State agencies urged to prioritise PPPs in budgeting

National Treasury Cabinet Secretary John Mbadi says no allocations will be made to state agencies if projects against which the cash has been requested can be funded through public-private partnerships. [Elvis Ogina, Standard] State agencies are under strict instructions to prioritise private funding in their 2026-2027 budget requests. The National Treasury insists that allocations for the year to the entities will be based on the robustness of their public participation engagement in the budgeting process. The strict guidelines will also affect ministries and departments as the government seeks to reduce their overreliance on the Exchequer amid shrinking fiscal wiggle room. National Treasury Cabinet Secretary John Mbadi said on Monday no allocations will be made if projects against which the cash has been requested can be funded through public-private partnerships (PPP). Likewise, no money will be released to ministries, departments and agencies (MDAs) if there is no documentary evidence of public participation. Amid the privatisation of state agencies, led by Kenya Pipeline Company (KPC), where the government seeks to cede more than half of its shareholding, Mbadi's sentiments on private funding for MDAs point to the country's squeezed fiscal space. Speaking during the launch of the 2026-2027 and medium-term budget preparation process in Nairobi, the CS, while emphasising the role of PPPs in the economy, said state agencies must consider private funding as they present their numbers. "I want MDAs to embrace PPPs. Before you ask us for extra budgetary allocations, exhaust the possibility of raising funds through PPP, especially for commercially viable projects," he said. The CSS cited the Rironi-Mau Summit Highway and the Galana Kulalu project, which are under PPP, saying the country's fiscal space has shrunk, necessitating innovative ways to fund infrastructure projects. "I want to encourage all the MDAs, including county governments, to come up with projects that can be funded through PPP," he added. The CS added that MDAs should also ensure their public participation processes are extensive to capture the views of all key stakeholders. He argued that this approach will enforce inclusivity in the decision-making process. "All your requests (MDAs) should be subjected to the test (public participation). If you are not conducting public participation, I am sorry, you may not get the resources you are requesting from the National Treasury," said Mbadi. In the 2026-2027 financial year, the government seeks to collect Sh3.4 trillion in ordinary revenue compared to Sh3.3 trillion projected in the current year. This will be 17.7 per cent of the country's gross domestic product compared to 17.2 per cent for the 2025-2026 fiscal period. National Treasury Principal Secretary Chris Kiptoo noted the country's shrinking fiscal space, noting reduced allocations to development that have dropped to 9.2 per cent of the budget, hence the innovative funding mechanisms such as PPPs. "Government-funded development projects have declined. Now, instead of the 21 per cent we used to enjoy, only 9.2 per cent of our budget is going to development," he said. The PS said much of the revenue collections now go to offsetting interests on loans and pensions. "Interest rates and pensions are taking up 48.5 per cent of ordinary revenue," he said, noting that this was up from 16 per cent in 2013.

State agencies urged to prioritise PPPs in budgeting

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State agencies urged to prioritise PPPs in budgeting

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