Draft 2024 Budget Policy Statement

REPUBLIC OF KENYA
THE NATIONAL TREASURY AND ECONOMIC PLANNING
MEDIUM TERM
DRAFT 2024 BUDGET POLICY

STATEMENT
SUSTAINING BOTTOM-UP ECONOMIC

TRANSFORMATION AGENDA
18THDECEMBER, 2023
© Budget Policy Statement (BPS) 2024
To obtain copies of the BPS, please contact:
The National Treasury and Economic Planning

Treasury Building
P. O. Box 30007-00100
NAIROBI, KENYA
Tel: +254-20-2252-299
Fax: +254-20-341-082
The document is also available on the website at: www.treasury.go.ke
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Draft 2024 Budget Policy Statement
Foreword
The 2024 Budget Policy Statement (BPS), the second to be prepared under the
Kenya Kwanza Administration, reaffirms the priority policies and strategies under
the Bottom-Up Economic Transformation Agenda (BETA) and prioritized in the
Fourth Medium Term Plan of the Vision 2030.
Since coming into office in September 2022, the Government has implemented
bold policy responses to mitigate the negative global and persistent shocks that
have pushed the economy to its lowest vibrant level, and embarked on structural
reforms to stabilize Government finances and the economy. These shocks include,
global supply chain disruptions due to ongoing conflicts in Eastern Europe and the
Israeli-Palestinian war; high interest rates limiting access to credit and exacerbating
debt servicing costs; significant losses and damages due to frequent extreme
weather events; and elevated commodity prices such on petroleum products on
account of increased geopolitical fragmentation and global oil supply cuts.
Against this background, the Government continues to implement interventions

and policies to reduce the cost of living and improving livelihoods, while at the
same time fostering a sustainable inclusive economic transformation through the
Bottom-Up Economic Transformation Agenda. This is meant to reverse the
economic recession and ignite economic recovery. This Development Agenda
recognizes the importance of managing the cost of living through well-functioning
markets to enhance productivity, availability and affordability of goods and
services for all citizens. Indeed, market failures in sectors that supported the
economy are glaring. The interventions target five core priority areas namely: i)
Agricultural Transformation and Inclusive Growth; ii) Micro, Small and Medium
Enterprise (MSME) Economy; iii) Housing and Settlement; iv) Healthcare; and v)
Digital Superhighway and Creative Industry.
The agenda places special focus on increased employment, more equitable

distribution of income, social security while also expanding the tax revenue base,
and increased foreign exchange earnings. The Government has targeted 9 value
chains with the largest impact on jobs creation and economic recovery as follows:
(i) Leather; (ii) Cotton; (iii) Dairy; (iv) Edible Oils; (v) Tea; (vi) Rice; (vii) Blue
Economy; (viii) Natural Resources Including Minerals & Forestry); and (ix)
Building Materials.
Despite the challenging environment, we have noted significant success following

the various interventions rolled out during the past one year by the Government.
Specifically, economic vibrancy has started. The economy in the first half of 2023
remains strong at 5.45 percent a demonstration of resilience. This growth well
above estimated global and Sub-Saharan African region average of 2.9 percent and
3.3 percent respectively. The economy is projected to expand by 5.5 percent in
2023 and 2024 from 4.8 percent in 2022. This growth outlook will be supported by
a broad-based private sector growth, continued robust performance of the services
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sectors, the rebound in agriculture, and the ongoing implementation of policy
measures to boost economic activity in the priority sectors of the BETA.
Over the next four years, the Government will scale up efforts on policy and
structural reforms under the BETA so as to navigate the global turbulence,
accelerate economic recovery, and address overarching development challenges
namely creating jobs, eradicating poverty and mitigating climate change. As
explained earlier, the Government will accelerate investments in: (i) Human
Capital Development; (ii) Markets; (iii) Domestic Resource Mobilization; (iv)
Reform and Restructure of Institutions; and (v) Digitization so as to coordinate all
the other four areas.
The fiscal policy stance for the FY 2024/25 and the medium term aims to support
the Bottom-Up Economic Transformation Agenda (BETA) through a growth
friendly fiscal consolidation plan. The consolidation will be supported by enhanced
revenue mobilization and rationalization of non-priority expenditure while
protecting capital expenditure. Emphasis will be placed on aggressive revenue
mobilization through a combination of tax administrative and tax policy reforms.
The Government has embarked on the implementation of the Medium-Term
Revenue Strategy (MTRS) that will further strengthen tax revenue mobilization
efforts to over 20.0 percent of GDP over the Medium Term. On the Tax
Administration side, the Authority’s capacity will be scaled up to rely more on
technology to seal leakages; enhancements of iTax and Integrated Customs
Management System (iCMS); and use of e-TIMS (Tax Invoice Management
System). The Government has also scaled up efforts on requiring the various
Ministries, Departments and Agencies (MDAs) to not only mobilize more non-tax
revenues but also transfer resources to exchequer. Eventually, majority of the
MDAs are expected to be self-financing. These policy strategies will expand the
primary surplus in the fiscal framework and stabilize the growth of public debt
thereby boosting the country’s debt sustainability position.
Given the limited resources, the hard sector ceilings provided for the FY 2024/25
Budget and the Medium Term will form the basis of the detailed budget allocations
for submission to Parliament by 30th April 2024. The budgeting for the FY 2024/25
budget, will strictly be developed through a value chain approach under five
clusters for the nine value chains as enumerated earlier. The targeted outcomes of
budget implementation is to bring down the cost of living, increase employment,
enhance equitable distribution of income, social security while also expanding the
tax revenue base, and increasing foreign exchange earnings.
NJUGUNA NDUNG’U, CBS

CABINET SECRETARY
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Acknowledgement
The 2024 Budget Policy Statement is prepared in compliance with the provisions
of the Public Finance Management Act, 2012. It outlines the strategic priorities of
the Government, highlights the current state of the economy, provides macro-fiscal
outlook over the medium term together with a summary of Government spending
plans as a basis for the FY 2024/25. The publication of the 2024 BPS aims to
improve the public’s understanding of Kenya’s public finances and guide public
debate on economic and development matters.
The Government is keen on fostering prudent management of public resources in
order to support inclusive economic growth and development. In this respect, the
Government has adopted a “hard budget constraint” principle in relation to the
fiscal framework for FY 2023/24. Expenditure requirements arising within the year
will be financed by cutting back on other expenditures thereby maintaining the
expenditure ceilings and primary budget balance as per the fiscal framework. This
policy has been operationalized in the current financial year - new expenditure
requirements which have arisen during the year have been accommodated by an
across the board 10 percent budget cut. Additionally, while preparing this budget,
all proposed Ministries, Departments and Agencies (MDAs) budgets for FY
2024/25 have been scrutinized carefully to ensure quality and alignment to the
Government’s Bottom–Up Economic Transformation Agenda as outlined in this
BPS and the Fourth Medium Term Plan and other strategic interventions of
national interest.
The policy measures outlined in the 2024 BPS are expected to improve economy-
wide efficiencies, create an enabling environment that supports growth in
businesses and investment, reduce the cost of living as well as enhance the
wellbeing of all Kenyans. The tight fiscal stance is expected to reduce debt
vulnerabilities through implementation of reforms to broaden the domestic tax base
and improve tax compliance. Expenditure rationalization will continue to focus on
enhanced efficiency of public investments, better targeting of subsidies and
transfers, addressing weakness in state corporations, and digital delivery of public
services. Social safety nets and fiscal risk management framework will be
enhanced.
The completion of this policy statement was as a result of collective effort by
various MDAs who provided valuable information. We are grateful for their
contributions. We are also grateful for the inputs we received while preparing this
document from the Macro Working Group; stakeholders and the general public
during the Public Sector Hearings in December 2023. A dedicated team in the
National Treasury spent substantial amount of time putting together this BPS. We
are particularly grateful to them for their tireless efforts and dedication.
DR. CHRIS KIPTOO, CBS

PRINCIPAL SECRETARY/THE NATIONAL TREASURY
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Table of Contents
Foreword ............................................................................................................................. iii
Acknowledgement ......................................................................................................................... v
I. SUSTAINING BOTTOM-UP ECONOMIC TRANSFORMATION AGENDA ................ 1
1.1 Overview ............................................................................................................................... 1
1.2 Core Pillars ............................................................................................................................3
1.2.1 Agricultural Transformation and Inclusive Growth .......................................................3
1.2.2 Transforming the Micro, Small and Medium Enterprise (MSME) Economy ................4
1.2.3 Housing and Settlement .................................................................................................5
1.2.4 Healthcare ......................................................................................................................6
1.2.5 Digital Superhighway and Creative Economy ............................................................... 7
1.3 Enablers .................................................................................................................................9
1.3.1 Infrastructure..................................................................................................................9
1.3.2 Manufacturing Sector .................................................................................................. 12
1.3.3 Blue Economy ............................................................................................................. 15
1.3.4 The Services Economy ................................................................................................ 15
1.3.5 Environment and Climate Change ............................................................................... 18
1.3.6 Education and Training ................................................................................................ 19
1.3.7 Women Agenda ........................................................................................................... 20
1.3.8 Social Protection .......................................................................................................... 20
1.3.9 Sports, Culture and Arts............................................................................................... 22
1.3.10 Youth Empowerment and Development Agenda ...................................................... 22
1.3.11 Governance ................................................................................................................ 23
1.3.12 Foreign Policy and Regional Integration ................................................................... 25
1.4 Medium Term Revenue Strategy ......................................................................................... 28
1.4.1 Objectives of Medium-Term Revenue Strategy .......................................................... 28
1.4.2 Highlights of Specific Revenue Mobilization Measures .............................................. 29
1.4.3 Implementation of Medium-Term Revenue Strategy .................................................. 31
II. RECENT ECONOMIC DEVELOPMENTS AND MEDIUM-TERM OUTLOOK......... 32
2.1 Overview ............................................................................................................................. 32
2.2 Domestic Economic Developments..................................................................................... 33
2.3 Fiscal Performance .............................................................................................................. 41
2.4 Fiscal Policy ........................................................................................................................ 42
2.5 Economic Outlook ............................................................................................................... 46
2.6 Risks to the Economic Outlook ........................................................................................... 49
III. BUDGET FOR FY 2024/25 AND THE MEDIUM TERM ............................................... 51
3.1 Fiscal Framework for FY 2024/25 and Medium Term Budget ........................................... 51
3.2 FY 2024/25 and Medium-Term Budget Priorities ............................................................... 51
3.3 Budgetary Allocations for the FY 2024/25 and the Medium-Term..................................... 52
3.4 Details of Sector Priorities................................................................................................... 54
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3.5 Public Participation/ Sector Hearings and Involvement of Stakeholders ............................ 70
IV. COUNTY FINANCIAL MANAGEMENT AND DIVISION OF REVENUE ................ 71
4.1 County Governments’ Compliance with Fiscal Responsibility Principles .......................... 71
4.1.1 Allocation to Development Expenditure over the Medium-Term ............................... 72
4.1.2 Actual Development Expenditure over the Medium Term .......................................... 73
4.1.3 Compliance with the Requirement on Expenditure on Wages and Benefits ................ 74
4.2 Enhancement of County Governments’ Own-Source-Revenue .......................................... 74
4.3 Prudent Management of Fiscal Risks .................................................................................. 77
4.3.1 Pending Bills ................................................................................................................ 77
4.3.2 County Governments Capacity Building on Public Finance Management .................. 79
4.4 Division of Revenue for FY 2024/25 .................................................................................. 80
4.5 Intergovernmental Fiscal Transfers ..................................................................................... 81
4.5.1 Additional Allocations ................................................................................................. 81
4.6 Equalization Fund ................................................................................................................ 83
4.7 Emerging Issues and Policy Interventions ........................................................................... 83
4.7.1 Transfer of Functions and Cooperation between National and County Governments . 83
4.7.2 Integrated County Revenue Management System (ICRMS) ....................................... 84
4.7.3 Sharing of Mineral Royalty Revenue with County Governments and Communities .. 84
4.7.4 Revenue from Court Fines emanating from County Legislation ................................. 84
4.7.5 County Governments Public Finance Management ..................................................... 85
4.7.6 Intergovernmental Agreements in respect of the Additional Conditional Allocations 85
4.7.7 Transfer of the Library Services Function ................................................................... 85
ANNEX 1: ADHERENCE TO FISCAL RESPONSIBILITY PRINCIPLES ........................ 86
ANNEX 2: STATEMENT OF SPECIFIC FISCAL RISKS .................................................... 90
ANNEX 3: MEMORANDUM ON HOW RESOLUTIONS BY PARLIAMENT ON
PREVIOUS BUDGET POLICY STATEMENTS HAVE BEEN INCORPORATED ........ 101
Annex Table 1: Macroeconomic Indicators ............................................................................ 106
Annex Table 2: Government Fiscal Operations, Ksh Billion .................................................. 107
Annex Table 3: Government Fiscal Operations, Percent of GDP ........................................... 108
Annex Table 4: Summary of Expenditure by Programmes (Ksh Million) .............................. 109
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About the Budget Policy Statement
The Budget Policy Statement (BPS) is a Government policy document that sets out
the broad strategic priorities and policy goals to guide the National Government
and the County Governments in preparing their budgets for the subsequent
financial year and over the medium term.
In the document, adherence to the fiscal responsibility principles demonstrates
prudent and transparent management of public resources in line with the
Constitution and the Public Finance Management (PFM) Act, 2012.
Section 25 of the PFM Act, 2012, provides that the National Treasury shall prepare
and submit to the Cabinet the BPS for approval. Subsequently, the approved BPS
is submitted to the Parliament, by the 15th of February each year. Parliament shall,
not later than 14 days after the BPS is submitted, table and discuss a report
containing its recommendations and pass a resolution to adopt it with or without
amendments. The Cabinet Secretary, the National Treasury and Economic
Planning shall take into account resolutions passed by Parliament in finalizing the
budget for the FY 2024/25 and the medium term.
The Budget Policy Statement contains:
(a) an assessment of the current state of the economy, including macroeconomic
forecasts as well as the priorities of the Government current pillars of growth
and strategic directions;
(b) the financial outlook with respect to Government revenue, expenditures and
borrowing for the next financial year and over the medium term;
(c) the proposed expenditure ceilings for the National Government, including
those of Parliament and the Judiciary and indicative transfers to County
Governments;
(d) the fiscal responsibility principles and financial objectives over the medium-
term including limits on total annual debt; and
(e) Statement of Specific Fiscal Risks.
The preparation of the BPS is a consultative process that involves seeking and
taking into account the current Government priorities and challenges in economic
management and the views of: The Commission on Revenue Allocation; County
Governments; Controller of Budget; Parliamentary Service Commission; Judicial
Service Commission; Ministries, Departments and Agencies; the public and any
other interested persons or groups.
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I. SUSTAINING BOTTOM-UP ECONOMIC
TRANSFORMATION AGENDA
1.1 Overview
1. The 2024 Budget Policy Statement (BPS), the second to be prepared under
the Kenya Kwanza Administration, reaffirms the priority policies and strategies
outlined in the Bottom-Up Economic Transformation Agenda (BETA) and as
prioritized in the Fourth Medium Term Plan of the Vision 2030. Since coming into
office in September 2022, the Government has implemented bold policy responses
to mitigate the negative global and persistent shocks that have pushed the economy
to its lowest vibrant level, and embarked on structural reforms to stabilize
Government finances and the economy. These shocks include, global supply chain
disruptions due to ongoing conflicts in Eastern Europe and the Israeli-Palestinian
war; high interest rates limiting access to credit and exacerbating debt servicing
costs; significant losses and damages due to frequent extreme weather events; and
elevated commodity prices such on petroleum products on account of increased
geopolitical fragmentation and global oil supply cuts.
2. Against this background, the Government continues to implement
interventions and policies to reduce the cost of living and improving livelihoods,
while at the same time fostering a sustainable inclusive economic transformation
through the Bottom-Up Economic Transformation Agenda. This is meant to
reverse the economic recession and ignite economic recovery. This Development
Agenda recognizes the importance of managing the cost of living through well-
functioning markets to enhance productivity, availability and affordability of goods
and services for all citizens. We have noted that market failures in sectors that
supported the economy are glaring. The interventions target five core priority areas
namely: i) Agricultural Transformation and Inclusive Growth; ii) Micro, Small and
Medium Enterprise (MSME) Economy; iii) Housing and Settlement; iv)
Healthcare; and v) Digital Superhighway and Creative Industry.
3. Despite the challenging environment, we have noted significant success
following the various interventions rolled out during the past one year by the
Government. Specifically, economic vibrancy has started. The economy in the first
half of 2023 remains strong at 5.45 percent a demonstration of resilience. This
growth well above estimated global and Sub-Saharan African region average of
2.9 percent and 3.3 percent respectively. The economy is projected to expand by
5.5 percent in 2023 and 2024 from 4.8 percent in 2022. This growth outlook will
be supported by a broad-based private sector growth, continued robust
performance of the services sectors, the rebound in agriculture, and the ongoing
implementation of policy measures to boost economic activity in the priority
sectors of the BETA.
4. Other progress has been realised in the core pillars of the Bottom-Up
Economic Transformation Agenda. In order to support livelihood and businesses,
the Government through the Financial Inclusion Fund, or the Hustlers Fund has
provided access to affordable credit to over 20 million Kenyans and MSMEs at the
bottom of the pyramid and encouraged savings. To ensure food security in the
1 Draft 2024 Budget Policy Statement

country thereby reducing the cost of living, the Government rolled out fertilizer
and seeds subsidies to farmers across the country; and granted duty waiver for
importation of key food products such as white maize, rice, yellow maize, soya
beans, soya bean meal, assorted protein concentrates, and feed additives in order
to bridge the food stocks deficit as well as lower and stabilize food prices.
5. To promote achievement of the universal health coverage, the Government
has reformed the National Health Insurance Fund to meet the urgent needs of
Kenyans at the bottom of the socioeconomic structure by actualizing its purpose as
a social medical insurance facility. The Government is on track to facilitate
delivery of affordable houses and enable low-cost housing mortgages. The
Housing Levy that was enacted in Finance Act, 2023 is providing an off-take fund
that will de-risk investors, and offer affordable finance to home-owners, bringing
home ownership within the reach of the majority of urban population. To foster
digital transformation, the Government has closed the digital divide between urban
and rural areas by proving last mile connectivity to 25,000 small towns within
proximity of fibre backbone, thereby positioning Kenya to expand the pool of its
global digital workforce without requiring physical mobility.
6. Over the next four years, the Government will scale up efforts on policy and
structural reforms under the BETA so as to navigate the global turbulence,
accelerate economic recovery, and address overarching development challenges
namely creating jobs, eradicating poverty and mitigating climate change. As
explained earlier, the Government will accelerate investments in: (i) Human
Capital Development; (ii) Markets; (iii) Domestic Resource Mobilization; (iv)
Reform and Restructure of Institutions; and (v) Digitization so as to coordinate all
the other four areas.
7. On human capital development, in order to achieve economic transformation,
two driving factors are important, that is, human capital development and
enhancement of savings. The Government will ignite a sustained economic
transformation by raising capital accumulation. This is in addition to ongoing
investments in education, health, nutrition and labour markets to boost human
capital development.
8. On markets, most Kenyans overtime sunk into abject poverty mostly because
markets in their segments were interfered with or not properly governed. This
disrupted market development, and importantly curtailed further investments in
those sectors. Examples would be subsectors like sugar, coffee, pyrethrum, cotton,
even tea and milk where markets were interfered with. The outcome of this is an
institutional failure problem that pushed policies to fail. The interventions at the
Bottom of the pyramid under this Administration, are therefore targeted to ensure
markets work for the poor and also markets should work for everybody.
9. On domestic resource mobilization, the Government is keen to raise domestic
resources to support implementation of various ongoing programmes. The National
Treasury has embarked on the redesign of the taxation policies to make them more
supporting to economic activity without distorting the market and interfering with
investment. This will boost revenue collection and raise tax effort from the current
16.0 percent of GDP in FY 2023/24 to where it was previously, above 20 percent
of GDP. This will be done through the implementation of the Medium-Term

Revenue Strategy for the period FY 2024/25 – 2026/27 that will provide a
combination of tax administration and policy measures to enhance revenue
mobilization.
10. The Government has also scaled up efforts on requiring the various
Ministries, Departments and Agencies (MDAs) to not only mobilize more non-tax
revenues but also transfer resources to exchequer. Eventually, majority of the
MDAs are expected to be self-financing. On the Tax Administration side, the
Authority’s capacity will be scaled up to rely more on technology to seal leakages;
enhancements of iTax and Integrated Customs Management System (iCMS); and
use of e-TIMS (Tax Invoice Management System). These policy strategies will
expand the primary surplus in the fiscal framework and stabilize the growth of
public debt thereby boosting the country’s debt sustainability position. In order to
boost supply of public goods, the Government has strengthened the Public Private
Partnerships (PPP) framework so as to leverage on private sector to deliver projects
that have strong economic, commercial and environmental benefits and aligned to
the BETA priorities.
11. On the reform and restructure of institutions, the Government has embarked
on a process to wean some of the parastatals from reliance on exchequer. At the
same time, some institutions have governance related issues. In line with the
Privatisation Act, Entities have been identified and proposed to be included in the
2023 Privatisation Programme. These include eleven Government Owned
Enterprises and Government Linked Corporations.
12. Lastly, the Government will leverage on digitization to coordinate all the
above interventions. Specifically, the Government will digitize and automate all
critical Government processes throughout the country, with a view of bringing
greater convenience to citizens; support extension of National Optic Fibre
Backbone infrastructure to ensure universal broadband availability and promote
investment in the digital superhighway and the creative economy; raise revenue
efficiently for Government services that are paid for electronically, thus eradicating
leakage.
1.2 Core Pillars

