Economic Survey 2026 delivered no surprises

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The 565-page Economic Survey 2026 is a slow read.

The publishers seem to know our reading habits and have gifted us with a popular or summarised version. The coloured photos are attractive, but the data are not. 

The report starts with a global outlook before coming home. It highlights global statistics like growth and inflation. Data for the East African region is shared as well. 

What was missing, and what I would have loved, is data on our sentiments and feelings toward the economy.

Are we happy? Are we optimistic? Such feelings have a big impact on economic growth, hence the ascent of behavioural economics. Let’s briefly interrogate the report. 

One of the key highlights is that apart from Somalia and DR Congo, all the other East African countries trounced Kenya on GDP growth in 2025.

The stars are South Sudan, with 24.3 per cent, and Rwanda, with seven per cent. Oil export resumption drove South Sudanese growth; it’s not that magical.  

Kenya’s inflation fell to 4.1 per cent in 2025 from a high of 7.1 per cent in 2023. Remember, the high cost of living was partly behind the 2024 Gen Z-led protests.

What is the secret to this fall? I suspect it’s a stable exchange rate (any economist would say it’s too stable), which stabilised the price of oil, whose price is also controlled.

Add reduced demand because we have no money. It has been taken by higher or more taxes and levies, which shift money from the more efficient private sector. Don’t forget corruption and rare salary raises.  

The lower economic growth rate from 5.7 per cent in 2023 to 4.6 per cent in 2025 adds credence to our argument that we have no money.

Faster economic growth leads to some inflation, which, like spice, is not always bad. Try deflation. Lower growth can be easily explained by the echoes of COVID-19, the 2024 protests, the war on terrorism, and the Ukraine war. The Iran war will be factored in next year‘s report. 

Our political anger and uncertainty may have made Kenyans consume and invest less. The popularity of bonds demonstrates our reluctance to take risks and invest, further slowing down the economic growth rate. 

A GDP growth rate of 8-10 per cent should be our target. Three sectors dominate our economy. Services contribute a whopping 55 per cent to GDP, followed by agriculture and industry.

The 55 per cent explains why 83.8 per cent of the jobs are in the informal sector. Could industrialisation reverse that?

Why are jobs growing faster in the public sector than in the private sector? Less technology adoption? Overemployment? Does this explain why most of the government expenditure is recurrent, including in counties?  

Why did the liquidity ratios of commercial and microfinance banks go up in 2025? We don’t want to borrow? Another reason GDP growth slowed?  

Tax remains the key source of government revenues, almost 80 per cent. On the expenditure side, interest rate payments on debt are the highest cost, followed by education, general public service, and economic affairs (what’s that?). Servicing our debt is our leading economic worry. Someone must bell the debt cat!  

In trade, oil remains the biggest import, followed by machinery. Time to industrialise, exploit our oil, or go electric in cars and trains?

We still import more than we export, with China, the United Arab Emirates (UAE), and India as the key import partners (oil and machinery).

Tea, cut flowers, and vegetables/fruits were the key exports. Agriculture is still our economic backbone. Uganda and Pakistan are our leading export markets. Why did wheat and green tea production decline? Horticulture is a bright star. We should fully exploit our tropical location like the South Americans.

Why did logging do so well in 2025? Did we replant trees? Why are so few marine fish within 500km of the coastline?   

Why did the peak power production in 2022 start declining? Why has manufacturing sector growth declined from 7.1 per cent in 2021 to 2 per cent in 2025? More imports? Remember, one of the key imports beyond oil is machinery. Construction is a bright spot, but where did the 365km of superhighway come from? Reclassification? Error? Where is the money for construction coming from when economic growth is declining?  

Tourism is doing well, growing by 6.2 per cent in 2025. Clearly, charity begins at home; most of our tourists came from Africa, followed by Europe and North America. What did they come to see? In transport and storage, the Standard Gauge Railway (SGR) is doing better than the old rail. Mombasa port has more imports than exports.

Motorcycles are doing very well; registration is about 54 per cent of newly registered vehicles. Is that evidence of our lower purchasing power? We should report on the efficiency of this sector.  

ICT is dominated by mobile money, with transactions totalling Sh21 trillion in 2025, about five times our next budget! What of ICT gains in other sectors? Artificial Intelligence deployment?  

In education, most of the budget goes to recurrent expenditure. Yet Competency-Based Education (CBE) needs lots of resources beyond teachers.

We got 722,500 university students in 2025 against 890,000 in other tertiary institutions. Such high enrolment and slow economic growth are not a good combination.  

In health, respiratory diseases and malaria are the leading ailments. Very curious data: the number of births increased after 2021.

Post-COVID-19 recovery? The national government spends more money on health than counties, yet it’s a devolved unit.  On governance, peace, and security, we still have 598,835 cases pending. Why did the number of police officers decrease in 2025 from the previous year, except for Directorate of Criminal Investigations (DCI) officers? 

Finally, on social and economic inclusion, women are least represented as county commissioners and chiefs.

They are doing their best as CEOs of independent constitutional officials, assistant county commissioners, and ambassadors. How do you explain the 58.5 per cent of women who are magistrates and zero Kadhis?

What of such data from the private sector?  

I missed data on innovation, such as patents and productivity. These are at the heart of economic growth.

What of the counties’ economic performance? Any translation of the economic survey into Swahili and local languages? Or that is left to AI? 

Clearly, we need to catalyse our economic growth and ensure 2027 will not be a drag on that growth. Let’s see if the budget speech will address that.