Wealth creation, spending discipline: What I want to hear in Mbadi's budget

National Treasury Cabinet Secretary John Mbadi during a media engagement on the 2026 Finance Bill in Nairobi, on May 26, 2026. [Benard Orwongo, Standard]

The only thing we don’t know about Treasury Cabinet Secretary John Mbadi’s Budget Statement on Thursday is whether or not Pay-As-You-Earn tax bands will be adjusted, first as promised to lower income earners, and second, as recommended, mostly by the bankers, for top income earners (harmonising the top individual tax rate with the corporate one). 

Strictly speaking, because the 2026 Finance Bill is still a collection of proposals yet to be fully processed by the National Assembly’s Finance and Planning Committee, you could argue that Mbadi will present a budget to Parliament and the nation based on an unsettled revenue projection, but let’s not quibble.

This will be Mbadi’s second Budget Statement, but the presentation form of this annual ritual is familiar, and we have covered this before. 

In the introductory part of the address (Part 1), he will outline this administration’s achievements across the five Bottom Up Economic Transformation Agenda (Beta) pillars (agriculture, MSMEs, health care, housing, digital) as well as sectors such as education, energy and infrastructure and social protection. 

Since we are three years into Beta, it would be lovely to get a translation from the macro numbers around completed activities to actual service delivery impacts at output level and real welfare/wellbeing outcomes at “micro” level for the people, though I am not optimistic.

Indeed, this is probably the point where these achievements are not highlighted in a vacuum, but linked back to the baselines and targets officially set out in the 2023-2027 Medium-Term Plan (MTP IV). 

As said before, MTP IV is supposed to annually track 305 outcome and 1,522 output indicators (although, confusingly, the Medium-Term Expenditure Framework (MTEF) budget framework uses about 170 outcome and more than 4,000 output indicators).  We need to see the fabled “one government” framework in practice.

This is also the part where the Cabinet Secretary outlines this year’s budget imperatives before setting out the budget theme, which likely will not be the same theme underpinning the earlier Budget Policy Statement. 

For reasons unknown, we cannot carry a single theme through an entire budget process. 

Part 2 on economic policy context will speak to the global, then domestic (including monetary and fiscal) context and prospects, and the 2026/27 budget summary presented to Parliament with the Budget Estimates in April provides a glimpse of what the CS will cover. 

The global economic outlook remains uncertain, particularly given “on-off” happenings in the Middle East, with global growth for 2026 projected at 3.1 per cent; advanced economies expected to grow by 1.8 per cent, emerging and developing economies by 4.2 per cent and Sub-Saharan Africa by 4.3 per cent.

The domestic context begins with a drop in growth between 2024 and 2025 from 4.7 per cent to 4.6 per cent. After initially projecting 5.3 per cent growth for 2026, Treasury has now dropped that forecast to five per cent, with the CS suggesting that this expectation might be further lowered. Both the International Monetary Fund and the World Bank have dropped their own forecasts to between 4.4 and 4.5 per cent.  Instructively, Parliament’s own think-tank, the Parliamentary Budget Office, projects 4.4 per cent.

So, the first thing we might want to hear is if the official growth projection has changed, by how much, and how this potentially affects the entire macro-fiscal framework, which may effectively negate the actual budget the CS is presenting.  This is a world of swings and roundabouts, right?

Further, to repeat myself from last year, while the custom is to speak only to Gross Domestic Product (GDP) and other “macro-babble”, shouldn’t a statement on our domestic policy context capture the state of poverty, inequality and jobs, or even the state of our human development indicators at minimum?

Third, is there more that could be communicated on the economic outlook, beyond the broad GDP number?  Like say, growth projections by sector, or by industry.  Ideally, this might also be the place where the broad contours of our “First World” plan would also be clearly laid out.

Because this where we have a “output gap” between this part and Part 3 on policy and reform priorities  in which we will get a wordy narrative on planned initiatives under Beta, themes such as climate change and structural reforms covering public finance, public procurement, public investment, State corporations and the like.   

Essentially, it is impossible to link the policy actions in Part 3 with the earlier economic projections.  But more to the point, there is no “grand strategy” that guides these initiatives.  For the umpteenth time, this is exactly the moment for the Sessional Paper successor to Vision 2030.

One day we might get round to the sort of grand thinking that considers how we can equitably grow our estimated Sh55 trillion national wealth (including Sh45 trillion in private wealth in the context of an inadequately recorded but currently negative net worth public sector balance sheet) – over Sh120 trillion counting human capital – instead of Sh17 trillion GDP or Sh3 trillion in taxes.

That wealth number estimates our natural capital at Sh15 trillion, with as much more in potential.

But this requires a mindset shift from short-term survival budgets to long-term wealth creation.

 Part 4 will lay out the key elements — revenue, spending, debt — of the fiscal framework before providing high-level quantified aggregates on each.   This part might benefit from an honest and transparent review, as is done in South Africa, of audited fiscal outturn for past 2024/25, expected outturn for current 2025/26 leading into estimates for 2026/27.

On revenue in particular, three avenues could be examined.  First, how the “tax gap” between a current tax take of 13 to 14 per cent of GDP, and what is seen by advisers as a potential tax take of 22 per cent is being addresses.  Second, and in reverse, an accounting for the projected growth in tax revenues from 2025/26 to 2026/27 since it would appear that this growth will be achieved on the back of nominal economic growth without the need for a Sh120 billion Finance Bill. 

Expect Part 5 on spending priorities and resource allocations to be another lengthy monologue, even though it will largely mirror Part 2 on policy priorities and reform priorities.  The only innovation I would look for here is an objective assessment — as carried in my previous article — of spending performance against international norms. 

Finally, we get to Part 6 on revenue-raising measures.  This is a survival budget, but I will repeat my call from last year on the need to move beyond purely tax measures to a comprehensive view on resource mobilisation.  As said them, this should include justifications and quantifications on each resource mobilization measure – taxes (existing and proposed), non-tax revenue (existing and proposed), development partner support or donor aid (grants and loans), privatisation proceeds and PPP fund raising.  In this way we move from a Financial to Resourcing Statement.

Wealth creation, not GDP?  Spending Norms?  Comprehensive resourcing not revenue? That’s the truly long-term balance sheet view of Kenya I want from Mbadi.  I can dream, can’t I?