1.2.1 Agricultural Transformation and Inclusive Growth
1. Agriculture remains a core pillar for the realization of the Bottom-Up
Economic Transformation Agenda’s aspiration of proving employment and a
means of livelihood to the majority of the Kenyan people. In order to support
agricultural production, the Government rolled out a countrywide farmer
registration and fertiliser subsidy programme that has made available 5.5 million
bags to farmers across Kenya. The Government has also progressively reduced the
cost of fertiliser from Ksh 6,500 to Ksh 2,500, increased maize acreage under
production by an extra 200,000 acres and enhanced maize production by an
additional 18 million bags.
2. To achieve efficiency, transparency and accuracy in fertiliser distribution, the
Government enrolled farmers on a digital register, with accurate details of the

location and acreage of their agricultural landholding. The database enabled the
Government to implement an e-voucher system through which farmers received
their fertiliser consignments for planting and top-dressing of maize, tea, coffee,
rice, potatoes, cotton and edible oil crops.
3. Additionally, the Government has made adequate arrangements, including
investment in necessary infrastructure, to facilitate post-harvest management and
prevent losses. 17 certified warehouses, jointly managed by the National Cereals
and Produce Board and private sector owners, with a combined capacity of 365,000
metric tonnes, or 4 million 90 kilograms’ bags, have been prepared in the maize-
growing areas. Further, the Government has mainstreamed nine priority value
chains into the budget including those that have the highest potential to impact on
the cost of living (maize), increasing exports (tea, dairy, leather), reducing food
imports (rice, edible oils, blue economy).
4. Over the medium term, the Government will align all policies under the
agriculture sector towards increasing food production, boosting smallholder
productivity and reducing the cost of food. Overall, the strategies under the
Agricultural Transformation and Inclusive Growth Pillar will be geared towards:
addressing the cost, quality and availability of inputs; reducing the cost of food and
cost of living in general; reducing the number of food insecure Kenyans; raising
productivity of key food value chains; increasing access to affordable credit and
agricultural extension services; creating direct and indirect jobs, increasing average
daily income of farmers as well as exchange earnings; and revamping
underperforming and collapsed export crops while expanding emerging ones.
1.2.2 Transforming the Micro, Small and Medium Enterprise (MSME)

Economy
5. The Micro, Small and Medium Enterprise (MSME) Economy provides

enormous opportunities for Kenya’s socio-economic transformation especially by
providing income opportunities for economically excluded segments of the
population including youth, women, persons with disabilities and low-skilled
persons, who experience disproportionately high unemployment.
6. In order to support individuals and MSMEs at the bottom of the pyramid, the
Government established the Financial Inclusion Fund, or the Hustlers Fund in
November 2022 as an intervention to correct market failure problems at the bottom
of the pyramid and to cushion the MSMEs against high cost of credit. By the end
of October 2023, the Fund had disbursed Ksh 36.6 billion and realized Ksh 2.3
billion in savings, befitting 21.3 million customers with 7.5 million repeat
borrowers whose overall repayment rate is at an impressive 73 per cent. The top
borrower of the fund has so far accessed a total Ksh 4.5 million in 816 transactions,
while the top voluntary saver is at Ksh 631,491. In the intervening period, the
Hustler Fund has also launched a group product, which has attracted 50,000 active
groups to the platform, of which 20,000 have received Ksh 151 million.
7. Building on the progress made, to support MSMEs, the Government will
review and rationalise all business licences, establish MSME Business

Development Centre in every ward, and an industrial park and business incubation
centre in every TVET institution.
1.2.3 Housing and Settlement

8. As a core pillar in Bottom-Up Economic Transformation Agenda, the
Government is committed to ensuring that the constitutional right to accessible and
adequate housing is achieved. For this reason, through the Affordable Housing
Programme, the Government targets to support provision of at least 250,000
affordable houses to Kenyans every year thereby increase the percentage of
affordable housing supply from 2 percent to 50 percent. The Government is on
track to facilitate delivery of affordable houses and enable low cost housing
mortgages.
1.2.3.1 Urban Housing
9. The estimated shortfall of 200,000 urban housing units a year, has led to high
cost for very poor quality housing including slums. In order to bridge the housing
gap, the Government has launched several affordable housing projects across the
country. The construction of 46,792 units in various parts of the country is already
underway, while another 40,000 units are ready to commence construction. A total
of 746,795 housing units are in the pipeline, undergoing various stages of delivery.
10. The Government is also implementing policy and administrative reforms to
lower the cost of construction and improve access to affordable housing finance
while creating jobs and entrepreneurial opportunities to all Kenyans. In this regard,
the Government is structuring affordable long-term housing finance schemes,
including a National Housing Fund and Cooperative Social Housing Schemes, that
will guarantee off take of houses from developers. As part of the process, the
Housing Levy that was enacted in Finance Act, 2023 is providing an off take fund
that will de-risk investors, and offer affordable finance to home-owners, bringing
home ownership within the reach of the majority of urban population.
11. The Affordable Housing Programme is also envisaged as a job creating
economic stimulus that will offset the cutback in public infrastructure spending.
The Programme is expected to create quality jobs for youths, employing graduates
from TVETS, directly in construction sector and indirectly throughout every value
chain in the housing development ecosystem. Already, 50,000 Kenyans, who were
previously unemployed, are now engaged directly and indirectly in this enterprise,
and the numbers will significantly increase as the projects move into the next
phases.
12. Towards this end, the Government will continue to upgrade and support Jua
Kali capacity to produce high quality construction productions by linking it with
technical and vocational education institutions. More jobs will be created with the
formalisation of the Jua Kali clusters, providing products like doors, hinges and
windows. Architects, engineers, quantity surveyors, masons, electricians,
plumbers, transporters, steel and cement factory workers, and hardware merchants
will be partakers of this transformative plan from the bottom up.

1.2.3.2 Rural Housing and Settlement
13. To support rural housing and settlement, the Government will establish a
Settlement Fund similar to the one that was used to acquire land from settler
farmers after independence. The land purchased by the scheme will be subject to
land use planning where beneficiaries will own transferable residential plots in
planned settlement to stop land fragmentation.
1.2.4 Healthcare
14. The Constitution guarantees Kenyans the right to the highest standards of
health. For this reason, the Kenya Kwanza Administration identified healthcare
delivery as one of the core pillars of the Bottom-Up Economic Transformation
Agenda. In order to deliver Universal Health Coverage, the Government embarked
on various interventions to: i) provide of a fully public financed primary health
care system, an emergency care fund and a health insurance fund that will cover
all Kenyans, ii) install of a digital health management information system, iii) set
up a Fund for improving health facilities; iv) set up an Emergency Medical
Treatment Fund, iv) establish a National Insurance Fund that covers all Kenyans,
and v) avail medical staff who would deliver Universal Health Coverage.
15. Significant progress has been made in the delivery of the universal health
care. Notably, the Government has reformed the National Health Insurance Fund
to meet the urgent needs of Kenyans at the bottom of the socioeconomic structure
by actualizing its purpose as a social medical insurance facility. Health insurance
coverage in Kenya has generally been low at 26 percent, with those at the bottom
of the economic pyramid having the least coverage of less than 5 per cent. Many
Kenyans incur catastrophic expenditures from out-of-pocket healthcare payments,
while many more do not seek care when they fall ill, because they simply cannot
afford. Over the last decade, several measures have been put in place to enhance
the capacity of the National Hospital Insurance Fund to effectively deliver on its
mandate. While these reform initiatives have yielded significant progress, several
gaps remain. Recent analysis shows that, among others, the NHIF operates as a
passive, rather than a strategic purchaser, is plagued by inefficiency and
governance challenges, and is potentially financially unsustainable.
16. To strengthen the legal basis for health financing, health service provision and
achievement of UHC, four new health laws have been enacted. These are: i) Social
Health Insurance Act, 2023; ii) Primary Health Care Act, 2023; iii) Facility
Improvement Financing Act, 2023; and iv) Digital Health Act, 2023. These laws
will usher in and guarantee a new era in the provision of healthcare, covering all
essential services from preventive, promotive, curative, palliative and
rehabilitative services, guaranteeing every Kenyan access to comprehensive and
quality care. The Social Health Insurance Act will among other things, establishes
the publicly financed Primary Health Fund, a fully publicly financed chronic,
emergency and critical illness fund and the Social Health Insurance Fund. Access
to healthcare will no longer be based on ability to pay; it will be based on the health
needs of every Kenyan. The Government will be implementing a per-household
payment system, where a flat rate applies to everyone, regardless of their income.

17. To increase the availability of human capital in public health sector, the
Government has scaled up investment in healthcare workforce under Afya
Nyumbani. Under the program, 20,000 new healthcare workers have been
employed, 8,429 workers whose contracts had lapsed deployed and 3,394 interns
enrolled across the country. Additionally, the Government has collaborated with
all the County Governments to recruit and deploy 100,000 community health
promoters (CHP) throughout the country. In the last one month, CHPs have
attended to 1.2 million households. The work of the promoters will include basic
preventive and promotive health, health education, basic first aid for the treatment
of minor injuries and ailments at the household level and referral for facility-based
healthcare. Each community health promoter is allocated 100 homes within their
neighbourhoods countrywide. Considering the pivotal role played by community
health in the attainment of UHC, the long-term financial sustainability of
community health is contingent on enhanced domestic resources for health. The
National Government is working closely with the County Governments to
strengthen the delivery of community health services through payment of stipends
for CHPs, on a matching basis of 50:50.
18. To better deliver universal health coverage, the Government has leveraged on
the digital health agenda starting from the community level. In this regard, the
electronic community health information systems (e-CHIS), which is live and
being used by the promoters across the country, is a simple and user-friendly
mobile health application that will be used to collect real-time accurate household
data, initiate planning for health service delivery and provide linkage to health
facilities. Along with the CHP kits, the Government has provided 110,000
smartphones for use by the promoters and Community Health Assistants. This will
provide quality community health data that is essential for the planning, resource
allocation and monitoring of progress towards Universal Health Coverage.
19. To further deliver universal health coverage, the Government has instituted a
paradigm shift to preventive and promotive health rather than curative. The shift
will further be strengthened by the promotive services provided by community
health promoters at the household units, and integration of preventive services at
the primary health care levels. These services will include screening for
hypertension, diabetes and eye conditions; offer the necessary health education on
water and sanitation, nutrition and provide community rehabilitation services,
among others. These services will be provided through multidisciplinary teams that
will be established at the level of the Primary Care networks.
1.2.5 Digital Superhighway and Creative Economy

1.2.5.1 Digital Superhighway
20. The Government recognizes that digital economy is the emerging frontier of
opportunity, productivity and competitiveness. In order to entrench Kenya’s lead
in digital economy, the Government under the BETA committed to, among other
things: i) promote investment in the digital superhighway and the creative
economy; ii) support extension of National Optic Fibre Backbone infrastructure to
ensure universal broadband availability; and iii) digitize and automate all critical

Government processes throughout the country, with a view of bringing greater
convenience to citizens.
21. The Government has made progress to honor these commitments. Indeed,
when the Kenya Kwanza Administration came to office, only 320 Government
services were available online. Today, there are more than 13,000 services and with
a target of onboarding all services by the end of the year. This has increased
efficiency in service delivery, revenue collection and enhanced accountability.
Working with the private sector, the Government launched the local assembly of
affordable smartphones in November 2023 in Athi River. In particular, the
Government has prioritized digital registration in order to promote a reliable
identification and authentication system for all citizens and reduce fraud linked to
identity theft. A reliable and centralized identification system will also support
better management of social programmes, delivery of essential services and
transparency and accountability in Government operations. As part of the digitized
registration system, the Government has developed the following: i) Maisha
Namba; ii) Maisha Card; iii) Digital ID; and iv) National Population Master
Register.
22. The Government is currently rolling out the last mile 100,000 km of fibre
optic infrastructure throughout the country to improve internet connectivity in
health facilities, schools, Judiciary offices in far flung areas, and other public
institutions. The Government is also concurrently setting up 25,000 WiFi hotspots
targeting fresh produce markets, bus parks and other public spaces. Further, the
Government is working with Members of Parliament in the set-up of 1,450 ICT
Hubs equipped for digital innovation in every ward in the country, 8 remote
working and other online enterprises to enable our youth to find opportunities.
23. The Government has also prioritised the teaching and learning of digital
skills, including coding, from the primary school level to tertiary education, be it
technical and vocational education and training (TVET) institutions, or other
colleges and universities, including the recently launched Open University of
Kenya to prepare children to be competitive in the economy of the future. The
curriculum for primary and secondary schools as well as tertiary learning
institutions, will continuously be reviewed to make sure that Kenya's youth stay up
to speed in terms of global technological changes. These initiatives are expected to
spur e-commerce, the creative arts and the digital economy; the frontier of our
Bottom-Up Economic Transformation Agenda.
24. Over the medium, the Government will continue to: increase and fast-track
broadband con-nectivity across the country by construction of national fibre optic
connectivity network; enhance Government service delivery through digitization
and automation of all government critical processes; establish Africa Regional Hub
and promote the development of software for export; implement the Digital Master
Plan will adhere to environmental agreements in which Kenya is a signatory; and
strengthen Konza Technopolis to bring together industry, academic institutions,
and other innovators to co-invest in emerging technologies to create high-quality
jobs that leverage artificial intelligence, robotics, and other technologies.

1.2.5.2 Creative Economy
25. On the creative economy, the Government is committed in leveraging digital

prowess to enhance the creative economy’s position as a significant sector and
increase its contribution to fashion and value addition to leather and crafts export.
The Government will continue protecting intellectual property rights as the
foundation of effective monetisation and mainstream the development of arts and
culture infrastructure. Further, the Government will extend incorporating the
creative economy into the Brand Kenya and commercial diplomacy initiatives,
establish a vibrant film ecosystem and facilitate the monetisation of music to
promote entrepreneurship.
26. The creative industry will significantly add value to Kenya’s exports such as
fashion, leather products and craft industries among others. The Government will
mainstream the creative economy into Brand Kenya and our commercial
diplomacy, including appointing accomplished Kenyan artistes and creative sector
personalities as cultural ambassadors. Government will continue to partner with
other stakeholders such as Hollywood’s Invention Studios that will open doors for
rapid growth of Kenya’s film industry.
1.3 Enablers
27. Attainment of Government’s Bottom – Up Economic Transformation Agenda
will be underpinned by sound and innovative policy and structural reforms targeted
at all socio-economic sectors, building efficient infrastructure, climate-change
mitigation mechanisms, as well as foster strict compliance with the Constitution
and the rule of law. This will create a strong and solid foundation for economic
transformation and industrialization as envisaged in the Kenya Vision 2030 and
improve the living conditions of all Kenyans. The following enablers will be
prioritized to enhance the attainment of the Agenda:
1.3.1 Infrastructure
28. Development of critical infrastructure is key to economic growth as well as
key enabler to the implementation of Bottom-Up Economic Transformation
Agenda (BETA). The Government will continue to intensify national and regional
connectivity through water, road, rail, port, energy and fibre-optic infrastructure in
order to achieve socioeconomic transformation in the country, enhance Kenya’s
competitiveness, and facilitate cross-border trade and regional integration.
1.3.1.1 Water
29. In Kenya, more than 90 percent agricultural products are grown in rain-fed
farming systems and only 20 percent of land is deemed suitable for rain-fed
agriculture. The remaining land requires irrigation to ensure optimal production
due to inadequate rainfall. To enhance access to safe water for domestic, irrigation
and industrial use, the Government has made significant progress by developing
the Water (Amendment) Bill, 2023 which seeks to promote private investment in
the water sector through the Public-Private Partnerships (PPPs) model. The

amendments seek to expand the role of National Government entities such as the
Water Works Development Agencies (WWDAs) and National Water Storage
Authority (the NWSA) to provide water services by allowing them to enter into
bulk water purchase agreements under the PPP Act, 2021 (the PPP Act) which was
previously the preserve of county water service providers (WSPs). Additionally,
the Government also plans to construct 100 dams in the next five years and are
likely to use the PPP model.
1.3.1.2 Roads
30. The Government will continue to strengthen the institutional framework for
road development in order accelerate the speed of completion of new and stalled
road construction projects to cater for the growing population. In order to minimize
waste of resource, the Government will ensure all projects are completed within
two years and no new project to be launched before the ongoing ones are complete.
31. Over the medium term, the Government will prioritize upgrading and
maintaining rural access roads to open up the rural areas to enable farmers to get
their produce to markets faster and cheaply. The Government will also improve
road infrastructure in urban informal settlement and critical national and regional
trunk roads that have the highest immediate economic impact. To streamline
transport accident investigations, the Government will establish the Kenya
Transport Accident Investigation Bureau (KTAIB) as part of institutional and legal
reforms proposed. The Bureau will utilize international best practices and will
pursue safety interventions in road, rail, pipeline and marine transport.
1.3.1.3 Electricity
32. Access to affordable and efficient energy is crucial for the achievement of the
socioeconomic transformation as envisioned in the Bottom-Up Economic
Transformation Agenda and the Kenya’s Vision 2030. While generation capacity
and total electricity connections have increased considerably in the recent years,
electricity in the country remains expensive in comparison to other countries.
33. To reduce electricity prices, the Government has introduced a myriad of
interventions to provide relief for electricity consumers while at the same time
ensure the long-term viability and sustainability of the energy sector. This includes
Renewable Energy Feed-in Tariffs (REFIT), investment in geothermal energy,
rural electrification, and engagement of independent power producers in keeping
with the Renewable Energy Auction Policy. The Government has also lifted the
moratorium on Power Purchase Agreements (PPAs) as a way of enhancing the
nation’s energy security through opening up the energy sector for continued
investments.
34. Building on these interventions, the Government has set up a team to evaluate
on how to bring down the cost of electricity to lower the cost of living by the end
of 2023. The Government will continue to support the use of renewable energy.
Kenya has abundant renewable energy sources such as wind, solar, and geothermal
power. By investing in these sources of energy, Kenya can reduce its dependence
on expensive fossil fuels and lower the cost of electricity.

35. In order to meet the growing demand for electricity, the Government has
successfully completed key transmission projects that connect most parts of the
country to the national grid. The Arthi River Substation, 400kV Suswa – Isinya
Transmission Line, 500kV HVDC Ethiopia – Kenya Transmission Line and
Converter Substation at Suswa, 132kV Olkaria – Narok Transmission Line ,132kV
Mwingi – Kitui Transmission Line, Kitui Substation and 220/400kV Isinya –
Namanga Substation have been completed and commissioned, among other
projects.
1.3.1.4 Petroleum and E-mobility
Petroleum
36. Price volatility of petroleum products remains a key challenge for consumers
and economic stability. In order to stabilize consumer prices against unpredictable
swings in global oil prices, the Government has developed a strategy to revive and
commercialize the National Oil Corporation of Kenya (NOCK). Under this
strategy, NOCK will benefit from a partnership that restructures it into three
subsidiaries segmented around the petroleum products value-chain as follows:
NOC Upstream Limited, focused on exploration and upstream production activities
and services; NOC Downstream Limited, focused on marketing and distribution of
petroleum products; and NOC Trading Limited, specializing in holding strategic
stocks of petroleum products for import and export.
37. The Government has also approved the acquisition of the Kenya Petroleum
Refineries Limited (KPRL) by the Kenya Pipeline Company Limited (KPC). This
is expected to enhance petroleum supply chain infrastructure and thereby result in
security of supply and cost efficiency through reduced demurrage costs and
enhanced penetration of LPG usage in the country. This will enhance efficiency
and also foster synergy in the petroleum value chain by optimizing the use of our
existing downstream petroleum infrastructure.
38. Further, to cement the country as a leader in green energy, the Government
has developed the Liquefied Petroleum Gas (LPG) Growth Policy. The Policy
seeks to steer our nation along an irreversible path towards securing the dignity of
all households through the use of safe and affordable LPG. The Policy provides a
pathway for progressively weaning-off the 70 percent of Kenyan households from
using dirty fuels as their primary cooking fuel. The Policy proposes that all housing
developments to have provisions for liquefied petroleum gas reticulation
infrastructure. This provision will be embedded as a prerequisite for approval of
any housing development projects, including those under the Affordable Housing
Programme. The policy further seeks to encompass establishing common-user
LPG import terminals, distributing subsidized LPG cylinders to low-income
households, promoting LPG use in institutions, facilitated by partnerships with
finance institutions, LPG players, and the Ministries of Education and Health.
These measures aim to reduce consumer prices, improve public safety and
contribute to both public health and environmental sustainability.

