Introduction: Why Every Kenyan Should Understand the Budget

Every year, the Cabinet Secretary for Treasury stands before Parliament to present the National Budget — a powerful document that determines how Kenya raises money and how it spends it.
But for many citizens, the budget feels complex, technical, and full of confusing economic terms.

This article breaks down the national budget in simple, everyday language so that every Kenyan can understand:

• Where government money comes from
• How it is spent
• What it means for your taxes and daily life
• Why the budget affects everything from fuel prices to county services

1. What Exactly Is the National Budget?

Think of the national budget like Kenya’s financial plan for the year.

It answers two big questions:

✔ How much money will the government collect?

✔ How will that money be spent?

Just like a household budget helps families plan for rent, food, and school fees, the national budget helps the government plan for:

• Education
• Healthcare
• Roads
• Salaries
• Security
• Debt repayment
• Social programs

2. Where Does the Government Get Money From?

The government has several main income sources:

2.1 Taxes

This is the biggest source of money. Taxes include:

✔ Income Tax

Paid by individuals, companies, and employers (PAYE).

✔ VAT (Value Added Tax)

Added to goods and services, usually 16%.

✔ Excise Duty

Charged on fuel, alcohol, cigarettes, mobile money, airtime, etc.

✔ Customs Duty

Charged on imported goods.

Taxes make up over 60% of the government’s revenue.

2.2 Non-Tax Revenue

These include:

• National park fees
• Immigration fees
• Issuance of licences
• Fines and penalties
• Dividends from state corporations

2.3 Borrowing

When taxes are not enough, Kenya borrows:

• Domestically (from Kenyan banks, bonds, treasury bills)
• Externally (from World Bank, IMF, China, Eurobond, etc.)

Borrowing helps fill the gaps but increases national debt, which must be repaid with interest.

3. How Is the Money Spent?

Government spending is divided into three major categories:

3.1 Recurrent Expenditure (Day-to-Day Bills)

These are costs that keep the government running. They include:

• Salaries for civil servants
• Office operations
• Rent, fuel, travel, utilities
• Hospital supplies
• Security operations

This is like a family’s monthly expenses.

3.2 Development Expenditure (Projects)

This is money used to build or improve infrastructure:

• Roads
• Bridges
• Hospitals
• Power projects
• Water systems
• ICT infrastructure

This is like a family building a house or investing in a long-term project.

3.3 Consolidated Fund Services (CFS)

These are mandatory payments that MUST be made before anything else:

• Debt repayment (principal + interest)
• Pensions for retired public servants
• Salaries of judges & constitutional office holders

In recent years, debt repayment has taken the biggest share, limiting money available for development.

4. Why the Budget Feels “Tight” Every Year

Kenya faces several challenges:

❌ High debt repayments

A large portion of revenue goes to paying loans.

❌ Huge wage bill

Thousands of government employees require salaries.

❌ Low revenue collection

The tax base is narrow, and some sectors underperform.

❌ Corruption and inefficiencies

Leakages reduce money available for development.

❌ Expensive political system

Multiple elected leaders and agencies consume funds.

These factors squeeze the budget, leaving limited space for new projects.

5. How the Budget Affects Your Daily Life

The national budget influences:

✔ Fuel prices

Taxes on petroleum affect transport, food prices, and electricity.

✔ Cost of living

VAT and excise duties influence the price of goods.

✔ Education

Funding determines teacher recruitment, university loans, and school infrastructure.

✔ Healthcare

Budget allocation affects medicines, equipment, NHIF/NHIF reforms.

✔ County services

Counties depend on national transfers for most of their activities.

✔ Job opportunities

Public sector hiring and development projects create employment.

The budget is not just a government issue — it impacts every Kenyan.

6. How the Budget Is Made (Simplified)

Here’s the simple step-by-step process:

Step 1: Treasury Drafts the Budget

Based on economic conditions, revenue projections, and priorities.

Step 2: Public Participation

Citizens, NGOs, and businesses submit their views on priorities.

Step 3: Parliament Debates & Approves

MPs discuss allocations and may propose changes.

Step 4: President Signs Appropriations Bill

The budget becomes law.

Step 5: Money Is Released in Phases

Treasury distributes funds to ministries, agencies, and counties.

Step 6: Implementation & Monitoring

Auditor-General, Controller of Budget, and commissions oversee spending.

7. The Big Question: Is Kenya’s Budget Sustainable?

Kenya’s budget faces structural challenges:

⚠ Growing debt

⚠ High recurrent expenditure

⚠ Low development spending

⚠ Expensive political system

⚠ Revenue shortfalls

Long-term sustainability requires reforms in:

• Revenue collection
• Wage bill management
• Public procurement
• Debt management
• Digital government adoption

8. What Kenya Must Do to Improve Budget Outcomes

✔ Expand the tax base fairly

Bring more sectors into the formal tax system without overburdening citizens.

✔ Reduce wastage and corruption

Digitisation, automation, and strong audits.

✔ Prioritise development projects

Focus on impactful and realistic projects.

✔ Strengthen county revenue systems

Counties must reduce dependence on national transfers.

✔ Increase productivity in agriculture, SMEs, and manufacturing

These sectors fuel growth and tax revenue.

Conclusion: Understanding the Budget Empowers Citizens

The National Budget is not just a document for economists and politicians — it is a roadmap for Kenya’s future.
When citizens understand it, they can:

• Demand accountability
• Engage in public participation
• Question misuse of funds
• Support evidence-based policy
• Track priorities that affect daily life

A well-informed public is the strongest force against mismanagement and poor governance.

Kenya’s progress depends on budgets that are transparent, sustainable, and citizen-driven.