Budget: Of Mbadi dreaming of Singapore but stuck with hustler reality

National Treasury CS CPA John Mbadi at Bunge Tower on November 14, 2024. [Boniface Okendo, Standard] The annual planning cycle took a decisive milestone this past week. According to the Medium Term Expenditure Framework (MTEF) budget calendar for 2026/27, the Budget Policy Statement (BPS) must be submitted to the National Assembly for consideration and approval on Friday, February 13, 2026. This effectively concludes the technical stage in the development planning process for the coming fiscal year at the executive level. The next step is a short window to incorporate inputs from political actors and the public. The Public Finance Management Act of 2012 and accompanying Regulations of 2015 allow the National Assembly only 14 days to consider and approve, with or without amendments, the BPS after the National Treasury has submitted it to the Clerk. Otherwise, it passes automatically in the form Treasury has submitted it on the lapse of the 14 days. At the sub-national level, the County Governments are allowed another two weeks to align their County Fiscal Strategy Papers (C-FSP) with the BPS. The C-FSPs must be submitted to the respective County Assembly by February 28, where the Assemblies again are allowed only a 14-day window to consider and approve them. Effectively, the economic planning process for the country must be completed before March 15 each year. The only exemption provided in law is for the election year, when the budget calendar is fast-tracked for the planning and budget process to be concluded before Parliament and County Assemblies are dissolved in May in readiness for General Elections. The framers of the Constitution provided for these strict timelines to ensure budget allocations are aligned with planned priorities. In theory, spending of any public funds must be preceded by an approved economic plan. Big Numbers According to the draft BPS published on the website of the National Treasury dated December 19, 2025, the shareable revenue available for the two levels of government in the 2026/27 fiscal year is Sh2.982 trillion. This is proposed to be distributed at Sh2.553 trillion for the National Government, Sh420 billion for the Equitable Share for counties, Sh15.163 billion for the Equalisation Fund (inclusive of Sh5.561 billion arrears) and additional conditional grants to counties of Sh11.801 billion. The additional conditional grants for the counties are earmarked for Aggregated Industrial Parks, basic pay, and arrears for Community Health Promoters (CHPs) and mineral royalties. The overall revenue projections available for the 2026/27 fiscal year are Sh3.487 trillion, up from Sh3.321 trillion expected for the current fiscal year. This translates to 16.7 per cent of Gross Domestic Product. On the expenditure side, Treasury projects total spending to be Sh4.728 trillion. Proposed allocation distributions are Sh2.801 billion for the National Executive, Sh48.8 billion for Parliament, and Sh29.4 billion for the Judiciary. The Consolidated Fund Services that includes public debt repayment, pensions, and salaries for Constitutional offices, is projected at Sh1.427 trillion. Of this spending projection, recurrent expenditure would be Sh3.431 trillion while development will take Sh759.1 billion. The budget deficit is projected to increase from Sh901 billion in 2025/26 to Sh1.106 trillion in the coming fiscal year. Treasury proposes to finance this deficit with external borrowing at Sh99.5 billion and domestic net borrowing of Sh1.006 trillion. This indicates a continued credit squeeze for the private sector from the domestic credit market. It is the first time that the Treasury plans to cross the psychological one-trillion mark in domestic borrowing. On sector allocations, education takes the lion's share once again at Sh703.1 billion, followed by Energy, Infrastructure, and ICT at Sh534.6 billion. Health, Public Administration, National Security and Governance, Justice and Law take [takes take] Sh138.1 billion, Sh321.5 billion, Sh253.8 billion, and Sh283 billion respectively. It would be interesting to see how the banking and capital markets will respond to the policy incentives coming from the Monetary Policy Committee, which reduced the base rate to 8.75 per cent this week to boost private and consumer credit. Singapore or Hustlers Overall, the BPS is a very technical and long document at 138 pages. To make sense of the totality of its content and tease out the main issues in the plan, I sought help of the AI assistant for a general summary. The AI assistant relies on the overall theme of the document to generate a high-level summary of the main propositions. The theme for 2026/27 seeks to accelerate the gains of the Bottom-up Economic Transformation Agenda for inclusive and sustainable growth. According to the AI summary, the agricultural transformation pillar is still considered the main driver of growth in the country. Policy wonks at Treasury estimate that the sector supports over two-thirds of the households in the country and is a key driver of employment. The government proposes to sustain the fertiliser subsidy, committing to provide 2.3 million metric tonnes to 4.4 million farmers in the fiscal year. The government would further distribute 3.5 million fruit tree seedlings to enhance crop diversification and vaccinate 22.7 million livestock to boost productivity. On the Micro, Small and Medium Enterprises (MSMEs) pillar, Treasury estimates that the subsector accounts for 98 per cent of businesses and 84 per cent of employment in the country. This data underscores the huge informality of the economy that, in effect, undermines not only government revenue mobilisation but also policy transmission. To revitalise the subsector, Treasury proposes to inject sh.100 billion through the Hustler Fund to enhance local industries and undertake regulatory reforms to reduce barriers to the formalisation of these small businesses. On Universal Health Care, the government targets enrolling 35 million people under coverage by the end of this year. As of the end of 2025, an estimated 27 million Kenyans were enrolled on the SHA. Targets for the coming fiscal year are to increase CHPs to 120,000, integrate community health units with hospitals for coordinated care and strengthen digital health systems. Policy makers estimate that the current 107,831 CHPs support over 8.8 million households across the country. Important listed achievements are tuberculosis treatments at 89 per cent and immunisation outreach coverage estimated at 80 per cent. The Affordable Housing Programme is listed to have 214,057 housing units under construction. The government says the subsector has created 428,000 jobs and is projected to reach one million jobs in 2026. The target for the fiscal year is for the government to establish 15 building materials centres to reduce the costs of construction. On the final pillars of Digital Superhighways and Creative Economy, Treasury estimates that 37,645 kilometres of fibre optic network have been installed and nearly two million individuals trained in digital skills since 2022. The Open University is highlighted as a key driver here, with 30 degree programmes and enrolment of 5,063 students. The creative economy initiative is estimated to have trained over 240,000 youths in entrepreneurship. It is not clear if the ongoing NYOTA programme is included in this data. Finally, the operating environment in 2026/27 is projected to likely suffer from severe weather, likely to impact agriculture negatively and the allocation of resources. Treasury lists droughts and floods as likely internal factors to impact the plan. From the external environment, the global cost of energy, geopolitical tensions and trade restrictions are expected to impact the economy through inflationary pressure, leading to general price increases for consumers. Overall, while the political elites dream of Singapore, it appears the technocrats still lean on the hustler narrative. For the masses, they still remain in the dark as to at what point the hustler agenda was abandoned and what the road to Singapore looks like. The ruling elites now say we'll have a stopover in Singapore on the way to Canaan.

Budget: Of Mbadi dreaming of Singapore but stuck with hustler reality

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