E-Mobility
39. BETA identifies the adoption of electric mobility, or e-mobility, as a priority

intervention to achieve the win-win outcomes of reducing greenhouse gas
emissions, providing cheaper transport and leveraging our large local and regional
motorcycle market to build an electric vehicle industry.
40. Motorcycles comprise the fastest growing form of transport in many
countries. This has had serious implications for climate change and air quality.
Africa now faces a tremendous carbon dioxide emissions challenge owing to its
huge two-wheeler, internal combustion engine powered fleet. Ageing fleets and
unsustainable technologies are to blame for this hazard. In Kenya, two and three-
wheeler vehicles comprise the largest share of the national fleet, at 67 percent. This
puts Kenyan cities and urban areas in danger of turning into heavily polluted and
unhealthy places, placing millions of enterprising people at great risk.
41. For this reason, the Government has adopted e-mobility is a high-priority
intervention to address the challenges of pollution, adverse health effects and fuel
costs which raise the cost of living. Successful transition to e-mobility requires
intensive investment to reconfigure transportation system through electrification
and the provision of every necessary services and infrastructures throughout the
ecosystem. To attract investment, the Government has developed a compelling
package of incentives for serious investors in e-mobility to stake their capital on
opportunities in the country’s green growth agenda.
1.3.2 Manufacturing Sector

42. Manufacturing sector in Kenya plays an important role in driving economic
growth by promoting and supporting productivity, boosting employment and
enhance competitiveness of the country through exports. The Government’s value
chain approach is expected to revamp the sector, and encourage competitiveness
and growth of local industries. The Government has implemented the following
initiatives across the value chains:
1.3.2.1 Agro-Processing
43. To promote growth of the agro-processing sector, the Government will

continue supporting value addition to agricultural produce across the value chain.
This will involve processing tea, coffee, meat, sugar, dairy, fruits and vegetables
locally in order to obtain more value and create additional jobs and wealth for
Kenyans.
44. In Kenya, post-harvest management has been a major challenge in the
agricultural sector with estimated loss of 20 percent to 50 percent of harvested
crops, fruits, vegetables and fresh horticultural produce, mainly due to poor storage
and handling practises. In the view of addressing the post-harvest losses and
enhance farmers income, the Government has begun the construction of the initial
18 County Aggregation and Industrial Parks (CAIPs). The CAIPs are special zones
being set-up by the Government with the aim of having the project implemented

in all 47 counties by FY 2025/26. This CAIPs will provide value addition centres
for agricultural products as well as storage facilities.
1.3.2.2 Leather and Leather Products
45. Kenya remains a leading producer of hides and skins in Africa. The leather
industry has the capacity to deliver 80,000 jobs and 100 billion dollars. To support
the growth of the leather industry in the country, the Government will build on the
ongoing interventions to facilitate local processing of all hides and skins that
include; setting up of leather cottage industries and expansion of existing tanneries;
completing the development of leather parks such as the Kenya Leather Industrial
Park (KLIP) and Kenanie; and supporting establishment of processing clusters in
Isiolo, Wajir, Narok, Ewaso Ng’iro.
1.3.2.3 Building and Construction Materials
46. The Government will continue to support building and construction value
chains, by: initiating the establishment of industrial park for construction materials;
enhancing local manufacturing of construction materials (clinker, cement, cabros,
prefabs) and electrical and electronics fittings, cables and products; and ring
fencing certain components of the low cost housing project for MSMEs.
1.3.2.4 Garments and Textiles
47. Garments and textiles sector has huge untapped potential of employing
thousands of Kenyans and earning significant foreign exchange. However, the
sector is confronted by y numerous challenges including high cost of labour and
low agricultural productivity that hampers the competitiveness of Kenya’s garment
export. To unlock the potential of the sector, the Government will build on ongoing
measures including: attracting investment in manufacture of garments and
apparels, promoting modernization of textiles mills and cotton ginneries; and
promoting linkage of MSMEs (tailors) with schools, institutions to provide a
market for uniforms.
1.3.2.5 Dairy Products
48. Dairy and livestock economy are sub-sectors are an integral part to the
Government’s plan to improve food security, create jobs and boost exports. To
support value chains under the dairy sub-sector, the Government targets to double
milk production in the next five years to expand opportunities for farmers. The
Government has already put in place a solid plan that will boost increase in
production from 5.2 billion litres to 10 billion litres a year.
49. As part of the process, the Government will modernise Kenya Cooperative
Creameries plants and install milk coolers countrywide so that more milk can be
processed boosting milk quality and income of dairy farmers. The Government will
also eliminate brokers from agricultural value chain using the county aggregation
and industrial parks so that farmers can earn maximum returns from their milk.
Other interventions include: duty free importation of raw materials for manufacture
of animal feeds to lower the cost production and make animal feeds affordable;

establishment of cottage industries at the Nasewa Industrial Park to promote animal
feeds production; supply and installation of dairy mechanization and value addition
equipment including bulk milk coolers; and promotion of investment in the cold
chains.
1.3.2.6 Edible and Crop Oils
50. Currently, Kenyans consumes around 900 metric tonnes of edible oil
annually. Out of this, only 6 percent being produced locally while the rest is
imported, translating to an import bill of around Ksh 120 billion annually. To
reverse this trend, the Government will continue to measures targeted at increasing
the annual production of edible oils from 80,000 metric tonnes to 240,000 metric
tonnes within five years. This will reduce Kenya’s dependence on imports and
saving almost Ksh 100.0 billion spent annually on imports. Towards this end, the
Government will continue to attract investment to support oil cottage industries;
provision of CMFs and processing machinery for small industries; and expand
processing capacity of existing industries.
51. As part of the process, the Government launched dispensing machines made-
in-Kenya dubbed “Mama Pima” geared towards lowering the cost of cooking oil
in August 2023. The machines are expected to provide employment to thousands
of citizens and reduce the cost of the commodity. The initiative showcases the
Government's commitment to addressing the needs of the most economically
disadvantaged citizens and empowering them to improve the quality of life
1.3.2.7 Tea and Coffee Sub-sectors
52. Tea and coffee sub-sectors remain a key sector providing livelihoods to
millions of Kenyans and contributing significant foreign exchange earnings. To
revitalize the sub-sectors, the Government will build on the ongoing efforts
including: reforming the legal and policy frameworks; promotion of value addition
through provision of processing equipment; export market development and export
promotion; and establishment of warehouse for value added tea and coffee in key
development markets.
53. The Government’s reforms in the coffee sector are bearing fruit, with farmers
set to earn four times advance pay for their crop, from a low of Ksh 20 to Ksh 80,
following the allocation of Ksh 4 billion from the Coffee Cherry Fund. Coffee
reforms regulations will give farmers' the necessary representation and weight at
the Nairobi Coffee Auction. These measures are expected to aid ongoing efforts,
including expanding production to new counties and double coffee output in the
next 4 years.
1.3.2.8 Sugar Sub-sector
54. The Government is currently restructuring public sugar mills, expediting the
leasing of five companies for rehabilitation and expansion to boost industry
competitiveness before the COMESA sugar safeguards expire. The objective
includes creating a competitive sector, raising farmer incomes and enhancing

productivity. As part of the process, the Government has waived Ksh 117 billion
non-performing debt for government-owned sugar factories.
1.3.3 Blue Economy

55. The Kenya’s lakes, coastal and marine environment are endowed with rich
natural resources, which have an immense economic and cultural value to the
region’s inhabitants and the nation at large. Indeed, the blue economy provides a
massive economic potential for economic growth, livelihoods and jobs, and ocean
ecosystem health. However, the potential of the blue economy remain largely
untapped in Kenya.
56. In order to support the blue economy, the Government has established 22 new
fish landing sites in 9 counties in the Nyanza and Coast regions, funded and
organised beach management units into cooperatives, set up two hatcheries in
Kabonyo and Shimoni and is in the process of completing Liwatoni fish processing
plant by December 2023 and Shimoni fish port by the end of 2024.
57. The Government has also commissioned MV Uhuru II, a wholly newly-built
merchant marine vessel that demonstrates the rapid maturation of the national
shipbuilding industry especially the Kenya Shipyards and highlights its dynamic
capacity to undertake different important assignments and deliver various types of
vessels for diverse markets. Notably, the Kenya Shipyards is quickly emerging as
a leader in high-quality shipbuilding for our local and regional needs. In this regard,
the Kenya Shipyards have been contracted to repair and maintain ships for
Government Ministries, Departments and Agencies, including the Kenya Coast
Guard Services, the Kenya Ports Authority, the Kenya Maritime Authority, the
Kenya Marine Fisheries Research Institute and private operators in the Indian
Ocean coast as well as Lake Victoria. In addition, the Kenya Shipyards poises as
Kenya’s strategic anchor in the development of the blue economy by channelling
technology as well as local and foreign direct investment into a diverse industrial
ecosystem with distinct clusters assembled around shipbuilding.
1.3.4 The Services Economy
1.3.4.1 Financial Services
58. The Government continues to implement targeted interventions to strengthen

the financial services sector’s role in driving the Government’s Bottom - Up
Economic Transformation Agenda (BETA), and help millions of ordinary citizens
overcome pressing economic challenges and achieve prosperity. Specifically, the
Government will continue supporting individuals and Micro, Small and Medium
Enterprises (MSMEs) excluded at the bottom of the pyramid through the Financial
Inclusion Fund, or the Hustlers Fund. The Government will also convert the Credit
Guarantee Scheme into the Kenya Credit Guarantee Scheme Company (KCGSC)
to ensure sustainability and develop a Credit Guarantee Policy whose objective is
to provide a clear framework for a sustainable model for credit guarantee scheme
for MSMEs.

59. To promote agricultural productivity and transformation, the Government has
initiated an Agricultural Financing and Inclusion Programme. The objective of the
Programme is to enhance access, efficiency and stability of agricultural rural
finance to facilitate transformation of the agricultural sector into an innovative,
commercially oriented and modern agriculture, livestock and fisheries sector as
envisaged in the Kenya Vision 2030. To strengthen this objective, the Government
established a Rural Kenya Financial Inclusion Facility (RK-FINFA). This will
pursue the objective of increased rural financial inclusion and green investments
by agriculture value chain stakeholders, leading to equitable employment
opportunities, innovative and resilient production systems, and increased incomes
for smallholders, poor and marginalized rural households, women and youth.
60. The banking sector remains stable and resilient, with strong liquidity and
capital adequacy ratios. To strengthen resilience of the banking sector, the Central
Bank of Kenya (CBK) is currently reviewing the licensing fees for commercial
banks. The licencing fees for commercial banks was last reviewed in 1990. This
was based on the number of branches that a branch has. The banking sector has
transformed significantly since 1990 with technology and innovations and moved
towards branchless banking. For this reason, the review will consider, among other
things: the changing banking sector land scape, increased supervisory or
surveillance costs, and international best practice. To further strengthen the
resilience of the banking sector and increase commercial banks’ capacity to finance
large projects, the CBK will review the minimum capital requirements for
commercial banks. The current minimum capital requirements of Ksh 1.0 billion
for commercial banks has been in effect since 2012. The banking sector has
transformed since 2012, growing from an asset base of Ksh 2.3 trillion to over Ksh
7.0 trillion currently. The banking sector’s risk profile has also changed in the last
10 years with growing prominence of among others, cyber security risk, cross
border risk and climate-related risks.
61. In order to position Kenya as premier green financial hub green, CBK will
work with banks to build capacity and climate related risk management in their day
to day operations. The initiative will attract global funds that are looking for
opportunities to finance initiatives that build climate resilience. As a strategy, CBK
will build on the progress that has been made in this areas which include issuance
the Guidance on Climate-Related Risk Management on 15th Ocotber, 2021. The
Guidance was aimed at enabling banks to integrate climate-related risks into their
governance, strategy, risk management and disclosure frameworks. It was also
intended to enable banks leverage on business opportunities from efforts to
mitigate and adapt to climate change. These include the adoption of low emission
energy sources, development of new products and services, access to new markets,
housing, and resilient infrastructure.
62. In order to deepen the domestic financial markets, CBK in partnership with
the National Treasury has spearheaded market development initiatives aimed at
increasing liquidity, reducing market segmentation as well as establishing a stable
yield curve which extends to twenty-five years. Notably, the Central Bank
introduced DhowCSD, an upgraded Central Securities Depository infrastructure
that offers a simple, efficient, and secure portal by the CBK to enable the public to
invest in Government of Kenya securities. The platform enables investors to

participate and trade in Government securities market (Treasury Bills and Bonds)
on their mobile phones and on web-based devices. The DhowCSD will transform
Kenya’s financial markets through enhanced operational efficiency and expansion
of digital access, market deepening for broader financial inclusion, and improved
monetary policy operations. The DhowCSD will also improve the functioning of
the interbank market by facilitating collateralized lending amongst commercial
banks and further reduce segmentation in the interbank market. The Treasury
Mobile Direct (TMD) is also available to retail investors as well as the Internet
Banking (IB) platform targeting institutional and corporate clients to access
services such as bidding and dissemination of auction results for Government
securities and view their portfolio positions.
63. To deepen capital markets, the Government is undertaking a comprehensive
review of the legal and regulatory framework to address emerging issues in the
capital markets space. This includes, among others, aspects on collective
investment schemes, public offers and listings, alternative investment mechanisms,
and streamlining credit rating operations in Kenya.
64. To further exploit Kenya's established lead in digital finance, the Government
will continue to implement the National Payment Strategy (2022-2025) and fast-
track finalization of a National Policy on Digital Finance. Specifically, the
Government will undertake a comprehensive review of the National Payments
System legal and regulatory framework. The amendments are aimed at: i)
strengthening CBK’s national payments mandate and oversight to ensure that
Kenya operated a safe, efficient and effective national payments system; and ii)
broadly, enhancing CBK payments policy and supervisory framework in order to
protect Kenyans from abuse by entities that are operating without the required
authorization and licensing. Additionally, the review is intended to provide CBK
with a comprehensive consumer protection framework tailored on for the unique
context of digital payments, guide CBK’s oversight of Payments Service Providers
from a market conduct point of view, and mitigate current and future consumer
protection risks.
1.3.4.2 Tourism Sector
65. Tourism sector is a critical enabler of the Bottom-Up Economic

Transformation Agenda in terms of unlocking employment opportunities and
generate foreign exchange which is important for enhancing the welfare of
Kenyans. For this reason, the Government will continue to implement initiatives
targeted at increasing tourist visits in the country in order to increase the sector
contribution from 14 percent to 50 percent over the next 10 years. In part, the
Government will promote investments in adventure, relaxation, sports, conference
and medical tourism among others aimed at growing tourist visit from the current
1.4 million to 200 million over the next 10 years that will increase foreign earnings
to the country. In this regard, the National Government in collaboration with the
County Governments will map out potential tourism products and sites for
development and marketing to attract tourist with focus on a bottom up job-
creation. The Government will also engage sector stakeholders in re-examine the

tourism and wildlife sector and redesign tourism ecosystem to improve tourism
flow to the country.
66. The Government successfully hosted the Climate Change Summit at the
Kenyatta Convention Center and the first Wildlife Scientific Conference that
brought together wildlife researchers, scientists, conservationists, policy makers
and Government officials across the world. Following the success of the
conference, the Government tourism marketing model will focus on a more
inclusive approach in order to maximize the economic potential and create
employment opportunities. This also provides an opportunity to divert from the
usual wildlife and traditional safari tourism, but also showcase Kenya’s rich
cultural heritage, pristine beaches, adventure tourism, and emerging markets such
as eco-tourism.
1.3.4.3 Aviation Sector
67. The Government will continue to entrench Kenya’s position as regional

aviation hub by expanding, modernizing and managing the aviation sector. In this
regard, the Government will continue to expand and modernize airstrips to connect
various parts of the country and enhance Kenya connectivity and competitiveness
in the region.
1.3.5 Environment and Climate Change

68. The Government remains committed to the provision of a clean, secure and
sustainable environment and adequate drinking water and sanitation for all
Kenyans. Sustainable environment and water management is critical for the
realization of the Bottom –Up Economic Transformation Agenda and the Kenya
Vision 2030. For this reason, the Government will strengthen actions to halt and
reverse biodiversity loss, prevent deforestation, combat desertification and restore
degraded landscapes as part of a broader programme to fulfil the commitments to
reduce emissions by 32 percent by 2030. This is expected to achieve land
degradation neutrality, implement a global biodiversity framework and enhance
the integrity and efficacy of carbon markets.
69. 80 percent of Kenya's land area is arid and semi-arid, with only 12 percent
tree cover. This makes Kenya vulnerable to climate hazards such as droughts,
floods and landslides. In order to reverse this, the Government will continue to
implement its National Tree Growing Programme as part of its plan to grow 15
billion trees across the country by 2030 and to promote and support more resilient
livelihoods. This will ensure that the country attains the Constitutional mandate of
at least 10 percent land area forest cover. Towards this end, the Government has
launched the National Landscapes, Ecosystem Restoration Strategy that is aligned
with the UN Decade for Ecosystem Restoration and Land Degradation Neutrality
Targets under UNCCD, Global Biodiversity Framework and NDC targets. This
programme is expected to contribute to climate change mitigation and adaptation,
and employment creation for vulnerable groups and the youth. In addition, the
Government in collaboration with County Governments and Development Partners
will continue to commit funds towards the National Tree Growing Programme
through the Financing Locally-led climate Action (FLLoCA) Program.

70. Restoration and rehabilitation of wetlands remains a key priority of the
Government. Towards this end, the Government has unveiled the Wetlands
Restoration Strategy to facilitate ecosystem restoration through the National Tree
Growing Programme, circular economy and climate action. To initiate the process,
Toniqo and Horri Ghudha wetlands were commissioned after being rehabilitated
by NEMA through fencing and tree planting to allow them to regenerate. The
wetlands offered a restoration model which will be replicated in the rehabilitation
of other wetlands across the country.
71. In order to sustainably manage waste, the Government is working on
developing a vibrant circular economy that will transform over 8 million metric
tonnes of waste Kenya generates annually into raw material for industrial
production.
1.3.6 Education and Training

72. Education and training is a key enabler of the Government’s Bottom-Up
Economic Transformation Agenda for inclusive growth. For this reason, the
Government has continued to heavily invest in education to facilitate impartation
of the necessary skills and competencies to learners from pre-primary to the tertiary
level to enable them effectively play their part by contributing to the nation
building effort, and partake of the dividends of shared prosperity.
73. The investment by Government has significantly reduced the teacher-student
ratio, with 56,760 new teachers have been employed, while 8,200 primary school
teachers were retrained to equip them with capacity to effectively deliver learning
and teaching at the Junior School level. In subsequent years, the Government is
committed to recruit more to further bridge the teacher-student ratio gap.
Government has also engaged 46,000 teacher interns to equip Kenyan youth with
practical skills and competencies.
74. Funding TVET and Universities in Kenya over the years, has continued to
experience challenges over time. TVET has grown exponentially in the number of
institutions and enrolment rate because it provides opportunities for youths to
acquire employment and entrepreneurship skills. The rapid change in technology
and the dynamics labour market, require that TVET links with industries to update
skills and training. To address this, the Government plans to increase tutors in the
Technical and Vocational Education and Training (TVETs) by another 2,000 to
facilitate the value of technical and vocational training in the provision of skills,
knowledge and competencies.
75. To address the financing gaps which denied many young Kenyans the
opportunity to pursue tertiary education, the Government has unveiled a new
funding model for higher education and technical and vocational training that
guarantees needy students free college studies. The new model for financial
support is student-centred and deploys a rigorous, impartial means testing
instrument to establish their level of need, which then becomes the primary
consideration in allocating scholarships and loans. Additionally, to fully
democratise Kenya’s education system and make higher education accessible and

affordable to all, the Government has chartered the Open University of Kenya
following requisite Cabinet and parliamentary approvals.
76. Information and technology (ICT) is a key factor in the developing world and
there is need to leverage technology at all levels of education by developing ICT
infrastructure for curriculum and improve digital literacy among teachers, parents,
and other stakeholders. In this regard, KNEC in line with the global trends and
expectations of the 21st Century has incorporated digital literacy by ensuring that
the assessments for teacher trainees are conducted electronically. This will
entrench digital literacy among the teachers and provide skills that the teachers can
impart to the learners in schools. Additionally, digital literacy is one of the core
competencies that learners are expected to acquire under the CBC and is a key
target needed to ensure Kenya’s industrial development.
77. Further, he Government has prioritised the teaching and learning of digital
skills, including coding, from the primary school to tertiary education, including
TVET institutions. The recently launched Open University of Kenya will prepare
students to be competitive in the economy of the future. The curriculum for primary
and secondary schools as well as tertiary institutions, will continuously be
reviewed to make sure the students are in touch with global technological change.
1.3.7 Women Agenda

78. Gender equality, women empowerment especially representation in decision
making and economic empowerment, and breaking the silence on Gender Based
Violence (GBV) remains key priorities of the Government. To protect women
against domestic violence, the Government launched Protection against Domestic
Violence Rules (PADV). This is a remarkable milestone in the collective efforts to
combat domestic violence. PADV rules are designed to provide a robust legal
framework that strengthens the support and protection mechanisms available to
survivors of domestic violence. These rules emphasize protection, intervention,
and holistic support, reflecting a multi-sectoral approach that involves
collaboration between Government agencies and civil society organizations.
79. Over the medium term, the Government will continue to provide financial and
capacity building support for women through the Hustler Fund for women-led co-
operative societies, ‘chamas’, merry-go-rounds and table banking initiatives and
protect them from predatory interest rates charged by unscrupulous money lenders.
Specifically, the Government will; i) prioritize Women’s Economic
Empowerment, ending GBV and implementation of the Constitutional provisions
of Article 81(b) of not more than two thirds of either gender; ii) develop an
Affirmative Action Policy; iii) finalize the process of merging the Affirmative
Action Funds into the proposed Biashara Bank.
1.3.8 Social Protection
80. Social Safety Nets Programs in Kenya play a pivotal role in reducing poverty,
improving social inclusion and enhance economic stability. By providing financial
and non-financial support to vulnerable populations, these programs contribute to
the well-being and resilience of elderly citizens. For this reason, the Government

will continue to develop and expand its social safety nets, addressing coverage
gaps, improving targeting, and building administrative capacity will be crucial to
achieving the goal of reducing poverty and promoting social inclusion. In part, the
Government will continue to enhance the capabilities of communities and officially
register Self Help Groups and Beneficiaries Welfare Committees (BWCs),
granting them formal recognition and opportunities to connect with Micro Finance
Institutions (MFIs) and non-state entities
81. The National Council for Persons Living with Disabilities Fund has made
significant strides in promoting the welfare and inclusion of persons with
disabilities in Kenya. However, challenges such as resource constraints, ensuring
that funds are utilized effectively and raising public awareness about the rights of
individuals with disabilities continue to be areas of focus and improvement by the
Government. In order to effectively support people with disabilities (PWDs), the
Government is developing programs designed to provide support persons with
disabilities and their caregivers. Special focus will be placed on offering respite
care services and strengthen psychosocial support systems. The Government is also
developing the National Disability Policy that seeks to advance the inclusion and
participation of persons with disabilities.
82. Street families is one of the impediments to socio-economic developments of
a country as potential human capital is wasted in the streets. The National
Government in collaboration with County Governments will create a well-planned
strategy on the rehabilitation of street families to ensure dignified reintegration of
persons living in the streets to society.
83. To ensure attainment of 100 percent NHIF coverage for senior citizens, the
Government has enacted Social Health Insurance Bill, which extend health
insurance to all Kenyans based on member contributions, with government-
subsidized coverage for the poor; expand the cash transfer programmes for elderly
and vulnerable households to improve operational efficiency, prompt payment
accountability and coverage; invest in education and training for caregivers and
medical staff to fill the gap of skills in the provision of specialised care for older
people.
84. To enhance savings that have consistently been among the lowest globally,
and to correct the delayed transformation of our social security architecture,
fundamental reforms are underway in our savings and social security space. In this
regard, the Government has taken deliberate measures to foster a strong culture of
saving among Kenyans and enable them mobilise resources for investment and
development of intergenerational capital, to eliminate old age poverty and ensure
comfort in retirement. As a result of these initial interventions, contributions to the
National Social Security Fund have grown to Ksh 6.5 billion monthly from the
previous level of. Ksh 1.4 billion a month. The implication of this growth in
national savings is that it will significantly consolidate Kenya’s ability to invest in
development using domestic pension industry financing.

