, providing a detailed analysis of where opportunities and value addition are concentrated. This analysis will guide the identification of constraints and shape future interventions. The subcomponent will also strengthen MSEA’s ability to support clusters through digital marketing platforms and develop tools for assessing climate risks and recommending adaptation measures for value chains.

The second subcomponent emphasizes building the capacity of MSME clusters themselves. Support will be structured around subprojects, each benefiting either an association, a cooperative, or, in exceptional cases, a single MSME with high export potential or significant backward and forward linkages. Each subproject will provide an integrated package of business development services such as training, quality improvement, and market linkages. In addition, selected subprojects will receive co-investment support for machinery and other productive assets. The approach draws on the World Bank’s experience with Productive Alliances in agribusiness but is tailored to non-agricultural value chains. Over the life of the project, about 1,200 subprojects will benefit from business development services, while approximately 600 will receive targeted co-investments. This will improve productivity, standardization, and the capacity to meet commercial opportunities identified during the application process.

Component 3: Scaling Up Green Financing and Strengthening Climatic Resilience for SMEs

The third component seeks to mobilize private green capital and strengthen resilience to climate shocks among SMEs. It will be overseen by the SDIP, with the Kenya Development Corporation (KDC) as the implementing agency. This component complements existing World Bank operations such as the Supporting Access to Finance and Enterprise Recovery (SAFER) project and the Kenya Industry and Entrepreneurship Project (KIEP).

The first subcomponent involves the creation of a Green Investment Fund (GIF). The project will capitalize KDC, which will then act as a limited partner investing in the fund. The GIF will provide long-term, patient capital, including equity and mezzanine financing, to SMEs adopting green technologies. To attract private investors, the fund will be structured using junior equity and other risk-adjusted instruments. Its design follows the Cascade approach, which emphasizes maximizing private sector finance while avoiding the displacement of existing capital.

The second subcomponent will establish a Climate Disaster Credit Facility, also managed by KDC. This facility will provide contingent credit to MSMEs affected by climate-related disasters such as droughts and floods. The credit will be non-collateralized and triggered when pre-defined conditions are met, reducing the risk of insolvency for viable businesses affected by external shocks. The facility is expected to target smaller MSMEs that are vulnerable but have potential for job creation. By stabilizing these businesses during crises, the facility will enhance their survivability and safeguard employment. KDC will collaborate with MSEA to ensure that MSMEs benefiting from Component 2 also have access to this credit. Technical assistance will further explore additional financing instruments, such as insurance, to expand the scope of the facility.

Component 4: Project Management, Monitoring, and Evaluation

The fourth component strengthens project management and monitoring functions to ensure effective implementation across agencies. It will finance coordination by MCMSME and MITI, capacity building for staff, and systems to sustain impact beyond the project.

Project management will be carried out by a team of technical and fiduciary specialists in procurement, financial management, monitoring and evaluation, and environmental and social safeguards. The component will establish and strengthen monitoring and evaluation systems, enabling consistent tracking of beneficiaries, project results, and impact. The system will also integrate with external databases to increase efficiency in monitoring.

Baseline data will be collected proactively to allow for robust impact evaluation and evidence-based decision-making. Regular site visits will be conducted to engage with beneficiaries and assess their satisfaction with project offerings. Communication strategies will be developed and implemented to inform beneficiaries and stakeholders about project activities, progress, and results. This outreach will help build awareness and accountability while documenting lessons learned during implementation.

Project beneficiaries

Overall, the project is expected to reach 40,000-50,000 beneficiary Kenyan workers through businesses. These will include firms receiving Business Development Services (BDS), co-investment from MSEA, equity investments from the Green Investment Fund (GIF), and/or Climate Disaster Credit Facility. BDS will improve firms’ business and financial management capacity, establish market linkages, increase productive capacity, and promote the adoption of climate smart practices. Co-investment and equity investments are expected to help firms expand and improve their productive capacity. Finally, accessing Climate Disaster Credit Facility will increase firms’ resilience to climate-related shocks. Such firm-level improvements are expected to translate to increased revenues and profits at the firm level. In turn, this will translate to new and/or improved jobs for 40,000-50,000 beneficiary workers, who are defined as workers in new and/or improved jobs that are employed by firms receiving BDS, co-investment, GIF equity investment, and/or Climate Disaster Credit Facility products.

All beneficiary figures are indicative and preliminary and will be tracked in the project results framework. Given the wide variation in the estimated number of informal and formal MSMEs in the country, even across government sources (Census and Economic Survey), it is not possible to estimate the share of MSMEs that will benefit directly and indirectly from the project. With backward linkages to other MSMEs, the project is expected to have a great indirect impact and strong demonstration effect, crowding in private capital from investors and commercial banks to reach additional MSMEs.