Beyond the Budget: Kenya needs an economic story, not just a fiscal one

Let’s cut to the chase. 2027 messaging might look like this. Kibaki fixed the economy by taxing it. Ruto is taxing the economy to fix it. In between, Uhuru’s debt spree altered the fiscus (public treasury) so much more than the economy that Ruto must borrow simply to keep the lights on in government.

This is an arguably incomplete economic message, but it is a seductive political one. In 2027 terms, it doesn’t matter how much development “hardware” we see if it isn’t hitting our pockets. On the other hand, our debt mountain will still be there even after we troop to polling stations.

Think of this as the broad context that closes the national government’s 2026/27 budget season. For the Kenya Kwanza administration, this is their last full-year budget before next year’s ballot.

Of course, we also have 47 counties with their own 2026/27 budgets, including their respective appropriations and finance bills, but nobody is really watching. Somewhere along the way, we seem to have lost the idea that counties were where the real action would be – think economic growth poles, not overhead cost centres – with national left to policy, regulation and standards.

In this rendering, we wouldn’t be spending more than twice as much on devolved agriculture at national as we do across all counties, or roughly equal amounts between both levels on healthcare, or up to 50 per cent more on general economic affairs (trade, commerce, industry, tourism, etc) at national. Counties have two basic jobs: local service delivery and economic development.

But let’s get back to the national budget. Reportedly, President William Ruto will sign off on the 2026 Finance Bill and 2026/27 Appropriations Bill today, at the beginning of “June 25th week”, and we are already hearing loud noises from all and sundry about Thursday’s planned demos.

Yet, two years on, it’s no longer just about the Finance Bill; it’s about accountability and justice beyond cash compensation. And, to be clear, June 25, 2024, changed what Kenya is and wants.

Today, it’s worth resurfacing a few of my familiar beefs to close this budget preparation season.

First, we need to put as much energy into tracking and monitoring budget execution and programme implementation as we do with budget preparation and spending promises. Some of this already happens given the excellent work of the Controller of Budget (on budget implementation) and Auditor-General (on audit), but we still haven’t got to the point where we have a holistic and connected view of what I call our 3-in-1 public finance management cycle (next year’s budget preparation, this year’s budget execution, last year’s audit and oversight) as a basic minimum.

And that’s before we get to the anomaly we call supplementary budgets, which, in addition to taking excess advantage of Article 223 on “emergency spending”, always seem to end up at levels originally proposed. My own take on what Treasury calls “spending pressures” is that we are trying to use public spending as a substitute for a low-productivity economy, except the spending itself has low fiscal multipliers (productivity). The other theory, as an IMF working paper once found, is that high public spending generally correlates with high social fractionalisation (a divided society).

But that’s just the beginning. The bigger detail we ignore is the link between spending amounts and programme outputs and outcomes (where programmes equal service delivery plus development (projects). Or more simply, moving beyond how much we are spending to what we are really buying. It is one thing to celebrate a huge education budget, but another to question its imbalance between teaching personnel (the bulk of the budget) and supporting infrastructure investment. Knowing how much government costs (spending) is not the same as knowing its cost (norms).

Second, there is the Finance Bill itself. Plenty of correct noise has been made about the fact that, simply, 35 per cent of our budget-making leaders have just made 100 per cent of next year’s new tax rules for 100 per cent of the people, but that’s a matter for our low-quorum parliamentary Standing Orders designed to ease law-making, or even our broader constitutional design. Yes, after constitution making, annual budget making is probably next in the hierarchy of legislative importance (though I would argue that planning ranks higher), but this is the bed we must lie in.

My different beef is with the extreme effort that goes into this incremental bill, now reportedly worth only around Sh20 billion in new tax measures from Sh120 billion, then Sh99 billion. I look forward to the mad, radical and transparent day when the President signs off on a (Total) Revenue Act that gives full substance and balance to the (Total Spending) Appropriations Act. In the fullness of time, even a medium-term Revenue Act that is less distorting than annual Finance Bills.

There is also the “buoyancy versus elasticity” argument that almost all of our tax revenue growth in recent years has been organic (economy, inflation, population), and these annual Finance Acts hurt collections. MPs wouldn’t know this because they aren’t using any models or simulations.

And maybe they’re not getting them because revenue looks like the balancing figure between spending and the deficit (borrowing), or as we used to say, revenue keeps chasing expenditure.

My final beef is also familiar, but more recent. Even with budget preparation now complete, you still feel we have a missing picture. This is the picture that goes beyond government’s outsized role in the economy to the actual economy itself; a picture that speaks not just to revenues but resources, or what I call a “balance sheet” perspective (think of the budget as an “income statement” perspective). This is where we move from short-term cash flow thinking to a long-term wealth creation perspective, where we are more specific about, say, the National Infrastructure Fund, or Sovereign Wealth Fund, as part of a quantified and costed master plan.

Less esoterically, something specific about our economic “dog” beyond its fiscal “tail”. Not the usual “development” talk, maybe something about investment and job gains from foreign travels,

You can see that this Kenya Kwanza administration is trying to think out of the box on how Kenya moves forward with the least amount of borrowing, but you don’t get the full picture. So, here’s a closing thought. Maybe the daring, but clever, messaging for this “June 25th week” is a “beyond the budget, full economy/resourcing” statement from the Presidency to Kenyans.