1.3.9 Sports, Culture and Arts
1.3.9.1 Sports and Arts
85. Sports, Culture and Arts sectors are critical for revenue generation by availing
the foreign exchange through a sports economy value chain, inclusive growth and
employment creation. To realize these benefits, the Government continues to
facilitate the development of legal framework, economic institutions, and
organisational mechanisms to promote the effective and sustainable monetisation
of all talent in sports and creative economies.
86. To foster talent development, the Government developed the Sports and
Creative Economy Master Plan, or Talanta Hela. The program is intended to
support and nurture the talents of Kenyan youth, providing them with opportunities
to turn their skills and abilities into viable sources of income. The endpoint of
Talanta Hela is 'pesa mfukoni' or competitive incomes that can sustain livelihoods
and reward talent, dedication, discipline and focus. Talanta Hela program is a
demonstration of the Government’s commitment to turn competitive capabilities
across all sporting disciplines and the expansive spectrum of the creative industry,
including music and dance, film and theatre, fashion and pageantry, digital content
creation as well as literary and fine arts.
87. Over the medium term, the Government will establish a National Academy
by expanding the resident academy at the Moi International Sports Centre-
Kasarani, to incorporate modern training and accommodation facilities that meet
international standards. The Government will also prioritize the completion and
upgrading of stalled/ old sports facilities in optimal utility areas and high potential
talent zones. Currently, the Government is upgrading the Moi International Sports
Centre, Kasarani, Nyayo National Stadium and the Kipchoge Keino Stadium in
Eldoret to provide the infrastructure for international football in Kenya.
1.3.9.2 Culture
88. Culture serves as a critical repository of identity, knowledge, skills and

practices, including sustainable solutions to the pressing challenges of our time.
Article 11, the Constitution recognizes culture as the foundation of our nation and
the cumulative civilization of the Kenyan people and nation. Therefore, the
Government will promote all forms of national and cultural expression in various
forms, including traditional celebrations. The Government has approved the
Culture Bill and is developing Creative Economy Framework, National Kiswahili
Council of Kenya Bill, the Kenya Film Bill, the National Heritage and Museums
Bill.
1.3.10 Youth Empowerment and Development Agenda

89. Youth empowerment and development is an integral part of the Government’s
Bottom-up Economic Transformation Agenda and essential to the entire plan. For
this reason, the Government will continue providing education, employment, and
engagement opportunities that is aimed at empowering the youth to drive Kenya's
socio-economic development and foster a generation of informed, responsible, and

empowered citizens. This comprehensive approach is essential for building a more
inclusive and prosperous future for Kenya.
1.3.11 Governance
90. To strengthen the framework for governance as envisaged under Article 10
of Constitution on national values and principles of governance, the Government
has approved the Public Relations and Communication Management Bill and the
Statute Law (Miscellaneous Amendments) Bill, 2023. Further, the Government has
identified the significant improvement of productivity in key sectors an urgent
priority of national economic governance efforts. Such improvements require
immense investments and the resources to invest come from revenues. There is
simply no space for wastage and corruption because that would be the recipe for
disastrous failure. In line with this, today, the Cabinet approved the Public Audit
(Amendment) Bill, 2023, which will enhance the Auditor General's independence
and transparency to ensure proper utilization of public resources through audits and
also provide power for fraud investigations.
91. Corruption, wastage, inefficiency and negligence are serious threats to
transformation agenda, and unacceptable practices that have no place in the nation.
To address these challenges, the Government will continue to scale-up the
implementation of the provisions of the Kenya 2010 Constitution, strengthen the
rule of law, increase access to justice, and ensure respect for human rights. As part
of the process, the Government will continue to strengthen various institutions that
are mandated to fight corruption in the country, implement reforms on good
governance and enhance the capacity to recover corruptly acquired assets.
Additionally, enactment of the Assets Declaration and Conflict of Interest Bill will
further tighten Kenya’s anti-corruption policy framework, and eliminate space for
misbehaviour.
1.3.11.1Public Service Transformation
92. Kenya has one of the world’s finest human capital with huge potential to drive
socio-economic transformation envisaged under the Bottom-Up Economic
Transformation Agenda and the Kenya Vision 2030. For this reason, the
Government will continue to transform public service sector to make more
responsive to people needs. In particular, the Government will continue to facilitate
Public Service Commission so as to exhibit high levels of productivity, good
governance, diligence and excellent performance.
93. In order to improve human resource management, the Government has
developed a Unified Human Resource (UHR) system—which will consolidate
Human Resource and Payroll data in the Public Service for access through a single
warehouse. Since July 2023, the UHR system is linked to Kenya Revenue
Authority i-Tax to facilitate filing of PAYE tax element associated with individual
employees and total monthly PAYE tax obligation from the State Departments.
The Government will incorporate the other deductions to enable all remittances to
be sent to respective entities including Pension Funds and other employees’
contributions schemes by July 2024.

94. The Government intends to roll out the UHR system for the entire Public
Service by July 2024. The roll out of the UHR will be carried out in phases. Phase
1 entailed rolling out the system to all MDAs and Counties, implemented in
September 2023. Phase 2 involved the roll out to all State Agencies that have
adopted the Unified Payroll Numbering (UPN) System—including to Teachers
Service Commission (TSC). The 349,000 teachers under TSC have been issued
with UPN. Phase 3 will entail issuing the UPN to all Commissions and Independent
Offices, State Corporations, Public Universities, and Agencies by July 2024.
95. Public Service Internship Program is a transformative program that is
currently in its third year with 16,500 young university graduates having
successfully completed a 12-month internship period since its inception. The
Government’s commitment is to onboard at least 10,000 interns every year to offer
an opportunity for university graduates. The internship programme has immense
value not only to the individual intern but also to the country. At the individual
level, the programme has afforded the interns and opportunity to gain work
experience and enhance their employability chances. It has provided hands-on
experience by building upon skills learned in the classroom while also instilling
public service etiquette, values and ethics. The programme has also enabled the
Government to establish a database of skills available to the public service for
future human resource needs. Further, the programme has also helped to promote
inclusivity and diversity as envisaged in the Constitution. The internship
programme is therefore a clear testimony of the Government’s commitment to
empower Kenya youth and enable them to contribute significantly to the socio-
economic transformation of our country.
1.3.11.2Strengthening Leadership Accountability and De-Personalising

Politics
96. The Government has implemented various initiatives and strategies to

strengthen leadership and governance. These efforts are aimed at enhancing
transparency, accountability, and leadership effectiveness. Specifically, the
Government has been engaging public participation in decision-making processes.
This includes public consultations and other forums for citizens to engage and hold
the Government accountable. Additionally, efforts have been made to improve the
efficiency and professionalism of the civil service. This includes hiring, training,
and performance evaluation of civil servants.
1.3.11.3 Strengthening Devolution
97. The Government remains committed to to ensuring the success of devolution.

Delays in disbursing allocations to County Governments have had tremendous
negative effects overtime. To reverse this trend, the Government for the first time
in seven years, disbursed 100 percent of equitable share to the 47 County
Governments amounting to Ksh 399.6 billion by 30th June, 2023. This included
Ksh 370.0 billion equitable share and the arrears of Ksh 29.6 billion inherited from
previous regime.
98. Over the medium term, the Government will continue disbursing funds to
counties in a more efficient and timely way; and supporting counties to improve

their capacity to generate their own source revenue reduce over-reliance on
transfers from the National Government. Government will also complete transfer
of all functions constitutionally earmarked to counties and develop a framework
for ensuring that state-owned firms carrying out devolved or shared functions
adhere to the principles of governance and ensure that the principle of funding-
follows-functions is adhered to with respect to all devolved functions.
1.3.11.4 Security
99. The security and safety of all citizens is the Government’s foremost
commitment and most fundamental obligation, without which every other
endeavour including attaining the Bottom-Up Economic Transformation Agenda
is not possible. For this reason, the Government continues to implement reforms
targeted at improving the operational capacities of our security forces to protect
Kenyans against external and internal threats.
100. As part of the process, the Government has increased funding to all security
agencies to improve their operations including addressing the spectre of terrorism
that is a continuing threat, banditry, cattle-rustling and armed lawlessness have
besieged and devastated communities in the Rift Valley, North-Eastern and,
occasionally, parts of Eastern and the Coast regions. As a strategy, the Government
will endeavour to achieve a corrupt free law enforcement sector and restoring
public confidence in the country’s security apparatus. The Government will also
cultivate a culture of open communication and information sharing among different
stakeholders, with a special focus on local communities, to aid in the ongoing
campaign against violent extremism.
101. Cybersecurity threats are becoming a growing concern for Kenyan online
business especially with the rise of payment portals which have rendered them
vulnerable by cybercriminals. To mitigate these risks, the Government will
continue employing a robust security measure, educate business owners, and
collaborate with various actors both state and non-state. The use of electronic
payment systems and inclusion is a critical infrastructure deliberated through a
National Computer and Cybercrimes Coordination Committee (NCCCC).
102. The Government’s commitment to peace initiatives is unwavering as
enshrined within the Global Public Security Framework. The Government aim to
deepen cooperation in peace and security initiatives as well as law enforcement
programs. To ensure peace in the region, the Government launched a security
operation dubbed Operation Maliza Uhalifu North Rift to deal with security
challenges caused by pastoralist militia activity. This has significantly reduced
insecurity across North Rift region. However, its long-term impact is less certain
due to the country’s multiple security challenges and the risk of overstretching
Government security forces. To enhance boarder security, the Government will
earmark more Ports of Entry (PoE) in different parts of the country.
1.3.12 Foreign Policy and Regional Integration

103. The Kenyan economy is firmly interconnected with regional, continental and
global economic systems. Our security and stability is likewise integrated with

those of our neighbours. Kenya has a fundamental, essential, legitimate and clear
interest in conducting robust diplomacy in the form of bilateral and multilateral
engagements.
104. Notably, for the past 12 months, the Government has continued to fulfil
international obligations through Kenya’s leadership in the international arena.
This is underscored by the high-level summits Kenya has hosted and participated
in. Kenya successfully hosted the inaugural Africa Climate Summit, the 43rd
Ordinary Session of the Executive Council, the 5th MidYear Coordination meeting
of the African Union and the Regional Economic Communities, and the first-ever
African edition of the Berlin Climate and Security Conference in Nairobi, bringing
over 30 Heads of State and Governments to our country and over 30,000 delegates
from different parts of the world.
105. Over the medium term, to entrench Kenya’s significance in world affairs, the
Government will continue to promote friendly relations with our neighbours, play
a leading role in regional and pan-African affairs, collaborate with international
partners, and uphold commitment to the international community.
1.3.12.1Economic and Commercial Diplomacy
106. To unlock the potential of Kenya’s commercial and trade relations, the
Government will continue developing bilateral cooperation in trade and
investment, agriculture, forestry, capacity development in the public service and
transport and communications, among others. Other MOUs are on
telecommunications and ICT, oil and gas, mining and geology, health
collaboration, capacity building of the Public Service and cooperation of our
respective diplomatic academies.
107. The Government has also set up a highly experienced economic advisory
team to forge the right policies and create an enabling environment for foreign
investors to support Kenya’s economic development agenda. Part of the critical
pillars of the foreign policy and regional integration agenda will include:
i) deepening bilateral ties and work with other countries at various multilateral
fora. Kenya is fully committed to a just and rules-based multilateral order that
works for the betterment of humanity;
ii) ensuring that existing bilateral agreements and memorandums of
understanding (MOUs) are constantly reviewed and updated for maximum
benefit;
iii) ensuring a mutually beneficial partnership that will seek more initiatives,
particularly for vocational training where young Kenyans can acquire critical
innovation skills in agriculture, science and technology, and health systems,
among others;
iv) considering easing entry visa requirements for this category of visitors
including diplomats, legislators, and businesspeople, in order to capitalize on
these opportunities. This would necessitate a reciprocal agreement for us to
ease access to visas into Kenya; and

v) expanding the market for our products and services by taking advantage of
our membership in regional organisations such as the East African
Community, the Common Market for Eastern and Southern Africa
(COMESA), the African Continental Free Trade Area (AfCTA), and the
Intergovernmental Authority on Development (IGAD).
1.3.12.2 Anchor State
108. The Government will continue to strengthen Kenya’s profile as regional role
as an anchor state in regional, continental, and global affairs. Underlying Kenya’s
peace and security diplomacy is the recognition of peace and stability as necessary
pre-conditions for development and prosperity. Linked to this, is Kenya’s
conviction that its own stability and economic wellbeing are dependent on the
stability of the sub-region, Africa and the rest of the world. To realize these
benefits, the Government will continue to:
vi) promote the resolution of conflicts by peaceful means drawing on Kenya’s
experiences in mediation, conflict resolution and peacekeeping;
vii) collaborate with other African countries to strengthen the conflict prevention,
management and resolution capacity of regional institutions, including the
East African Community (EAC), Inter Governmental Authority on
Development (IGAD), Common Market for Eastern and Southern Africa
(COMESA) and the African Union (AU with the aim of promoting
sustainable peace and development;
viii) support peace efforts by the African Union and the United Nations through
contributing troops and providing leadership in peacekeeping missions within
the continent and globally; and
ix) create conflict analysis and prevention capacity nationally and in the region
through the foreign service academy.
1.3.12.3Global citizenship
109. The Government recognizes the role played by international organizations in

the global arena. These include the African Union, the East African Community
and the UN and its affiliates. For this reason, as part of global cooperation, the
Government will deepen bonds with long-standing international and bilateral
partners to address various issues such as peace and security, trade, human rights
and environmental protection shaped by its foreign policy objectives, economic
interests, and regional dynamics. Special focus will be placed on causes that
improve the welfare of Africans worldwide.
1.3.12.4 Diaspora
110. The Government recognizes the huge and untapped potential of Kenyans
living abroad which can contribute to the country’s national socio-economic
transformation as envisaged in the Bottom-Up Economic Transformation Agenda
and the Kenya Vision 20230. For this reason, the Government will implement the
National Diaspora Policy that seeks to engage the Kenyan Diaspora in a more

constructive and productive manner to harness the diverse skills, knowledge,
expertise and resources of Kenyans living abroad, and facilitating their integration
into the national development agenda.
1.4 Medium Term Revenue Strategy

111. Domestic resource mobilization is a major source of long-term financing for
sustainable development and has been a concern of many developing countries. To
address this, a number of countries have embarked on the development of a
framework for guiding tax reforms to enhance domestic revenue mobilization.
Since 2016, over twenty-five countries globally have formulated MTRS and are at
various stages of implementation geared towards boosting tax revenues and
improving efficiency of tax systems.
112. In Kenya, revenue as a percentage of GDP has been declining over the years
from 18.1 percent in FY 2013/14 to 14.3 percent in FY 2022/23 while expenditure
pressure has been rising leading to an increase in borrowing to bridge the revenue
gap. Studies have been done which identified various tax policy and administration
reforms that should be implemented over the medium term to address this declining
trend. In this respect, the Government with the support of development partners, in
2021, embarked on the development of the MTRS to enhance domestic revenue
mobilization.
113. The MTRS is aligned to the National Tax Policy which is currently before
Parliament. The MTRS will also guide tax administration to improve efficiency in
the administration of tax laws, close loopholes for tax evasion, and enhance
voluntary tax compliance. The MTRS is expected to hasten the fiscal consolidation
process thus reducing the fiscal deficit to facilitate the achievement of the EAC
target of 3.0 percent of GDP.
114. The additional resources raised from the MTRS will facilitate the
implementation of the Government’s Bottom-up Economic Transformation
Agenda geared towards economic turn-around and inclusive growth through the
Fourth Medium Term Plan (MTP IV) of the Vision 2030, as well as the Medium-
Term Expenditure Framework (MTEF).
1.4.1 Objectives of Medium-Term Revenue Strategy

115. The objectives of the Medium Term Revenue Strategy (MTRS) are to:
i) improve efficiency in revenue administration;
ii) ensure equity and fairness in the tax regime;
iii) enhance tax-payer compliance with tax obligations;
iv) expand the tax base;
v) create certainty in the tax regime to attract investment; and
vi) promote investment across various sectors by removing market distortions.
116. The implementation of MTRS is expected to:

i) Raise revenue to GDP ratio from 14.3 percent in FY 2022/23 to 20.0 percent
by end of the FY 2026/27;
ii) Increase tax compliance rate from 70 percent in FY 2022/23 to 90 percent by
FY 2026/27; and
iii) Increase investment to GDP ratio from 19.3 percent in FY 2022/23 to 25.7
percent in FY 2026/27.
1.4.2 Highlights of Specific Revenue Mobilization Measures
117. The strategies for boosting revenue collection focus on all the tax heads,
income tax, VAT, excise duty and customs duty. The Strategy also outlines
administrative measures aimed at improving the tax system. The strategic
interventions for each of the tax heads are:
(a) Income Tax
i) Reduce the corporate rate of income tax from the current 30 percent to 25
percent over the Strategy period;
ii) Gradually phase out the preferential corporate tax rates;
iii) Review residential rental income tax regime;
iv) Re-introduce minimum tax;
v) Introduce withholding tax on payments for goods supplied to the
government, similar to services, as an advance tax;
vi) Review and rationalize tax exemptions for corporate entities to expand the
tax base;
vii) Review the personal income tax band structure to improve progressivity;
viii) Review taxation regime of pension from exempt-exempt-tax to exempt-
exempt-exempt, and review upward the exempt contribution threshold; and
ix) Review and rationalize tax exemptions and reliefs on individuals’ income
to expand the tax base.
(b) Value Added Tax
i) Review of the VAT rate downwards;
ii) Review the VAT registration threshold;
iii) Review and rationalize the exempt/zero rated supplies and align with
international best practice;
iv) Explore the introduction of VAT on education services with a threshold to
relieve the lower segment of the society from the tax. However, the
introduction of the VAT will exclude basic education and early childhood
education;
v) Introduce VAT on Insurance services; and
vi) Removal of the threshold for applying VAT input tax apportionment
formula.

(c) Excise Duty
i) Review of excise duty regime on petroleum products;
ii) Introduce excise duty on coal;
iii) Review excise duty regime for cigarettes and other tobacco products;
iv) Review excise tax regime for products that contain sugar as well as
introduction of excise duty on other goods with harmful health effects;
v) Review excise tax regime for alcoholic beverages to base taxation on
alcoholic content; and
vi) Review excise duty on betting and gaming to fully address the negative
externalities.
(d) Customs Duty
118. Taking cognizance that the East African Community (EAC) Common
External Tariff (CET) provides common duty rates across the EAC Region, Kenya
to request other EAC Partner States to review the structure of the EAC CET with
a view of having one duty rate for all imported goods while primary raw
materials/inputs will not attract duty.
(e) Other Tax Measures
i) Develop a framework to introduce carbon tax and granting of green fiscal
incentives; and
ii) Introduce motor vehicle circulation tax payable annually by motor vehicle
owners with exemption to certain categories of motor vehicle.
(f) Hard to Tax Sector
i) Review and explore means on suitable taxation of informal sector;
ii) Review the taxation of digital sector; and
iii) Review and explore means on suitable taxation of agriculture sector, such
as introducing withholding tax on payments for produce delivered to
cooperatives or other organized groups, with a threshold to cushion low-
income earners.
(g) Fees, Levies and Non-tax Revenues
i) Digitalize collection of fees, levies and non-tax revenues and review to
remove any exemptions where appropriate.
(h) Administrative measures
i) Tax base expansion by recruiting new taxpayers into the tax net;
ii) Modernization of tax procedures through various tax management systems
and integration of tax administration system with other Government and
third-party systems to improve efficiency;
iii) Simplification of tax procedures to make tax compliance easier for
individuals and businesses;

iv) Tax debt management to ensure that taxpayers pay tax debts to minimize
debt accumulation;
v) Improve compliance levels by focusing on risk management and voluntary
compliance through improved taxpayer services;
vi) Improved integrity by putting in place measures that enhance integrity and
build public confidence in tax administration;
vii) Timely refund of tax to the taxpayers by improving efficiency in
management and processing of tax refunds;
viii) Staffing of tax administration by developing measures/interventions to
facilitate staff retention, undertake skill-gap analysis to inform targeted
employment and continuous training of the staff;
ix) Strengthen taxpayer audit to ensure that taxpayers comply with the tax
laws and also deter evasion and avoidance; and
x) Enhance non-tax revenue collection, administration, accountability and
reporting by use of integrated financial management information system.
119. The review and rationalization of the tax exemptions under the various tax
laws will not affect the privileged persons under the Privileges and Immunities Act.
1.4.3 Implementation of Medium-Term Revenue Strategy

120. The MTRS will be implemented within a three-year period beginning from
FY 2024/25 to FY 2026/27. Tax policy reforms will be implemented through the
Finance Acts and Regulations, beginning with the Finance Act, 2024 and will not
require additional resources from the Exchequer. Implementation of revenue
administration reforms will begin from January 2024 and will require additional
budgetary allocation, estimated at Ksh 12.9 billion.
121. The implementation of the Strategy will involve Ministries, Departments and
Agencies; the Legislature, Judiciary; County Governments; private sector players
and development partners.

