Budget hearings expose widening gap between spending plans and funding

Despite, to their credit, the National Treasury livestreaming the event, many might have missed the ongoing Sector Budget Hearings for the 2027/28 fiscal year and the medium-term at KICC.

Lest we forget, next year’s budget is being prepared on an accelerated calendar, with the Budget Statement due to be read on March 18, 2027, with the expectation that both the revenue-raising Finance Bill and the spending-related Appropriations Bill will have been passed into law by March 31, 2027.  Early budget passage clears the tracks for our political class to hit the campaign trail as we head into the 2027 election.

Are these hearings useful?  Here’s how it’s supposed to work in theory. The earlier Budget Review and Outlook Paper (BROP) sets out resource ceilings for each of our 10 Medium-Term Expenditure Framework (MTEF) sectors (which, as noted before, are neither aligned with our five planning clusters under the Fourth Medium-Term Plan (MTP IV) nor with the 20 sectors the Kenya National Bureau of Statistics (KNBS) uses to track the economy, but that’s a story for another day). Each of these 10 MTEF sectors is then supposed to prepare a Sector report, though we never get one for National Security.

These sector reports provide a programmatic and financial review of the past three years, excluding the current one, so this year the reports cover 2023/24 to 2025/26 but exclude the current 2026/27.  The reports then set out three-year programme plans supported by resource bids or estimates, so that’s 2027/28 to 2029/30.  In principle, these resource bids shouldn’t be at significant variance with the BROP ceilings.  So, restricting ourselves to the immediate 2027/28 resource bids, what do we see this year being presented to the public (assuming that the unpublished and absent National Security sector sticks to its ceiling)?

Against an overall resource ceiling of Sh3.271 trillion (Sh2.219 trillion in recurrent spend, Sh1.052 trillion in development spend), total resource bids rocked in at Sh4.973 trillion (Sh2.955 trillion recurrent; Sh2.018 trillion development).  That’s a total overbid across nine sectors of Sh1.702 trillion (Sh736 billion recurrent, Sh966 billion development).  Now, here’s the twist the public doesn’t see. That Sh4.973 trillion resource bid reflects hundreds of programs that the national government promises to deliver to Kenyans.  What’s missing is the extent to which programs will be delivered on the smaller Sh3.271 trillion ceiling.  In other words, what has the national government prioritised within the ceiling, and what is it forced to drop?

Think about it this way.  As a general view, only 2/3rds of government’s planned programmes are funded.

To be clear, this serial overbidding, now an established annual (mal)practice, cuts across all sectors.  Education wants Sh1.161 trillion, but is restricted to Sh849 billion (up from Sh784 billion in current 2026/27).  Energy, infrastructure and ICT want Sh1.053 trillion (including Sh900 billion for development – what happened to the National Infrastructure Fund?), but are capped at Sh646 billion (from Sh530 billion this year).  Health wants more than double its ceiling – Sh406 billion against Sh195 billion – up from Sh176 billion this year.  Ditto for environment, water and natural resources, bidding Sh271 billion against a Sh132 billion ceiling (Sh121 billion this year).  Agriculture and rural development? A Sh178 billion bid versus a Sh108 billion ceiling (Sh111 billion this year).  General economic and commercial affairs? Sh166 billion versus Sh62 billion (Sh61 billion this year).  Social protection, culture and recreation?  Sh167 billion versus Sh101 billion (Sh101 billion this year).  Governance, justice, law and order?  A Sh637 billion ask against a Sh385 billion ceiling (Sh361 billion this year).  Public administration and international relations? Sh576 billion versus Sh432 billion (Sh359 billion this year).  Did somebody just say zero-based budgeting?

For the everyday Kenyan, these mind-boggling numbers are just numbers.  Which is probably why you are unlikely to get an in-depth discussion around which programs are funded or not at these public hearings.  Don’t forget that these overbid budgets offer the perfect escape hatch for future Article 223 shenanigans.

It is also worth remembering that this Sh4.973 trillion in resource bids is simply the cost of national government, before you factor in about Sh3 trillion more for consolidated fund services and counties.  In perspective, the current 2026/27 cost of national government is Sh2.923 trillion; over Sh2 trillion less.  For the umpteenth time, zero-based budgeting doesn’t work without zero-based programming and planning.  How do you justify a budget from scratch if you haven’t established the baseline cost of service delivery? 

If the first gap in these hearings is about the tenuous links between planned programmes and funding, the second speaks to the balance of resources between sectors, basically sectoral proportions of total spending. Let’s illustratively use global spending benchmarks, and restrict our analysis today to national government (because strictly speaking, total government spending should include county governments).

For education, both the resource ceiling (26 per cent) and resource bid (23 per cent) exceed the Incheon benchmark of 20 per cent, so the question for this sector is more about quality than the quantum of spend. The proportion for healthcare – 6 per cent of total ceiling and 8 per cent of total bids – falls short of the 15 per cent Abuja benchmark, but we should remember that it is a devolved function.  Agriculture and Malabo’s 10 per cent? We’re at 3-4 per cent, but this is also a devolved function. Energy, infrastructure and ICT at 20-21 per cent approaches World Bank norms, while governance, justice, law and order exceeds the UN/World Bank norm of 10 per cent, coming in at 12-13 per cent of total spend.

National security, using the 2 per cent of GDP (9 per cent of budget) SIPRI benchmark, falls within range at 7-11 per cent, as does environment, water and natural resources at 4-5 per cent, which is around the UN’s 5 per cent SDG financing norm.   General economic and commercial affairs fall short of the 3 per cent WTO trade capacity benchmark at 2 per cent, while public administration and international relations significantly overshoot the 5 per cent Commonwealth benchmark at 11-13 per cent.  Finally, social protection at 3 per cent is far below the ILP benchmark of 2 per cent of GDP (9 per cent of budget).

Except for underfunded agriculture and social protection (and overfunded public administration), there appears to be reasonable balance in the budget proportions when compared to norms.  Yet, as noted above, the larger gap between resource bids and ceilings is in development.  A proper unpacking of recurrent-to-development proportions across sectors – ranging from 95 per cent recurrent in education to 78 per cent development in energy, infrastructure and ICT is also needed. Part of this discussion needs to centre on the idea that a productive state budgets around spending multipliers, while an extractive state simply adds up bureaucratic bills for taxpayers.  In short, spending quality, not just quantity.

So, are these hearings useful?  Well, they offer the public an important opportunity to interact with the national budget process, the output of which is finalised Sector Reports that will feed into the Budget Policy Statement.  And while it is almost impossible to plough through 3,704 pages across nine sector reports – which could be improved - bringing a big-picture lens, as done here, is just as useful an input.