President Kibaki has promised to stamp out corruption

Economic growth for 2003 will hit 3%, despite the weak outlook for the world economy, the bank said.

In January, the bank forecast annual growth of 2.5%.

But in its monthly report it said that investors had become more confident about Kenya's future, thanks to the government's commitment "to address existing business concerns".

"The government has begun fighting corruption while the implementation of key reforms in various sectors of the economy, including reconstruction of dilapidated infrastructure is underway," the bank said.

International aid

The bank said that in the prevailing business environment, Kenya would benefit from increased regional and international trade.

President Mwai Kibaki, who led the opposition National Rainbow Coalition to power after 24 years of rule by Daniel arap Moi, has promised to rid Kenya of corruption.

Analysts say that, during his first two months in office, he has shown he is serious about fighting the problem.

International donors had stopped lending to Kenya because of high-level corruption.

But they have said they will give aid again once the government has taken concrete action to deal with the problem.