II. RECENT ECONOMIC DEVELOPMENTS AND
MEDIUM-TERM OUTLOOK
2.1 Overview
122. The global economy is experiencing challenges arising from global supply
chain disruptions due to the prolonged Russia -Ukraine conflict, elevated global
interest rates on account of inflationary pressures limiting access to credit and
exacerbating debt servicing costs; and significant losses and damages due to
frequent extreme weather events increasing fiscal pressures. As such, global
growth is projected to slow down to 3.0 percent in 2023 and 2.9 percent in 2024
from 3.5 percent in 2022 which is below the historical (2000–2019) average of 3.8
percent (Table 2.1).
123. The geopolitical fragmentation arising from the Israeli-Palestinian conflict
and elevated global oil prices on account of supply cuts by major oil exporters
particularly Saudi Arabia and Russia could weigh on the global economic outlook.
Table 2.1: Global Economic Performance
Source: IMF World Economic Outlook, October 2023. *National Treasury Projection
124. Advanced economies are projected to record a slower growth of 1.5 percent
in 2023 and 1.4 percent in 2024 from 2.6 percent in 2022 mainly driven by lower
growth in the Euro Area. The slowdown in growth in the advanced economies is
as a result of aggressive monetary policy tightening that has contributed to a
significant deterioration of global financial conditions.
125. Growth in the emerging market and developing economies is projected to
decline relatively modestly, from 4.1 percent in 2022 to 4.0 percent in both 2023
and 2024, although with notable shifts across regions. In sub-Saharan Africa,
growth is projected to decline to 3.3 percent in 2023 from 4.0 percent in 2022
reflecting worsening climate change related shocks, inflationary and exchange rate
pressures, and domestic supply issues, including, notably, in the electricity sector.
Growth in the region is expected to rebound to 4.0 percent in 2024, picking up in

four fifths of the sub-Saharan Africa’s countries, and with strong performances in
non-resource intensive countries.
2.2 Domestic Economic Developments

126. The Kenyan economy in 2022 demonstrated resilience in the face of severe
multiple shocks that included the adverse impact of climate change, lingering
effects of COVID-19, global supply chain disruption and the impact of Russia-
Ukraine conflict. As such, the economic growth slowed down to 4.8 percent in
2022 from 7.6 percent in 2021 but broadly aligned with the pre-pandemic decade
average of 5.0 percent (Table 2.2). This growth was largely supported by the robust
growth of service sectors, particularly transport and storage, financial and
insurance, information and communication, and accommodation and food services
sectors. However, the agriculture sector contracted by 1.6 percent due to the
adverse weather conditions that affected reduction of crops and livestock.
Table 2.2: Sectoral GDP Performance
Source of Data: Kenya National Bureau of Statistics.
127. Despite the challenging environment, the Kenyan economy is demonstrating

resilience with growth performance well above the global and SSA average. In the
first half of 2023, the economic growth averaged 5.4 percent (5.5 percent Q1 and
5.4 percent Q2). This growth was primarily underpinned by a rebound in the
agricultural activities and a continued resilience of service sectors. All economic
sectors recorded positive growths in the first half of 2023, though the magnitudes
varied across activities.
128. Agriculture: In the first half of 2023, the agriculture sector rebounded
strongly following improved weather conditions and the impact of fertilizer and

seed subsidies provided to farmers by the Government. The sector grew by 6.0
percent in the first quarter and 7.7 percent in the second quarter. The strong
performance was reflected in enhanced production, especially of food crops that
led to significant increase in exports of tea, coffee, vegetables and fruits. However,
production of cut flowers and sugarcane declined during the period.
129. Services: The services sector continued to sustain strong growth momentum
in the first half of 2023 growing by 6.0 percent in the first quarter and 5.9 percent
in the second quarter. The robust performance was reflected in the notable growth
of information and communication (driven by increases in wireless internet and
fiber-to-home subscriptions), wholesale and retail trade, accommodation and food
services (driven by recovery in tourism), transport and storage, financial and
insurance (due to strong private sector credit growth and lending to the
government) and real estate (supported by sustained expansion of the construction
industry).
130. Industry: In the first half of 2023, the industrial sector recorded lower
growths of 2.5 percent in the first quarter and 1.8 percent in the second quarter
compared to growths of 4.4 percent and 4.2 percent, respectively in similar quarters
in 2022. The slowdown in growth was mainly reflected in manufacturing, and
electricity and water supply sub-sectors. Activities in the manufacturing sector,
which accounts for nearly half of the industrial sector output, was hampered by a
decline in the manufacture of both food (particularly sugar production) and non-
food products while electricity sub-sector slowed down due to a notable decrease
in electricity generation from all sources, except geothermal.
Inflation outcomes
131. Inflation had remained above the Government target range of 5±2.5 percent
from June 2022 to June 2023. In order to anchor inflation expectations, the
Monetary Policy Committee (MPC) gradually raised the policy rate (Central Bank
Rate (CBR)) from 7.50 percent in May 2022 to 10.50 percent in June 2023 and
further to 12.50 percent in December 2023. The tightening of the monetary policy
was to address the pressures on the exchange rate and mitigate second round effects
including from global prices. This will ensure that inflationary expectations remain
anchored, while setting inflation on a firm downward path towards the 5.0 percent
mid-point of the target range
132. Consequently, inflation eased gradually to 6.8 percent in November 2023
from a peak of 9.6 percent in October 2022 and has been within the target range
for the five months of FY 2023/24. However, inflation has remained sticky in the
upper bound of the Government’s target range since July 2023. The easing of
inflation was also supported by lower food prices.
133. Food inflation remained the dominant driver of overall inflation in November
2023. However, it declined to 7.6 percent in November 2023 from a peak of 15.8
percent in October 2022 supported by general decline in international food prices,
government interventions through zero rating of select food commodities, and
improved weather conditions that enhanced production of fast-growing food items,
thus moderating their prices. Nonetheless, sugar prices remained elevated driven
by domestic and global factors.

134. Fuel inflation remained elevated reflecting the impact of the rise in
international oil prices. It increased to 15.5 percent in November 2023 from 11.7
percent in November 2022. The increase reflects the impact of higher international
oil prices, depreciation in the shilling exchange rate and gradual withdraw of the
fuel subsidize from September 2022 and the upward adjustment of electricity tariff
from April 2023. In addition, the upward adjustment of VAT on petroleum product
in July 2023 from 8.0 percent to 16.0 percent to eliminate tax credits from the sector
exacted upward pressures on prices. However, prices of cooking gas continued to
decline and moderated inflation reflecting the impact of the zero-rating of VAT on
liquefied petroleum gas (LPG).
135. Core (non-food non-fuel) inflation remained stable at 3.3 percent in
November 2023, from a peak of 4.4 percent in March 2023. The decline is
attributed to the tight monetary policy and muted demand pressures.
Figure 2.1: Inflation Rate, Percent
Source of Data: Kenya National Bureau of Statistics
Monetary and Credit Developments

136. Broad money supply, M3, grew by 19.5 percent in the year to September 2023
compared to a growth of 6.1 percent in the year to September 2022 (Table 2.3).
The primary source of the increase in M3 was an improvement in the Net Foreign
Assets (NFA) of the banking system and resilient domestic credit. The increase in
NFA mainly reflected the improvement in commercial banks’ foreign assets.
137. Net Domestic Assets (NDA) registered a growth of 10.9 percent in the year
to September 2023, compared to a growth of 17.6 percent over a similar period in
2022. The growth in NDA was mainly supported by an increase in domestic credit
particularly resilient private sector credit and net lending to government. Growth
of domestic credit extended by the banking system to the Government declined to
a growth of 16.0 percent in the year to September 2023 compared to a growth of
19.8 percent in the year to September 2022.

Table 2.3: Money and Credit Developments (12 Months to September 2023,
Ksh billion)
Source of Data: Central Bank of Kenya
138. Growth in private sector credit from the banking system remained resilient
partly reflecting improving business conditions and demand for working capital.
Credit advanced to the private sector grew by 12.2 percent in the year to September
2023 compared to a growth of 12.9 percent in the year to September 2022 (Figure
2.2). Improved credit expansion was registered in various sub-sectors that include
finance and insurance, manufacturing, agriculture and transport and
communication. However, there were fluctuations in the Monthly (month on
month) credit flows to the private sector which amounted to Ksh 47 billion in
September 2023 compared to Ksh 52.4 billion in September 2022.
Figure 2.2: Private Sector Credit

Interest Rates Developments
139. Reflecting the tight monetary policy stance and liquidity conditions in the
money market, interest rates increased in the year to November 2023. The
interbank rate increased to 11.4 percent in November 2023 compared to 4.6 percent
in November 2022 while the 91-day Treasury Bills rate increased to 15.4 percent
compared to 9.2 percent over the same period (Figure 2.3). The introduction of the
interest rate corridor, in August 2023, is expected to align the interbank rate to the
Central Bank Rate and thereby improve the transmission of the monetary policy.
Figure 2.3: Short Term Interest Rates, Percent
140. Commercial banks average lending and deposit rates increased in the year to
September 2023 in tandem with the tightening of the monetary policy stance. The
average lending rate increased to 14.0 percent in September 2023 from 12.4 percent
in September 2022 while the average deposit rate increased to 8.6 percent from 6.8
percent over the same period. Consequently, the average interest rate spread
declined to 5.3 percent in September 2023 from 5.6 percent in September 2022.
External Sector Developments
141. The current account deficit improved to USD 4,160.5 million (4.1 percent of
GDP) in September 2023 compared to USD 5,928.1 million (5.3 percent of GDP)
in September 2022. The current account balance was supported by an improvement
in the trade balance account and resilient remittances (Table 2.4).
142. In the year to September 2023, exports contracted by 2.0 percent mainly due
to a decline in horticultural exports particularly cut flowers despite an improvement
in receipts from tea and manufactured exports. The increase in receipts from tea
exports reflects higher prices attributed to lower global supply due to drought amid
resilient demand from traditional markets.
143. On the other hand, imports declined by 13.2 percent in the 12 months to
September 2023, mainly reflecting lower imports of infrastructure related
equipment, manufactured goods, oil, and chemicals. Oil prices remain elevated on
account increased geopolitical fragmentation and global oil supply cuts by major
oil exporters particularly Saudi Arabia and Russia. As a result, the trade account

balance improved by USD 2,429.5 million to a deficit of USD 9,741.7 million in
September 2023.
Table 2.4: Balance of Payments (USD Million)
144. Net receipts on the services account declined by USD 928.2 million to USD
671.8 million in September 2023 compared to a similar period in 2022. This was
mainly on account of a decline in receipts from transport despite an increase in
receipts from tourism as international travel continues to improve. Net Secondary
income remained resilient owing to an increase in remittances which amounted to
USD 4,142 million in the 12 months to September 2023, and were 3.5 percent
higher compared to a similar period in 2022.
145. The capital account balance improved by USD 12.6 million to register a
surplus of USD 144.1 million in September 2023 compared to a surplus of USD
131.5 million in the same period in 2022. Net financial inflows slowed down but
remained vibrant at USD 3,144.8 million in September 2023 compared to USD
4,784.7 million in September 2022. The net financial inflows were mainly in the
form of other investments, financial derivatives, and direct investments. Portfolio
investments registered a net outflow during the period.
146. The overall balance of payments position slowed down to a surplus of USD
1,044.4 million (1.0 percent of GDP) in September 2023 from a surplus of USD
2,225.9 million (2.0 percent of GDP) in September 2022.
Foreign Exchange Reserves
147. The banking system’s foreign exchange holdings remained strong at USD
13,968.3 million in September 2023, an improvement from USD 11,337.4 million
in September 2022. The official foreign exchange reserves held by the Central
Bank stood at USD 7,651.8 million compared to USD 7,787.5 million over the

same period (Figure 2.5). Commercial banks holdings improved to USD 6,316.5
million in September 2023 from USD 3,549.9 million in September 2022.
148. The official reserves held by the Central Bank in September 2023 represented
4.1 months of import cover as compared to the 4.4 months of import cover in
September 2022. It, however, fulfilled the requirement to maintain it at a minimum
of 4.0 months of imports cover to provide adequate buffer against short-term
shocks in the foreign exchange market.
Figure 2.5: Foreign Exchange Reserves (USD Million)
Exchange Rate Developments

149. Kenya like several other countries is experiencing foreign exchange
challenges due to the rise of US interest rates. In November 2023, the Kenya
Shilling weakened by 24.7 percent against the US Dollar, 31.9 percent against the
Sterling Pound and 32.2 percent against the Euro, compared to a similar period in
2022.
150. The Kenya Shilling exchanged at an average of Ksh 152.0 in November 2023
compared to an average of Ksh 121.9 in November 2022. Against the Euro, the
Kenya shilling weakened to exchange at Ksh 164.2 in November 2023 compared
to Ksh 124.2 in November 2022 while against the Sterling Pound the Kenyan
Shilling also weakened to exchange at Ksh 188.6 compared to Ksh 143.0, over the
same period (Figure 2.6). The Kenyan Shilling was supported by increased
remittances, adequate foreign exchange reserves and strong exports receipts.
151. The Government has taken measures to stabilize the foreign exchange market
which include the Government-to-Government petroleum supply arrangement.
This arrangement is mainly intended to address the US Dollar (USD) liquidity
challenges and exchange rate volatility caused by the global dollar shortage and
sport market reactions that was driving volatility and a false depreciation that was
a scarcity value as well as market distortion.

Figure 2.6: Kenya Shillings Exchange Rate
Capital Markets Developments

152. Activity in the capital markets slowed down in November 2023 compared to
November 2022 as advanced economies tightened their monetary policy amid
inflationary pressures. The NSE 20 Share Index declined to 1,496 points in
November 2023 compared to 1,638 points in November 2022 while Market
capitalization declined to Ksh 1,436 billion from Ksh 1,971 billion over the same
period (Figure 2.7).
Figure 2.7: Performance of the Nairobi Securities Exchange
Source of Data: Nairobi Securities Exchange
153. In the domestic secondary bond market, bonds turnover declined by 16.1
percent to Ksh 644.86 billion in September 2023 from Ksh 768.84 billion in
September 2022. In the international market, yields on Kenya’s Eurobonds
decreased by 106.8 basis points at the end of September 2023 compared to
September 2022.

2.3 Fiscal Performance
154. Budget execution during the first four months of FY 2023/24 progressed
relatively well with revenues recording a growth of 13.0 percent in October 2023
compared to a growth of 11.9 percent in October 2022. Total revenue recorded a
shortfall of Ksh 47.6 billion with ordinary revenue missing the October 2023 target
by Ksh 59.1 billion and Ministerial Appropriation in Aid (AiA) recording a surplus
of Ksh 11.5 billion. Revenue performance is anticipated to improve over the course
of the fiscal year, mainly supported by the improved revenue administration by the
Kenya Revenue Authority.
155. Similarly, overall expenditures were below target by Ksh 244.6 billion in
October 2023 on account of below target disbursements towards; development
expenditure by Ksh 104.3 billion, recurrent expenditures by Ksh 81.4 billion, and
County Governments by Ksh 58.8 billion. The below target performance in
expenditures is largely explained by the shortfalls in revenue performance (Table
2.4a).
Table 2.4a: Fiscal Performance as at 31st October, 2023(Ksh billion)
Source of Data: National Treasury
Revenue Performance
156. Revenue collection to October 2023 recorded a slightly higher growth of 13.0
percent compared to a growth of 11.9 percent in October 2022. This revenue
performance is partly explained by rising cost of living which has negatively
affected the business environment. As at end October 2023, the cumulative total

revenue inclusive of Ministerial Appropriation in Aid (A-i-A) was Ksh 826.7
billion against a target of Ksh 874.3 billion recording a shortfall of Ksh 47.6 billion.
157. Ordinary revenue for the period to October, 2023 was Ksh 713.9 billion
against a target of Ksh 773.0 billion translating into a shortfall of Ksh 59.1 billion
despite recording a growth of 12.3 percent. All broad tax categories of ordinary
revenue safe for Value Added Tax (VAT) fell short of the respective targets during
the review period. Income tax recorded a shortfall of Ksh 48.8 billion, Excise taxes
of Ksh 12.7 billion and Import duty of Ksh 9.7 billion. Value Added Tax (VAT)
met the October 2023 target while other revenue was above target by Ksh 12.0
billion.
158. Ministerial A-i-A inclusive of the Railway Development Levy amounted to
Ksh 112.8 billion in October 2023 against a target of Ksh 101.3 billion recording
a surplus of Ksh 11.5 billion.
Expenditure Performance
159. Total expenditure and net lending in the period to October 2023 amounted to
Ksh 889.4 billion against a target of Ksh 1,133.9 billion; translating to a shortfall
in expenditure of Ksh 244.6 billion. This was largely on account of below target
disbursement towards development expenditure by Ksh 104.3 billion, recurrent
expenditure by Ksh 81.4 billion and below target disbursement to County
Governments of Ksh 58.8 billion (Table 2.4a).
160. The below target recurrent expenditure as at October 2023 was on account of
below target payments on domestic interest (Ksh 33.3 billion), operations and
maintenance (Ksh 55.5 billion), pensions (15.7 billion), and below target
contributions to civil service pension fund of Ksh 4.9 billion. External interest
payments were above target by Ksh 28 billion due to depreciation of the Kenya
Shilling against the US Dollar. Development expenditures were below target by
Ksh 104.3 billion on account of below target disbursement towards domestically
financed programmes by Ksh 83.9 billion and foreign financed programmes by
Ksh 15.9 billion. Disbursement to County Governments was below target by Ksh
58.8 billion.
161. Fiscal operations of the Government by end of October 2023 resulted in an
overall deficit including grants of Ksh 58.4 billion against a projected deficit of
Ksh 254.7 billion. This deficit was financed through net domestic borrowing of
Ksh 67.8 billion and net foreign repayment of Ksh 31.9 billion.
2.4 Fiscal Policy

162. The medium-term fiscal policy approach seeks to support the Government's
Bottom-Up Economic Transformation Agenda through continued implementation
of a growth responsive fiscal consolidation plan that slows the yearly increase in
the public debt and puts in place an efficient liability management strategy without
affecting the provision of services to the public. In addition, the Government will
put in place measures to broaden the revenue base and rationalize expenditures in
order to reduce the fiscal deficits. Consequently, revenue collections are expected
to rise to 19.7 percent of GDP in FY 2026/27 from 18.9 percent of GDP in the FY

2023/24. Total expenditures are projected to remain stable at about 23.7 percent as
a share of GDP over the medium term. Implementation of the reforms on revenue
and expenditure is expected to result in reduction in the fiscal deficit including
grants from Ksh 886.6 billion (5.5 percent of GDP) in the FY 2023/24 to Ksh 692.5
billion (3.1 percent of GDP) in the FY 2026/27 (Table 2.4 b).
Table 2.4b: Fiscal Framework (Ksh billion)
Domestic Revenue Mobilization
163. The Government will implement a mix of tax administrative and tax policy
measures in order to boost revenue collection efforts by the Kenya Revenue
Authority (KRA) to Ksh 4.0 trillion over the medium term thereby supporting
economic activity. In particular, the Government will focus on domestic resource
mobilization efforts that include:
i. Implementation of the Finance Act 2023 that targets to boost revenue
collection. This will lead to a tax effort of 16.0% of GDP in FY 2023/24;

ii. Implementation of the National Tax Policy to improve the tax system's
administrative effectiveness, offer uniformity and clarity in tax laws, and
control tax expenditures;
iii. Implementation of the Medium-Term Revenue Strategy (MTRS) for the
period FY 2024/25 - 2026/27 to further strengthen tax revenue mobilization
efforts to 20.0% of GDP over the medium term;
iv. Focus on non-tax measures that MDAs can raise through the services they
offer to the public e.g. Ministry of Land, Immigration and citizen services
among others; and
v. Strengthening of Tax Administration by KRA through scaling up use of
technology to seal leakages; enhancements of iTax and Integrated Customs
Management System (iCMS); and use of e-TIMS (Tax Invoice
Management System).
Expenditure Reforms
164. The Government will sustain efforts to improve efficiency in public spending
and ensure value for money by: i) eliminating non priority expenditures; ii)
rationalizing tax expenditures; iii) scaling up the use of Public Private Partnerships
financing for commercially viable projects; and iv) rolling out of an end - to - end
e-Government Procurement (e-GP) System to the National and County
Governments in the FY 2024/25 where all public procurement and assets disposal
transactions are undertaken online and are fully compliant with the Public
Procurement and Asset Disposal Act of 2015 and its attendant Regulations 2020.
The developed e-GP system will be interfaced with the Integrated Financial
Management Information System (IFMIS) to process payments of contracted
suppliers. Currently, the Government is piloting the new e-GP system in twelve
(12) MDAs. Once the system is implemented, it is expected to promote savings of
about 10-15 percent of the total Government procurement expenditure, value for
money, efficiency, transparency, audit trail and enhance good governance in our
public procurement.
165. In order to increase efficiency and effectiveness of the public spending, the
Government will continue to implement Public Investment Management
Regulations that aim to streamline initiation, execution and delivery of public
investment projects. Ministries shall be required to finalize ongoing projects before
commencing new projects in order to reduce the Government’s exposure on stalled
projects. Additionally, all PIM approved projects shall be required to factor
environmental and climate related risks including carbon emission and disaster risk
management as part of project appraisal. Going forward, the National Government
will commence rolling out the PIM Regulations to County Governments. Further,
the Government will roll out the Public Investment Management Information
System (PIMIS) to all the Ministries, Departments and Agencies (MDAs). The
System is aimed at improving the management of development projects in the
country. All State Departments, SAGAs and SOEs shall be required to list all the
projects.

