Kenya Development Corporation as an Instrument of Economic Growth

Development Finance Institutions (DFIs) seek to leverage on private investment that has commercial viability and developmental impact in target sectors usually shunned by commercial banks due to perceived excessive risk. DFIs have been in existence in Kenya since the 1960s, but development financing gap still exists. This chapter uncovers the evolution and role of DFIs in the development discourse, paying special attention to Kenya Development Corporation (KDC). We illuminate the historical context, political economy and institutional context, corporate governance, regulation and supervision, potential contribution to development outcomes, challenges encountered, as well as policy options. We establish that although KDC’s activities are growing, it, nevertheless, lacks proper regulation and supervision. There are legal barriers arising from the laws around which KDC was established that hinder its core mandate. Further, the political class/actors influence the activities of the corporation through the appointment of the board of directors and CEO which affects independence in decision making. The global political economy and development agenda which most often are characterized by value chain disruptions have also affected the corporation. KDC adheres to high standards of corporate governance. However, there is no framework for measuring development impact. The main challenge facing KDC is lack of sufficient and affordable funding.