166. To sustain and strengthen the pension reforms, the Government will monitor
and completely separate and delink the governance of the Public Service
Superannuation Scheme from that of the non-contributory scheme. The
Government will also revamp the public service pension administration through
digitization and re-engineering of the pension management system, expected to be
completed by December 2024. Digitization will streamline processes, improve
accuracy, and facilitate timely pensions payments. This also enable better
monitoring and management of pension-related matters while re-engineering will
complement the digitization by availing an end-to-end Enterprise Resource
Planning (ERP) solution that takes advantage of the modern IT technologies.
167. In order to address the challenges faced by State-Owned Enterprises, the
Government has embarked on the process of privatization and restructuring them.
As part of the process, the Government has identified and proposed 11 Government
Owned Enterprises and Government Linked Corporations to be included in the
2023 Privatisation Programme in line with the provisions of the Privatisation Act,
2023. This will support Government’s efforts for fiscal consolidation and spurring
economic development through: i) Raising of additional revenue; ii) Reducing the
demand for Government resources among many demanding and competing needs;
iii) Improving regulatory framework in the economy by unbundling regulatory and
commercial functions among some entities; iv) Improving efficiency in the
economy by encouraging more private sector participation hence make the
economy more responsive to market force and competitions; among others.
Deficit Financing Policy
168. Consistent with the objective of minimizing costs and risks of public debt, the
Government will mobilize resources mainly from multilateral, bilateral and
commercial sources will be utilized as a last resort to fund the fiscal deficit and
repay maturing external debts while issuance of Treasury bonds and Treasury bills
in the domestic market will be used to fund net domestic financing requirements.
169. More emphasis will be to maximize concessional loans while non-
concessional and commercial external borrowing will be limited to economic
enabler projects that cannot secure concessional financing and are in line with the
Bottom-Up Transformational Agenda of the Government.
170. In light of increased cost of financing, the Government will continue
monitoring the global financial market conditions before accessing the
international capital market for any liability management operations. The
Government will also explore other alternative sources of financing including
climate change financing options, Debt for Nature Swaps, Samurai and Panda
bonds if market and macroeconomic environment allow.
171. The domestic debt market remains one of central funding source to the
Government as it contributes to half of the total funding thus mitigating against
external currency risks. The Government will continue to implement reforms that
are aimed at deepening, improving efficiency and diversify the investor base within
the domestic market.

172. Commitment to fiscal consolidation (reduce fiscal deficits) remains important
to Government in restraining debt accumulation and thus progressively reduce the
debt service over the medium-term amidst global shocks on Kenya’s economy and
its medium-term prospects.
2.5 Economic Outlook

173. The economy is projected to remain strong and resilient in 2023, 2024 and
over the medium term supported by the continued robust growth of the services
sectors, the rebound in agriculture, and the ongoing implementation of measures to
boost economic activity in priority sectors by the Government. As such, the
economy is expected to remain strong and expand by 5.5 percent in both 2023 and
2024 (5.5 percent in FY 2023/24 and 5.4 percent in FY 2024/25) (Table 2.6 and
Annex Table 1).
174. From the supply side, this growth will be driven by a strong recovery in the
agriculture sector supported by the anticipated adequate rainfall in most parts of
the country and a decline in global commodity prices that will reduce the cost of
production. Additionally, Government intervention measures aimed at lowering
the cost of production such as the ongoing fertilizer and seed subsidy program and
provision of adequate affordable working capital to farmers will support growth of
the sector.
175. The industry sector will be driven mainly by increased activities in
manufacturing and construction subsectors. Manufacturing subsector will be
supported by improved availability of raw materials following the recovery in
agriculture production and a decline in global commodity prices which will support
food processing. Construction subsector will be driven by sustained investment in
the Affordable Housing programme, PPP infrastructure projects and the ongoing
work on building and maintaining public infrastructure. Electricity and water
supply subsector is expected to remain vibrant due to the anticipated increase in
demand as the industrial and residential consumption grows.
176. Services sector will be supported by resilient activities in accommodation and
restaurant, financial and insurance, information and communication, wholesale and
retail trade and transport and storage, among others. Accommodation and
restaurant subsector will be supported by the continued increase in tourists’ arrivals
as international travels recovers following the global economic slowdown and
Government’s effort to revamp the sector, through promotion of international
conference, cultural festivals and promoting wildlife safaris. Transport and Storage
subsector will be supported by improvement of critical national and regional trunk
roads that have the highest economic impact and adoption of electric vehicles
which signals new era of mobility. Activities in information and communication
subsector will be supported by laying of additional National Fiber Optic network
which will enable the Country to achieve the required national bandwidth to
expedite the deployment and development of rural telecommunication services.
177. On the demand side, growth will be driven by an improvement in aggregate
demand. Aggregate demand will be supported by household private consumption
and robust private sector investments coupled with Government investments as the

public sector consolidates. This growth will also be supported by improvement in
the external account supported by strong export growth and resilient remittances.
178. Consumption will mainly be driven by strong Private consumption which is
expected to increase to 79.3 percent of GDP in 2024 from 78.3 percent of GDP in
2023. The easing of inflationary pressures will result in strong household
disposable income, which will in turn support household consumption.
Government consumption is projected to decline in 2023 and 2024 in line with the
fiscal consolidation program.
179. Aggregate investment is projected to remain stable at 19.3 percent of GDP in
2023 and 19.2 percent of GDP in 2024 mainly supported by the private sector.
Investment will benefit from focus on public-private-partnership (PPP) projects
and improvements in the Foreign Exchange market conditions. Additionally,
private investments will be supported by stable macroeconomic conditions coupled
with the ongoing fiscal consolidation which will provide the needed confidence for
investors. Interventions by the Government through the Hustlers’ Fund will
strengthen MSMEs thereby correcting market failures for the vast majority of
Kenya's at the bottom of the pyramid. This will strengthen the private sector led
growth opportunities.
180. Growth over the medium term will also be driven by sustained Government
investments in the Affordable Housing programme, PPP infrastructure projects and
the ongoing work on building and maintaining public infrastructure. The
development spending in the budget will be above 5.0 percent of GDP so as not to
impact on growth momentum. The spending supports investments in key projects
under the Bottom-Up Economic Transformation Agenda (BETA). Particularly,
investments in the nine priority value chains (Leather, Cotton, Dairy, Edible Oils,
Tea, Rice, Blue economy, Natural Resources (including Minerals and Forestry),
and Building Materials).
181. The current account deficit is projected to improve to 4.4 percent of GDP in
2023 and 4.0 percent of GDP in 2024 compared to 5.1 percent of GDP in 2022.
The expected narrowing of the current account deficit is driven by a decline in
imports amid lower oil prices, exchange rate adjustment, and further rationalization
of capital spending. Additionally, the Current account balance will be supported
by continued strong remittance inflows.
182. Kenya’s exports of goods and services is expected to continue strengthening
supported by receipts from tourism, and an increase in receipts from tea and
manufactured exports. The strengthening of the dollar against the Shilling is also
expected to support export receipts. The expected recovery of Kenya’s trading
partners and the implementation of Africa Continental Free Trade Area (AfCFTA)
will enhance demand for exports of Kenyan manufactured products. Additionally,
the implementation of crops and livestock value chains, specifically, exports of tea,
coffee, vegetables and fresh horticultural produce, among others will support
growth in export receipts.
183. In the Balance of Payments Statement, external financing needs will be met
mainly by equity inflows and foreign direct investment given the conducive

business climate that Government has created particularly the fiscal policy
predictability.
Monetary Policy Management
184. The monetary policy stance is aimed at achieving price stability and providing
adequate credit to support economic activity. Consequently, overall inflation is
expected to remain within the Government target range of 5±2.5 percent in the
medium term. This will be supported by muted demand pressures consistent with
prudent monetary policy and easing domestic and global food prices coupled with
Government measures to lower cost of production through subsidizing farm inputs
and support sufficient supply of staple food items through zero rated imports.
185. The CBK continues to implement reforms outlined in the White Paper on
Modernization of the Monetary Policy Framework and Operations. The reforms
aim at enhancing the effectiveness of monetary policy and support anchoring of
inflation expectations through inflation targeting. In order to enhance monetary
policy transmission, the Central Bank of Kenya (CBK) adopted a new monetary
policy implementation framework and launched the Centralized Securities
Depository System (CSD) in 2023.
186. The new framework, adopted in August 2023, which is based on inflation
targeting, introduced an interest rate corridor around the Central Bank Rate (CBR)
set at CBR±250 basis points. Consequently, monetary policy operations are aimed
at ensuring the interbank rate, the operating target, closely tracks the CBR within
the corridor. To further improve the operation of the interest rate corridor
framework, access to the Discount Window was improved as the applicable interest
rate was reduced from the 600 basis points above CBR to 400 basis points above
CBR. The Centralized Securities Depository System, the DhowCSD, which went
live on 31st July, 2023, is a versatile market infrastructure that will improve
monetary policy transmission and implementation and enhance operational
efficiency in the domestic debt market, further promoting capital growth, market
deepening, expansion of digital access for broader financial inclusion, and
positioning Kenya as the preferred financial hub in the region.
187. CBK will continue improving monetary policy formulation and
implementation in Kenya including refining macroeconomic modelling and
forecasting frameworks, fine tuning of monetary policy operations around the CBR
and improving the communication of monetary policy decisions to make them
more effective.

Table 2.6: Macroeconomic Indicators and Projections
2020 2021 2022 2023 2024 2025 2026 2027
Act Prel. Act Prel. Act Proj. BPS 2024 BPS 2024 BPS 2024 BPS 2024
annual percentage change, unless otherwise indicated

National Account and Prices
Real GDP -0.3 7.6 4.8 5.5 5.5 5.5 5.5 5.5
Primary Sector 4.7 0.5 -1.0 5.8 4.1 4.1 3.7 3.7
of which: Agricuture 4.6 -0.4 -1.6 6.0 4.1 4.0 3.6 3.6
Industry 3.2 6.8 3.5 2.8 3.4 3.5 3.5 3.9
Services -1.8 9.6 6.7 5.9 5.9 5.9 6.3 6.3
GDP deflator 4.9 4.3 6.0 7.1 6.2 5.8 5.8 4.6
CPI Index (eop) 5.6 5.7 9.1 6.3 5.0 5.0 5.0 5.0
CPI Index (avg) 5.3 6.1 7.6 7.7 5.0 5.0 5.0 5.0
Terms of trade (-deterioration) -5.3 -2.2 0.7 -6.3 1.3 2.5 2.8 3.9
Money and Credit (end of period)

Net domestic assets 15.9 15.2 14.9 11.7 9.8 9.2 8.6 8.9
Net domestic credit to the Government 26.7 18.9 10.9 7.9 7.9 8.0 7.7 6.8
Credit to the rest of the economy 10.1 12.2 13.1 14.1 14.6 13.9 12.9 13.9
Broad Money, M3 (percent change) 6.9 10.5 13.2 12.3 11.3 11.0 10.9 11.3
Reserve money (percent change) 10.5 4.0 3.2 12.2 11.2 10.8 10.8 11.1
in percentage of GDP, unless otherwise indicated

Investment and Saving
Consumption 88.3 88.7 90.1 88.8 88.9 86.3 86.1 85.2
Central Government 12.5 12.1 12.3 10.4 9.9 9.2 9.0 9.2
Private 75.4 74.6 75.6 78.3 79.0 77.1 77.2 76.1
Gross Fixed Capital Investment 19.7 20.4 19.2 19.3 19.5 19.9 19.9 19.8
Central Government 5.5 4.5 3.8 3.6 4.1 4.6 4.9 5.1
Private 14.2 15.9 15.4 15.7 15.4 15.3 15.0 14.7
Gross National Saving 14.9 15.6 14.1 14.8 15.5 15.8 15.8 15.8
Central Government -3.3 -4.4 -4.1 -4.1 -3.9 -2.3 -1.3 -1.2
Private 18.1 20.0 18.2 18.9 19.4 18.1 17.1 17.0
Exports value, goods and services 9.7 10.8 12.2 13.1 12.8 12.8 12.5 12.7
Imports value, goods and services 17.7 19.9 21.5 21.4 21.4 20.1 19.4 18.9
Current external balance, including official transfers -4.8 -4.8 -5.1 -4.4 -4.0 -4.1 -4.0 -4.0
Gross reserves in months of next yr's imports 4.6 4.7 4.4 3.6 4.2 4.0 4.0 3.9
Gross reserves in months of this yr's imports 5.6 5.2 3.9 4.0 4.3 4.3 4.3 4.3
Central Government Budget

Total revenue 16.5 16.0 17.3 16.5 18.9 19.1 19.2 19.7
Total expenditure and net lending 24.4 24.6 23.8 22.6 24.2 23.3 22.5 23.2
Overall Fiscal balance excl. grants -7.9 -8.6 -6.5 -6.0 -5.3 -4.2 -3.4 -3.4
Overall Fiscal balance, incl. grants -7.7 -8.3 -6.3 -5.9 -5.1 -3.9 -3.1 -3.1
Overall Fiscal balance, incl. grants, cash basis -7.6 -8.3 -6.2 -5.6 -5.1 -3.9 -3.1 -3.1
Primary budget balance -3.4 -3.9 -1.6 -0.8 0.6 1.7 1.8 1.5
Public debt
Nominal central government debt (eop), gross 68.4 68.0 71.4 68.2 65.0 61.6 58.7 56.1
Nominal debt (eop), net of deposits 63.4 64.7 68.0 65.2 62.3 59.2 56.5 54.1
Domestic (gross) 32.8 34.1 33.9 32.8 31.4 30.9 29.9 29.2
Domestic (net) 27.9 30.8 30.5 29.8 28.7 28.5 27.8 27.3
External 35.5 33.9 37.5 35.5 33.6 30.7 28.8 26.8
Memorandum Items:
Nominal GDP (in Ksh Billion) 10,715 12,028 13,368 15,180 17,083 18,948 21,057 23,304
Nominal GDP (in US$ Million) 100,658 109,697 113,421 102,015 114,549 126,619 142,098 155,536
Source of Data: The National Treasury
2.6 Risks to the Economic Outlook
189. There are downside risks emanating from domestic as well as external
sources. On the domestic front, risks relate to unpredictable weather conditions due
to the impact of climate change which could adversely affect agricultural
production and result to domestic inflationary pressures and food insecurity.
Additionally, tight fiscal space due to the impact of the multiple shocks that have
affected the global and the domestic economy might lead to tight liquidity
conditions for financing the budget.

190. On the external front, uncertainties in the global economic outlook stemming
from the escalating geopolitical fragmentations could result in higher commodity
prices which poses a risk to domestic inflation outcomes leading to further
tightening of financial conditions. Additionally, weaker global demand due to the
slowdown the global economic recovery could adversely affect Kenya’s exports,
foreign direct investments and remittances. Continued strengthening of US dollar
against other global currencies arising from aggressive monetary policy tightening
present significant risks to financial flows and puts pressures on the exchange rate
with implication to growth and inflation.
191. The upside risk to the domestic economy relate to early easing of global
financing conditions and lower international fuel and food prices, which would
strengthen Kenya’s external balances. Faster than projected rebound in economic
activities that would result in higher Government revenues providing fiscal space
that would support fiscal consolidation.
192. The Kenyan Government continues to monitor the domestic and external
environment and will take appropriate policy measures to safeguard the economy
against the adverse effects of the risks if they were to materialize.

III. BUDGET FOR FY 2024/25 AND THE MEDIUM
TERM
3.1 Fiscal Framework for FY 2024/25 and Medium Term Budget
193. The FY 2024/25 and the medium-term budget is based on the Government’s
policy priorities and macroeconomic policy framework set out in Chapter I and
Chapter II. To support the Bottom - Up Economic Transformation Agenda, the
Government will continue with the growth friendly fiscal consolidation plan by
containing expenditures and enhancing mobilization of revenues in order to slow
down growth in public debt without compromising service delivery.
Revenue Projections
194. In the FY 2024/25, revenue collection including Appropriation-in-Aid
(A.i.A) is projected to increase to Ksh 3,445.6 billion (19.1 percent of GDP) up
from the projected Ksh 3,042.8 billion (18.9 percent of GDP) in the FY 2023/24
(Annex Table 2 and 3). Revenue performance will be underpinned by the on-
going reforms in tax policy and revenue administration measures geared towards
expanding the tax base. Ordinary revenues will amount to Ksh 2,958.6 billion (16.4
percent of GDP) in FY 2024/25 from the projected Ksh 2,596.8 billion (16.1
percent of GDP) in FY 2023/24.
Expenditure Projections
195. Government expenditure as a share of GDP for FY 2024/25 is projected to
decline to 23.3 percent from the projection of 24.2 percent of GDP in the FY
2023/24. In nominal terms, the overall expenditure and net lending is projected at
Ksh 4,198.8 billion compared to a projection of Ksh 3,904.9 billion in the FY
2023/24 budget. The FY 2024/25 expenditures comprise of recurrent of Ksh
2,873.6 billion (16.0 percent of GDP) and development of Ksh 881.3 billion (4.9
percent of GDP).
Deficit Financing
196. Reflecting the projected expenditures and revenues, the fiscal deficit
(including grants), is projected at Ksh 704.0 billion (3.9 percent of GDP) in FY
2024/25 compared to the projected fiscal deficit of Ksh 814.8 billion (5.1 percent
of GDP) in FY 2023/24.
197. The fiscal deficit in FY 2024/25, will be financed by net external financing of
Ksh 326.2 billion (1.8 percent of GDP), and net domestic borrowing of Ksh 377.7
billion (2.1 percent of GDP).
3.2 FY 2024/25 and Medium-Term Budget Priorities

198. The FY 2024/25 and the Medium Term Framework will focus on the
implementation of the Bottom-up Economic Transformation Agenda (BETA) as
prioritized in the Medium Term Plan (MTP) IV. The Agenda is geared towards
economic turnaround and inclusive growth, and aims to increase investments in the
five core pillars envisaged to have the largest impact to the economy as well as on

household welfare. These include: Agricultural Transformation and Inclusive
Growth; Micro, Small and Medium Enterprise (MSME); Housing and Settlement;
Healthcare; and Digital Superhighway and Creative Industry. Implementation of
these priority programmes aims at bringing down the cost of living; eradicating
hunger; creating jobs; and provide the greater majority of our citizens with much
needed social security while expanding the tax revenue base and improving foreign
exchange balance.
199. To achieve the pillars, the Government will implement strategic interventions
under the following key enablers: Infrastructure; Manufacturing; Blue Economy;
Services Economy, Environment and Climate Change; Education and Training;
Women Agenda; Social Protection; Sports, Culture and Arts; Youth Empowerment
and Development Agenda; Governance; and Foreign Policy and Regional
Integration.
3.3 Budgetary Allocations for the FY 2024/25 and the Medium-

Term
200. The total budget for FY 2024/25 is projected at Ksh 4,096.0 billion. The
allocations to the three arms of government including sharable revenues to the
County Governments is summarized in Table 3.1.
Table 3.1: Summary Budget Allocations for the FY2024/25 – 2026/27 (Ksh
Million)
Source of Data: The National Treasury

201. The resource allocation for the priority programmes will be developed
through a value chain approach under five clusters namely: Finance and Production
Economy; Infrastructure; Land and Natural Resources; Social Sectors; and
Governance and Public Administration. The nine (9) identified key value chain
areas for implementation include: Leather; Cotton; Dairy; Edible Oils; Tea; Rice;
Blue Economy; Natural Resources (including Minerals and Forestry); and Building
Materials. This process ensures there is no break in the cycle in the resource
allocations for a value chain. The process also ensures adequate resources are
allocated to any entity along the value chain and helps to eliminate duplication of
roles and budgeting of resources. Spending in these critical needs are aimed at
achieving quality outputs and outcomes with optimum utilization of resources. The
momentum and large impact they will create will raise economic vibrancy and tax
revenues.
202. Further, the MDAs will be encouraged to adopt efficiency in allocation of
resources through cost budgeting and reviewing the portfolio of externally funded
projects. The MDAs are also encouraged to restructure and re-align with the
Government priority programmes. Realization of these objectives will be achieved
within the budget ceilings provided in this BROP. The following criteria will serve
as a guide for allocating resources:
i. Linkage of programmes with the value chains of the Bottom-Up Economic
Transformation Agenda priorities;
ii. Linkage of the programme with the priorities of Medium-Term Plan IV of
the Vision 2030;
iii. Linkage of programmes that support mitigation and adaptation of climate
change;
iv. Completion of ongoing projects, viable stalled projects and payment of
verified pending bills;
v. Degree to which a programme addresses job creation and poverty
reduction;
vi. Degree to which a programme addresses the core mandate of the MDAs,
Expected outputs and outcomes from a programme;
vii. Cost effectiveness, efficiency and sustainability of the programme; and
viii. Requirements for furtherance and implementation of the Constitution.
203. The baseline estimates reflect the current ministerial spending levels in sector
programmes. In the recurrent expenditure category, non-discretionary expenditures
take first charge. These include payment of public debts and interest therein,
salaries and pensions.
204. Development expenditures have been allocated on the basis of the flagship
projects in Vision 2030, the Bottom - Up Economic Transformation Agenda and
the MTP IV priorities. The following criteria was used in apportioning capital
budget:

a. On-going projects: emphasis was given to completion of on-going capital
projects and in particular infrastructure projects with high impact on
poverty reduction, equity and employment creation;
b. Counterpart funds: priority was also given to adequate allocations for
donor counterpart funds which is the portion that the Government must
finance in support of the projects financed by development partners;
c. Post COVID-19 Recovery: Consideration was further given to
interventions supporting Post COVID-19 recovery; and
d. Strategic policy interventions: further priority was given to policy
interventions covering the entire nation, regional integration, social equity
and environmental conservation.
3.4 Details of Sector Priorities

205. Table 3.1 provides the projected baseline ceilings for the FY2024/25 and the
medium-term, classified by sector. Annex Table 4 provides a summary of
expenditures by programmes for the FY 2024/25– 2027/28 period. The BPS Sector
ceilings were enhanced on account of additional programmes, completion of
ongoing projects and additional expenditures tied to A-i-A revenue collection.

Table 3.1: Summary of Budget Allocations for the FY2024/25 – 2026/27 (Ksh
Million)
Suppl Suppl
Estimates Estimates % Share in Total Ministerial
Code Sector No.1 2024 BPS Ceiling No.1 Expenditure
2023/24 2024/25 2025/26 2026/27 2023/24 2024/25 2025/26 2026/27
AGRICULTURE, RURAL & URBAN DEVELOPMENT
010 (ARUD) Sub_Total 98,089.1 87,297.0 95,600.3 97,017.6 4.03 3.49 3.51 3.25
Rec_Gross 32,506.7 29,608.9 31,109.7 32,720.0 1.97 1.79 1.77 1.65
Dev_Gross 65,582.3 57,688.1 64,490.6 64,297.6 8.37 6.76 6.65 6.39
020 ENERGY, INFRASTRUCTURE AND ICT Sub_Total 494,715.3 505,668.0 546,260.5 555,684.6 20.35 20.19 20.04 18.60
Rec_Gross 145,306.0 145,306.0 156,244.5 158,046.6 8.82 8.80 8.89 7.98
Dev_Gross 349,409.3 360,362.0 390,016.0 397,638.0 44.61 42.21 40.25 39.51
GENERAL ECONOMIC AND COMMERCIAL AFFAIRS
030 (GECA) Sub_Total 72,443.0 56,715.2 66,981.5 62,360.8 2.98 2.26 2.46 2.09
Rec_Gross 39,575.5 32,305.2 35,101.9 40,297.0 2.40 1.96 2.00 2.03
Dev_Gross 32,867.5 24,410.0 31,879.6 22,063.8 4.20 2.86 3.29 2.19
040 HEALTH Sub_Total 138,845.9 147,598.9 155,507.7 160,080.8 5.71 5.89 5.70 5.36
Rec_Gross 88,191.2 87,324.2 91,930.2 95,303.5 5.35 5.29 5.23 4.81
Dev_Gross 50,654.6 60,274.7 63,577.5 64,777.3 6.47 7.06 6.56 6.44
050 EDUCATION Sub_Total 689,611.6 666,467.1 724,125.0 782,853.0 28.37 26.61 26.56 26.20
Rec_Gross 655,657.5 638,043.0 685,625.0 745,249.0 39.79 38.66 39.02 37.61
Dev_Gross 33,954.1 28,424.1 38,500.0 37,604.0 4.34 3.33 3.97 3.74
060 GOVERNANCE, JUSTICE, LAW AND ORDER (GJLO) Sub_Total 240,335.8 250,919.2 272,956.5 308,239.0 9.89 10.02 10.01 10.32
Rec_Gross 225,163.4 232,422.7 248,802.1 280,342.8 13.66 14.08 14.16 14.15
Dev_Gross 15,172.5 18,496.6 24,154.4 27,896.2 1.94 2.17 2.49 2.77
PUBLIC ADMINISTRATION AND INTERNATIONAL
070 RELATIONS (PAIR) Sub_Total 299,326.2 346,295.1 385,141.0 518,214.3 12.31 13.83 14.13 17.34
Rec_Gross 182,823.8 199,563.5 214,000.3 325,378.8 11.10 12.09 12.18 16.42
Dev_Gross 116,502.3 146,731.6 171,140.7 192,835.5 14.87 17.19 17.66 19.16
080 NATIONAL SECURITY Sub_Total 199,286.5 243,421.6 249,053.0 260,792.1 8.20 9.72 9.14 8.73
Rec_Gross 196,032.5 204,585.6 208,714.0 215,453.1 11.90 12.40 11.88 10.87
Dev_Gross 3,254.0 38,836.0 40,339.0 45,339.0 0.42 4.55 4.16 4.50
090 SOCIAL PROTECTION, CULTURE AND RECREATION Sub_Total 72,853.5 71,901.8 73,102.7 74,991.5 3.00 2.87 2.68 2.51
Rec_Gross 47,822.2 46,810.5 47,431.3 48,020.4 2.90 2.84 2.70 2.42
Dev_Gross 25,031.3 25,091.3 25,671.4 26,971.1 3.20 2.94 2.65 2.68
ENVIRONMENT PROTECTION, WATER AND
0100 NATURAL RESOURCES Sub_Total 125,516.7 127,965.0 157,600.0 167,719.0 5.16 5.11 5.78 5.61
Rec_Gross 34,724.9 34,549.0 38,306.0 40,672.0 2.11 2.09 2.18 2.05
Dev_Gross 90,791.7 93,416.0 119,294.0 127,047.0 11.59 10.94 12.31 12.62
GRAND TOTAL Sub_Total 2,431,023.4 2,504,248.9 2,726,328.2 2,987,952.7 100.0 100.0 100.0 100.0
Rec_Gross 1,647,803.7 1,650,518.6 1,757,265.0 1,981,483.2 67.78 65.91 64.46 66.32
Dev_Gross 783,219.7 853,730.3 969,063.2 1,006,469.5 32.22 34.09 35.54 33.68
Agriculture Rural and Urban Development Sector

206. The Agriculture Rural and Urban Development Sector is a major player in the
delivery of national development agenda as envisaged in Kenya Vision 2030, the
Kenya Kwanza Plan - Bottom-Up Economic Transformation Agenda (2022-2027),

Agricultural Sector Transformation and Growth Strategy (ASTGS) and the
Sustainable Development Goals (SDGs) and among other national and
international policies and obligations.
207. During the 2020/21-2022/23 Medium-Term Expenditure Framework
(MTEF) period, the Sector registered and issued 1,233,706 title deeds countrywide;
settled 24,112 landless households; geo-referenced 144,951 land parcels;
developed a national land value index in 25 counties, graduated 2,632 veterinary
and animal production technicians from livestock industry training institutions;
trained 2,293 actors in dairy, beef and apiculture value chains; produced 3.4 million
straws of semen and 85.7 million doses of assorted vaccines for livestock;
constructed a model feedlot in Baringo County; provided crop insurance cover to
1,004,651 farmers across 41 counties; supported 1,368,935 beneficiaries with
fertilizers, seeds, chemicals, agricultural lime and storage bags and 227,189 litres
of pesticides and 4,000 personal protective equipment; formalized and issued 6,023
letters of allotments in urban areas; facilitated compulsory land acquisition for 60
infrastructural development public projects; supported 19,395 groups in coastal
areas with a grant of Ksh1.5 billion for alternative livelihoods; trained 875 fishing
crew to support deep sea fishing, completed 7 fish landing sites, and disbursed
KSh.251 million under the Coffee Cherry Advance Revolving Fund.
208. During the MTEF period 2024/25 – 2026/27, the sector plans to: register and
issue 1,270,000 title deeds countrywide; settle 47,000 landless households; geo-
reference 1,770,000 land parcels; produce and distribute 135 million doses of
assorted livestock vaccines, 10.5 million doses of semen and 45,000 improved
embryos; distribute 640 milk coolers to counties; complete Kenya Leather
Industrial Park at Kenanie; train and recruit 1,000 fishing crew annually; construct
77 fish landing sites; develop 3 fishing ports; develop a fish processing plant in
Kalokol; undertake fish stock assessments; support 6,400 smallholder fish farmers
in aquaculture farming and 300 fisher folks interest groups with fish production
technological packages; support 4,166,282 farmers with 1,583,835 MT of
subsidized fertilizers and 9,102 MT of agricultural lime through the e-voucher
input subsidy system; create an enabling environment through development of 3
policies and compliance to various quality standards and regulations; provide 1585
MT of assorted oil crop seeds,800 MT of Cotton seeds to farmers,16.4 MT of basic
seed of cotton and 93.6 million of assorted clean crop planting materials; 41,500
MT of seed maize, 13,700 MT of seed potato and 900 MT of rice seed, issue 22,425
allotment letters; facilitate compulsory land acquisition for 70 infrastructural
development projects; and address 4,500 land disputes through Alternative Dispute
Resolution.
209. To implement the above interventions, the sector has a resource allocation of
Ksh.87.3 billion, Ksh95.6 billion, and Ksh. 97billion for the FY 2024/25, 2025/26
and FY 2026/27 respectively.
The Energy, Infrastructure, and ICT (EII)
210. The Energy, Infrastructure, and ICT (EII) Sector emerges as a pivotal force,
strategically propelling and expediting socio-economic progress within the
country. Functioning both as a driver and an enabler to the other Sectors of the
economy, EII steadfastly advances sustainable, efficient, and effective

infrastructure aligned to the Bottom-Up Economic Transformation Agenda
(BETA), the Fourth Medium-Term Plan (MTP IV) 2023-2027 of Kenya Vision
2030, regional infrastructure commitments, Africa Agenda 2063 and Sustainable
Development Goals (SDGs). The Sector comprises of nine sub-sectors namely;
Road, Transport, Shipping and Maritime, Housing and Urban Development, Public
Works, Information Communication Technology and Digital Economy,
Broadcasting and Telecommunications, Energy, and Petroleum.
211. During the period FY2020/21-2022/23, the Sector realized the following
achievements:Roads: Constructed 3,805 Km of new roads and 73 Bridges; repaired
240 km of roads; and maintained and rehabilitated 122,736 Km; designed 4,923
Km of roads and trained 14,603 plant operators, contractors and technicians.
Constructed Nairobi to Naivasha Standard Gauge Railway (SGR) and Naivasha
Inland Container Depot; Revitalized 69 km of Kisumu-Butere, 65 Km Leseru-
Kitale and 78Km Gilgil-Nyahururu rail branch lines; Rehabilitated Railway
Training School in Kisumu; Rehabilitated Kisumu Port; Rehabilitated Moi and
Isiolo Airports; Constructed and operationalization of East African Community
Regional Centre for Aviation Medicine; Constructed the first three berths at Lamu
Port; Completed relocation of Kipevu Oil Terminal; Completed development of
the Second Container Terminal at the Port of Mombasa; rehabilitated 4
aerodromes; and completed construction of a new airstrip at Mandera. The Sector
Trained 7,709 seafarers, 1,516 offered sea time; facilitated recruitment of of 2,416
on foreign ships; Constructed 1,787 housing units across the country and 10,261
housing units are ongoing at an average of 56% completion level under various
housing programs; Completed construction of Mtangawanda Jetty and Lamu
Terminal Jetty Access and New Mokowe Jetty was implemented to 98% level of
completion; Completed construction of 33 footbridges spread across the country;
Deployed 640KM of fibre from Eldoret to Nadapal, and 2,501 KM to 290 sub-
county sites; Connected and maintained 660 Government buildings with
broadband Network; Connected 46 hospitals and 46 markets to Public Wi-Fi;
Operationalized the Office of the Data Protection Commissioner in four regions
Nairobi, Mombasa, Kisumu and Nakuru; Completed Konza National Data Centre
with 72 clients on-boarded; Fully on-boarded 5084 Government services to E-
citizen portal; Gathered and disseminated news and information in both print and
electronic media; Developed twenty-one (21) media standards which include
modules for accreditation guidelines; Increased the installed capacity from
2840MW as of June 2020 to 3312MW as of June 2023; Constructed 675Km of
transmission line, 4 new high voltage substations, 1,266.7Km of medium voltage
distribution lines and 30 distribution substations; Connected 1,681,404 new
customers to electricity Reviewed the South-Lokichar Field Development Plan
(FDP); Acquired Geoscientific Data in Block L16 covering 1,600KM2 and in
Block L17 covering 600KM2;
212. During the FY 2024/25 and the Medium Term period, the sector will
implement the following programmes to achieve key strategic interventions as
highlighted; Construct 2,794Km of new roads; Rehabilitate 560Km of roads;
Maintain 137,544Km of existing roads and bridges; Construct 84 new bridges; and
Train 16,230 Plant operators, contractors and technicians. Complete construction
of Riruta – Lenana – Ngong Railway Line; Fast track completion of construction

of phase I of Nairobi Railway City (NRC) ; Complete construction of the new
MGR Link from Mombasa SGR Terminus - Mombasa MGR Station; Complete
construction of the Railway Bridge across Makupa Causeway; Aquire ferry vessel
for Lake Victoria; Complete construction of Kisumu Airport Control Tower;
Complete rehabilitation of terminal building and apron at Ukunda Airport;
Automate and upgrade 9 Motor Vehicle inspection centres; and Establish 5 new
inspection centres. Develop Bills and Regulations; Develop and implement the
Maritime Spatial Plan; Complete development of survival training centre for
upscaling of Bandari Maritime Academy; Develop Maritime Rescue Coordination
Centre in Kisumu and Search and Rescue Centres in Busia, Migori, Homabay and
Siaya; and Train 21,500 seafarers and facilitate recruitment of 12,000 seafarers
under the Vijana Baharia Programme; Development: Constuct 151,081 affordable
and 40,992 social housing units; Construct 5,000 hostel units in higher learning
institutions; Implement Second Kenya Informal Settlement Improvement Project
(KISIP II) in 33 Counties; Implement Second Kenya Urban Support Programme
(KUSP II) in 79 Municipalities in 45 Counties; and Construct 434 markets; Design,
document and supervise 330 new Government buildings and 495 for rehabilitation
and maintenance; Construct 197 footbridges; Construct 9 jetties and 1,150 meters
of seawall; Complete construction of 5 County Government Headquarters; Inspect
and audit 8,500 buildings and structures for safety; Test 60 buildings for structural
integrity; and Register 29,500 contractors and accredit 156,000 skilled construction
workers and site supervisors; Install 6,700 Kms of Fiber Cable; Provide internet
connectivity to 42,697 public institutions; Install 15,000 public Wi-Fi hotspots for
the Digital Superhighway; Modernize Kenya News Agency and Government
Advertising Agency; Establish 12 KBC Studio Mashinani; Connect 1,350,000
additional customers to electricity including 9,514 public institutions, and install
110,000 stand-alone solar home systems to enhance electricity access (both On
Grid and Off Grid); Acquire Geo-Scientific data in 4,350 Km2 to establish oil and
gas potential in the petroleum blocks; Complete evaluation of gas potential in
Block 9 in Anza Basin in Marsabit and Isiolo Counties; Provide 227 public learning
institution with Clean Cooking Gas (CCG); Distribute 6Kg LPG cylinders to
210,000 low-income households;
213. To implement these programmes, the Sector has been allocated Kshs. 505.7
billion, Kshs. 546.3 billion and Kshs. 555.7 billion in FY2024/25, FY 2025/26 and
FY2026/27 respectively.
General Economic and Commercial Affairs Sector
214. The General Economic and Commercial Affairs (GECA) Sector comprises
eight subsectors namely: ASALs and Regional Development; Cooperatives; Trade;
Industry; Micro, Small and Medium Enterprises Development; Investment
Promotion; Tourism; and East African Community Affairs. The sector contributes
to the Bottom-Up Economic Transformation Agenda (BETA) priorities through
promotion of job and wealth creation; industrial development, promotion of
investments and trade, tourism development, regional development; co-operative
development and widening regional economic integration while observing the need
for environmental conservation and climate change mitigation.

215. During the MTEF period 2020/21 - 2022/23 the sector implemented twenty
programmes and forty sub programmes which resulted to remarkable achievements
that include: Increase in the value of wholesale and retail trade by 12.1% from
Kshs.727.6 billion in 2020 to Kshs. 815.9 billion in 2022; Increase in the value of
Kenya’s exports by 35.6% from Ksh. 643.7 billion in 2020 to Ksh. 873.1 billion in
2022; manufacturing sector output increased from Ksh. 2.376 million to Ksh.
3.175million in 2022; Growth in national SACCO savings from Kshs.846 billion
in 2020 to Ksh. 1,047billion in 2022; Registered a total of 720,821 Micro and Small
Enterprises (MSEs) in the data system and 195,498 MSE Associations and groups
in collaboration with other government agencies; Constructed and refurbished 20
Constituency Development Centres across the country; Completed main works and
equipping of the Nyandarua Cold Storage facility; On-boarded 22 million Kenyans
within the Hustler platform with a repeat customer base of 7.5 million.
Modernization of NKCC has resulted in the increase of processing capacity of milk
from 300,000 liters to 800,000 liters per day in the last 5 years.
216. During the MTEF period 2024/25 - 2026/27 the sector will play a key role in
delivery of the Government’s Bottom-up Economic Transformation Agenda for
attainment of higher and sustained economic growth. As a driver, the Sector will
undertake targeted investments in manufacturing, agro-processing industry,
growth and promotion of MSMEs. As an enabler, the sector will create a conducive
environment for business, mobilize resources for investments and industrial
development, promote exports, promote sustainable tourism, deepen the EAC
integration, implement special programmes for accelerated development of the
ASALs and promote equitable regional socio-economic basin- based development.
217. The sector will also implement other earmarked priority programmes such as:
Modernization of processing/ storage facilities and enhancement of value addition;
Promotion, aggregation and value addition for smallholder tea growers; National
feed subsidy; Establishment of aggregation centers and export warehouses;
Sensitization of Kenya’s exporters on export market requirements and
opportunities for dairy value chain, edible oils, garments/textile, leather and leather
products, rice and tea value chains; Promotion of Linkage of small enterprises to
large enterprises; Enhancement of Infrastructure for MSMEs; Establishment of
County Aggregation and Industrial Parks (CAIPs), Modernization of RIVATEX
machinery; promotion of consumption of locally manufactured goods/services;
Attraction of Investments both local and foreign into SEZs; Development of Athi
River Textile Hub, Railway siding and Industrial Sheds; Establishment of a
Convention center at Mombasa Beach Hotel; and Hosting of 5 international
sporting events.
218. To implement the above interventions, the sector has a resource allocation of
KSh.56.7 billion, KSh.67.0 billion and KSh.62.4 billion in the FY2024/25,
FY2025/26 and FY2026/27 respectively. This comprises KSh. 32.3 billion, KSh.
35.1 billion and KSh. 40.3 billion for recurrent expenditure and KSh. 24.4 billion,
KSh. 31.9 billion and KSh. 22.1 billion for development expenditure for the same
period.

Health Sector
219. The Health Sector is an important contributor to the national economic growth
through ensuring that all Kenyans are productive and live a healthy life. The
Constitution underscores the “right to health” while the Vision 2030 while the
Vision 2030, the MTP IV as well as the “Bottom-up economic Transformation
Agenda” Agenda recognize provision of equitable, accessible and affordable health
care of the highest attainable standards to all Kenyans.
220. Significant achievements were realized during the FY 2020/21 to FY2022/23
period: Reduction of Prevalence of HIV from 4.3% in 2020 to 3.7 in 2022; new
HIV infections from 32,027 to 22, 154; and AIDS related mortality from 19,486 to
18,473. Kenya made strident efforts to combat Drug-Sensitive tuberculosis
(DSTB), Multi-Drug Resistant Tuberculosis (MRTB) and malaria by developing
new TB drugs, optimization of the existing ones, production of 244,927 units of
bleach (TBCide) and developing, piloting and adopting a new malaria vaccine.
221. The Sector established a diagnostic and reporting centre at KNH in the FY
2020/21, constructed and operationalized an Oxygen plant with a capacity to
produce 1,500 litres of oxygen per minute at Mwai Kibaki Hospital and
development and equiping the Chandaria Cancer and Chronic Diseases Centre
(CCCDC) at Moi Teaching and Referral Hospital (MTRH).
222. In FY 2022/23 over 6,000 primary health workers were trained on early
cancer diagnosis through e-learning platforms on the MOH Virtual Academy and
another 6,500 primary health workers on cervical and breast cancer screening and
treatment of precancerous lesions across the 47 counties. 257 community health
promoters in 10 counties were trained in cancer screening. Through support from
partners 150 thermal ablation devices were distributed in 22 counties.
223. In the FY 2021/22 and 2022/23, 270 healthcare workers were trained on
trauma and injury management. For the FY 2022/2023, 200 Community Health
Promoters (CHP’s) and other community members such as boda boda riders were
trained on prevention of injuries and basic first aid in Nairobi and Nakuru counties.
224. During the period under review, KNH performed specialized surgeries that
include thirty-two (32) major liver resections, increased kidney transplants from
fifteen (15) FY 2021/22 to nineteen (19) in the FY 2022/23. A total of 30,451,
33,523 and 37,307 specialized surgeries were conducted in FY 2020/21, 2021/22
and 2022/23 respectively. These specialized surgeries include maxillofacial,
obstetrics and gynaecology, paediatrics surgery, cardiothoracic surgery,
neurosurgery, plastic surgery, general surgery, ENT surgery, orthopaedic surgery,
ophthalmology. In addition, a total of 16,106 specialized renal services were
provided in the FY 2022/23 that included Continuous Renal Replacement Therapy
(CRRT), Tissue Typing, Venesection, Haemodialysis, Peritoneal dialysis, dialysis
Catheter procedures and Renal Biopsy. The hospital established heart surgery,
cancer treatment, diagnostics and imaging, laboratory medicine, tissue and organ
transplantation, gastroenterology, diabetes and endocrinology centres.
225. In FY 2022/2023, MTRH Laboratory performed 1,426,746 tests against
1,119,596 in FY 2020/2021; 27.43% Improvement over the last 3 years. The

Laboratory was the first to hit over 1 million in East & Central Africa. This was
made possible through the construction of a modern laboratory. Further, fifteen
(15) Corneal Transplants were conducted in FY 2022/2023 against 7 in FY
2020/2021; 118.28% Improvement over the last 3 years. In addition, MTRH
performed the first Cochlear Transplant Surgery in June 2023, being the first public
Hospital to undertake specialized Surgery in East and Central Africa.
226. KUTRRH commissioned the Integrated Molecular Imaging Center (IMIC)
and IMIC Hospitality Centre on 16th October, 2021. The center started operations
on 10th January 2022 and since then, the facility has been able to perform 1,169
successful FDG PET/CT scans in the year 2021/22 and 3685 in the year 2022/23
and 592 PSMAs in the year 2022/23. A total of 395 Brachytherapy sessions were
carried out in the year 2021/22 and 851 in the year 2022/23. To enhance capacity
for cancer detection, treatment and care, the sector established an Integrated
Molecular Imaging Center (IMIC) and IMIC Hospitality Centre at KUTRRH and
established.
227. In FY 2021/22 KEMRI supported the Ministry of Health in undertaking the
public Health Initiatives such as National school-based deworming programme,
Malaria Survey in school children, National Trachoma impact assessment survey,
capacity building for school health and nutrition and capacity building and
technical support for NTDs control and elimination by providing technical support
and field operationalization.
228. During the period under review the Ministry put several measures and
interventions in place to prevent and contain AMR. Key policy documents were
developed including the National Action Plan for containment and prevention of
antimicrobial resistance (2021), National antimicrobial stewardship guidelines for
health care settings in Kenya (2021) and the Patient and healthcare worker and
quality of care policy (2022).
229. Over the period in review 10 counties have established PCNs translating to
21% as per the target of 47 counties during the financial year in review. The
country has established 30 primary health care networks spread across ten counties
since 2020, with the bulk having been established in 2022/23. To strengthen
community reporting, the Sector developed a e-community health information
system for roll out to all the counties in 2022/23. It also collaborated with the
county governments to set up seven (7) primary care networks in seven counties,
namely Makueni, Kisumu, Garissa, Mombasa, Nakuru, Kakamega and Marsabit.
230. All essential HPT lists were reviewed to increase the scope and depth of
coverage by increasing the number of products available and the level of care
decentralized to improve accessed to UHC. The National Medicines and
Therapeutics Committee was operationalized to enhance rational use of Medicines
in the Country. Subsequently, 47 counties also formed and operationalized their
County MTCs.
231. One Million indigent households identified were covered under the
government social health insurance scheme nested in NHIF. 254,368 orphans and
vulnerable children (OVC) household were covered under Health Insurance
Subsidy Program (HISP). Number of mothers who registered through the Linda

mama program were 3,580,916 and 2,532,794 successful deliveries were reported
over the period. 58,800 households were covered under Older Persons and Persons
with Severe Disability (OPSD) program annually over the period.
232. Electronic patient health records system for diabetes and hypertension was
rolled out in 98 health facilities during the period. Three (3) regional cancer centres
were established in Garissa, Mombasa, and Nakuru counties. Health care facilities
with laboratory capacity to detect and report on Antimicrobial Resistance (AMR)
increased from 12 (2020/21) to 17 (2022/23). The proportion of laboratories with
capacity to conduct molecular testing of High-risk HPV increased from 9.1% to
10.6% in the period. Proportion of national and county reference laboratories able
to conduct molecular testing for emerging and re-emerging diseases stood at 31%.
233. Proportion of Women of reproductive age receiving Family Planning
commodities also increased from 43% in 2020/21 to 74% in 2022/23. Number of
facilities based neonatal deaths was 9.5 in 2020, 9.4 2021 and 10.1 in 2022. In FY
2021/22, a total of 2.2 million copies of Mother Child Health Handbook (MOH
216) were printed and distributed to all 47 counties. Proportion of fully immunized
children was 84%, 88% and 84.7% in 2020/21, 2021/22 ans 2022/23 respectively.
Orthopaedic Trauma Registers (MOH 274) was developed. Vitamin A
Supplementation coverage was 82.1% in 2020, 86.3% in 2021, and 83.7 in 2022
due to Malezi Bora.
234. 121 hospitals across all the 47 counties facilities benefitted from the Managed
Equipment Services with Uninterrupted services due to an uptime of more than
95%.
235. Number of students enrolled at KMTCs increased from 17,241 in 2020/21,
21,700 in 2021/22 to 25,889 in 2023. KEMRI conducted 2.45 million specialized
laboratory test and produced 1,147,490 diagnostic kits over the period. KHPOA
inspected for compliance to standards in service delivery a total of 13,996 facilities
while 17 level 5 hospitals assessed for emergency care preparedness.
236. 13 Medical oxygen was installed in six (6) national referral hospitals, (11)
county referral facilities, and 83 sub-county referral hospitals (L4s), with
KUTRRH, MTRH and KNH having 20,000-Liter capacity. 5 Pressure Swing
Adsorption (PSA) plants were installed. 10 facilities received liquid oxygen tanks
and 20,620 oxygen cylinders were delivered to facilities.
237. Electronic Community Health Information System (eCHIS) piloted in
2021/2022 in Isiolo and Kisumu and expanded to Kakamega, Siaya, Vihiga,
Migori, Nakuru, and Nyeri in 2022/2023. Further, Operationalization of existing
Community Health Units increased from 81 per cent in 2021/2021 to 86% in
2022/2023
238. The key Sector programme priorities for the FY 2024/2025 – FY 2026/27
include: National Referral and Specialized Services, Curative and Reproductive
Maternal Neonatal Child & Adolescent Health (RMNCAH) Services, Health
Innovations and Research, General Administration and Support Services,
Preventive & promotive health services, Health resource development &
innovation and Health policy standards & regulations.

239. To implement these programmes, the Sector has been allocated Ksh.147.5
billion, Ksh.155.5 billion and Ksh.160.1 billion in the FY 2024/25, 2025/26 and
2026/27 respectively.
Education Sector
240. Education Sector is comprised of four sub-sectors namely; Basic Education,
Technical Vocational Education and Training, Higher Education and Research,
and Teachers Service Commission. The Sector is a critical player in promoting
political, social, and economic development through education and training to
create a knowledge-based economy.
241. The Sector realized a number of achievements during the 2020/21-2022/23
MTEF period. These includes: Enrolment in Public Primary Schools grew from
8,592,810 in FY 2020/21 to 8,849,268 in FY 2021/22 before declining to 8,123,952
in FY 2022/23, due to transition of grade 6 learners to junior school in grade 7.
Enrolment of learners with special needs increased from 132,466 in FY 2020/21 to
146,313 in FY 2022/23. All learners in public primary schools were supported by
the government through capitation under the free primary education programme.
During the MTEF period, enrolment in Public Secondary Schools increased from
3,289,885 to 3,690,376, representing a 12.17% growth.
242. Overall enrolment in Public TVET institutions depicted a positive trend
having increased from 250,733 380,638 (51.81% change) .At the same time, the
number of trainees enrolled in TVET SNE institutions increased from 3,301 to
4,487.
243. The combined enrolment in public and private universities increased by
11.72% from 571,510 in FY 2020/21 to 638,479 in FY 2022/23. The enrolment
corresponded to a rise in demand for university student loans with the number of
undergraduate students receiving loans increasing from 229,727 in FY 2020/21,
244,552 in FY 2021/22 before declining to 228,453 in FY 2022/23.
244. The Sector increased its skilled workforce in public schools by recruiting
5,000 teachers in FY 2020/21 and FY 2021/22 and 13,000 teachers in FY 2022/23.
In the FY 2020/21, 8,000 teacher interns were recruited, while 4,000 were recruited
and finally a total of 22,000 interns were recruited in the FY 2022/23. The sector
also promoted 42,564 teachers to various cadres to effectively implement the
curriculum. In addition to reduction of staffing gaps, 148,819 teachers were
retooled on CBC reforms. To improve service delivery, 145,300 teacher files were
digitized in the period under review. Presently, a total of 356,321 teacher’s files
are accessible online. The sector recruited 1,918 and 1,300 TVET trainers in FY
2020/21 and FY 2022/23 respectively.
245. The MTEF 2024/25- 2026/27 coincides with a period when the sector is
undergoing major reforms in line with the Presidential Working Party on Education
Reform Report. These reforms aim to promote quality and inclusive education,
training and research for sustainable development and ensure socio-economic
development.
246. Under Basic Education, the Sector targets to enroll 10,058,422 learners in
pre-primary schools; enroll 21,773,321 students in public Primary School and
10,523,218 in Junior Secondary Schools; enroll 465,867 SNE learners in Primary

Schools; enroll 10,430,181 students in public Secondary Schools; construct 3,320
classrooms and 1,110 Laboratories in public Secondary Schools; Construction of
4,500 classrooms in Junior Secondary Schools; 8,992 learners provided with Elimu
scholarships; 16,000,000 vulnerable students to benefit from the School Feeding
Programe; enroll 61,409 SNE learners in Secondary Schools and 5,272 SNE
learners in Junior Secondary Schools; 155 curriculum designs developed for Grade
10 to 12 and 48,000 institutions assessed for quality and standards.
247. Under TVET, the sector intends to enroll 441,200 trainees in National
Polytechnics; enroll 637,350 trainees in TVCs; 13,620 students to be enrolled in
Special Needs TVCs; 7,500 TVET trainers accredited; 195 CBET curriculum
developed/reviewed; 9,000 TVET trainers recruited and 77 workshops equipped in
the existing TVCs.
248. Under Universities, the sector targets to enroll 1,982,583 students in
universities; award loans to 2,413,042 students in Universities and TVET through
HELB and support 570 Research projects.
249. The Teachers Service Commission plans to recruit 8,000 teachers and 6,000
intern teachers for Primary Schools; promote 12,000 Primary School teachers;
recruit 58,000 teachers and 54,000 intern teachers for Secondary Schools; promote
5,760 Secondary School teachers; train 270,000 teachers on Competency Based
Curriculum and digitize 90,000 employee Records.
billion, Ksh.724.1 billion, and Ksh.782.9 billion in FY 2024/25, FY 2025/26 and
FY 2026/27 respectively. This comprises of Ksh.638.0 billion, Ksh.685.6 billion,
and Ksh.745.2 billion for recurrent expenditure and Ksh.28.4 billion, Ksh.38.5
billion, and Ksh.37.6 billion for development expenditures for the same period.
Governance, Justice, Law and Order Sector
251. Governance, Justice, Law and Order (GJLO) Sector consists of sixteen sub-
sectors namely: State Department for Internal Security and National
Administration, National Police Service, State Department for Immigration and
Citizen Services, State Department for Correctional Services, State Law office,
The Judiciary, Ethics and Anti-Corruption Commission (EACC), Office of the
Director of Public Prosecutions (ODPP), Office of the Registrar of Political Parties
(ORPP), Witness Protection Agency (WPA), Kenya National Commission on
Human Rights (KNCHR), Independent Electoral and Boundaries Commission
(IEBC), Judicial Service Commission (JSC), National Police Service Commission
(NPSC), National Gender and Equality Commission (NGEC), and Independent
Policing Oversight Authority (IPOA).
252. During the MTEF review period, 2020/21 -2022/23, the Sector recorded
achievements in various programs and activities notably: On-boarding of 5,127
government services on the e-citizen platform; Enhanced public safety through
coordination of national police services and modernization of assorted security
equipment; Improved police and prison officers’ welfare through provision of
additional housing units, counselling services, enhanced mobility for police and
administrative officers, and fully operationalized 3 counselling centers and
regional offices; Clearance of 6,944 independent candidates for election;

Upgrading of Integrated Political Parties Management Systems for verifying
political parties membership list; Conducted elections for 1874 electoral positions
(General Elections); Rehabilitated 3,625 persons with substance use disorders at
Miritini rehabilitation centre; registered 65 NGOs; Conducted psychosocial
assessments to 421 witnesses and related persons; trained 3,303 duty bearers’
officers on human rights and fundamental freedoms; 92.4% Successful Conviction
rate of all prosecuted cases; concluded 3,749 cases filed against the Attorney
General; and inspected 1,639 police premises. Further, in the bid to reduce the level
of corruption, 369 cases of corruption crimes were investigated where the value of
loss of Ksh.14.94 billion was averted and Ksh.13.14 billion corruptly acquired
assets traced and recovered.
253. In the 2024/25 to 2026/27 MTEF period and line with the vision for a secure,
just, cohesive, democratic, accountable and a transparent environment for a
globally competitive and prosperous Kenya, the sector endeavours to: Facilitate
effective compliance with the Constitution to maintain peaceful coexistence,
security, law and order as well as enhance administration of and access to justice;
Strengthen the administrative, legal and policy coordination; Enhance and promote
digitization of information gathering, processing, recording and sharing for
effective service delivery; Increase use of geographical information systems in
crime surveillance and mapping; Promote anti-corruption, ethics and integrity,
national values and cohesion, as well as professionalism and impartiality in service
delivery; and Enhance compliance with the principles of equality and inclusion for
state and nonstate actors and strengthen regional & international cooperation and
collaboration.
254. The sector has been allocated Ksh. 250.6 billion, KSh. 272.7 billion and KSh.
308.2 billion in FY 2024/25, FY 2025/26 and FY 2026/27 respectively. This
comprises Ksh. 230.1 billion, KSh. 246.5 billion and KSh. 277.8 billion for
recurrent expenditure and Ksh. 18.6 billion, KSh. 24.3 billion and KSh. 27.9 billion
for development expenditure for FY 2024/25, FY 2025/26 and FY 2026/27
respectively.
Public Administration and International Relations
255. Public Administration and International Relations sector is comprised of
twenty-three Sub- Sectors. They include: Executive Office of the President; Office
of the Deputy President; Office of the Prime Cabinet Secretary; State Department
for Parliamentary Affairs; State Department for Performance and Delivery
Management; State Department for Cabinet Affairs; State House; State
Department for Devolution; State Department for Foreign Affairs; State
Department for Diaspora Affairs; The National Treasury; State Department for
Economic Planning; State Department for Public Service; Parliamentary Service
Commission; National Assembly; Parliamentary Joint Services; Senate;
Commission on Revenue Allocation; Public Service Commission; Salaries and
Remuneration Commission; Office of the Auditor General; Office of the Controller
of Budget; and Commission on Administrative Justice.
256. During the implementation of the FY 2020/21 to FY 2022/23 budgets the 23
sub sectors realized various achievements of the targeted outputs and outcomes.
This includes facilitated the executive to fulfil the Constitutional mandate,

facilitated retired Presidents, Vice Presidents and designated State Officers in
accessing statutory benefits, Coordinated the implementation of key Government
strategic priorities and interventions, coordinated Intergovernmental Budget and
Economic Council (IBEC) meetings, fostered international relations and
cooperation, promoted sound public financial management and accountability,
strengthened coordination between policy formulation policy, planning and
budgeting, ensured efficiency of the Public Service, strengthened
intergovernmental relations and financial matters, promoted citizen centric public
service and promoted accountability and transparency in public financial
management.
257. During the 2024/25-2026/27 Medium Term Budget Framework the sector
will ensure the proposed programmes and projects are in line with the priorities of
the Kenya Vision 2030, the Fourth Medium Term Plan and the Government
priorities related Bottom-Up Economic Transformation Agenda (BETA). The
sector plans to implement the prioritized activities within 43 programs and 126
sub-programs despite a decrease in resource allocation for the FY 2024/25. In
addition, the Sector will continue to enhance efficiency and effectiveness in service
delivery and promote comprehensive public financial management, intensify
resource mobilization and strengthen monitoring and evaluation.
billion, Ksh.385.1 billion and Ksh.518.2 billion in the FY2024/25, FY2025/26
and FY2026/27 respectively.
National Security
259. The Sector plays critical role is key Iin creating a conducive environment for
socio-economic and political development. It is therefore a critical actor and
enabler in the realization of Kenya Vision 2030, and the Bottom-up Economic
Transformation Agenda (BETA).
260. The Sector will continue to address contemporary and emerging threats to
national security that undermine peace and development. These include terrorism,
radicalization, human and drug trafficking, money laundering, cyber-crime and
other socio-economic and political challenges.
261. In order to implement the prioritized programmes and minimize the above-
mentioned threats, the Sector has been allocated Ksh 243.4 billion, Ksh 249.1
billion and Ksh 260.8 billion in FY 2024/25, FY 2025/26 and FY 2026/27,
respectively.
Social Protection, Culture and Recreation
262. The Social Protection, Culture and Recreation Sector is comprised of six (6)
sub-sectors namely: - Sports; Culture, the Arts and Heritage; Youth Affairs and
Creative Economy; Labour and Skills Development; Social Protection and Senior
Citizen Affairs, Gender and Affirmative Action. The Sector visualizes on a global
competitive, healthy workforce, Sports, culture and recreation industry, an
endurable impartial and informed society. The strategic roles played by the sector
in the country’s transformation and social economic development agenda include:

creating an efficient, motivated and healthy human resource base for an enhanced
national competitive, economic growth and Development, productive healthy
workforce, fundamentals rights, and adequate income from, work, representation
and social security, social protection, community empowerment, promotion of
volunteerism, safety, care and service for children, persons with disabilities, older
persons and other vulnerable group, rescue, rehabilitation, resocialization &
reintegration of street families, advancement of diverse cultures, to monetize sports
and the Arts through the Talanta Hela Initiative, and enhance cohesiveness and
Kenyans regional and international competitiveness.
263. The sector major achievements during the Medium Term Expenditure
Framework (MTEF) period FY 2020/21 - 2022/23 include; the Sector garnered 134
medals in 32 International Sports Competitions hosted in the country, seven stadia
constructed/upgraded to completion and a 16-storey Talanta Plaza in Upper hill,
Nairobi which serves as the Ministry’s headquarter office was constructed. Further,
608 Sports Organizations were registered, 33,439 persons were reached through
Anti-Doping education and 3,127 Intelligence-based tests on athletes conducted.
In addition, 6,015 athletes, 1,360 coaches, referees and umpires were offered
training in different sports disciplines. The Sector established a virtual Library
through instillation of the library information management system (LIMS);
established and operationalized National Heroes council; established a COVID- 19
testing and research centre at the institute of primate research (IPR), rehabilitated
the see wall of Fort Jesus, natured and trained youth, in theatre, drama and concerts
and poetry; and refurbished the Kenya National Archive and Documentation
services.
264. In addition, there were 19,900 youth provided with employment
opportunities; 61,391 youth trained in life skills, 29,415 in core business skills,
27,162 in job specific skills and 159,210 in entrepreneurship skills.
Operationalized 88 Youth Empowerment Centres and constructed 25 new Centres;
identified and nurtured 11,400 youth talents; 2,715 youth were engaged in green
jobs and 390,335 youth in the President’s Award Programme. In addition, 102,095
youth were sensitized on social vices, harmful cultural practices and contemporary
issues, 165,050 youth in peace, volunteerism and national cohesion, 35 youth
Saccos operationalized, 1,847 youth trained on online jobs and 32,430 youth on
AGPO and Affirmative Action Funds. The Sector finalized the National Policy on
Labour Migration to provide a framework for promotion of inclusive and
sustainable development of the country through safe, orderly and productive
Labour Migration; Developed Bilateral Labour Agreements on recruitment and
employment of Kenyan Migrant workers with Key The Sector disbursed cash to
756,485 older persons; 38,118 households with persons with severe disabilities
(PWsD); and 278,188 Orphans and Vulnerable Children (OVCs); Empowered
167,797 Community Self-Help Groups through mobilization, registration, and
capacity building, linked 139,822 groups to MFIs for financial support Registered
and issued 120,929 PWDs with disability cards; Granted tax exemption certificates
to 5,533 PWDs; Supported 10,291 PWDs with assistive devices against a target of
12,000; Provided scholarships to 7,550 learners. Rescued 10,149 street persons,
against a target of 8,500; Supported 66,900 Orphans and Vulnerable children
(OVCs) with Presidential Secondary School education scholarship in the review

period. The National Government Affirmative Action Fund (NGAAF) supported
vulnerable groups through disbursement of grants to groups of social development
through value additional initiative, disbursement of loans through Uwezo funds to
groups of youths, women and PWDs.
265. In the Medium Term period, the sector will prioritise the implementation of
the following key strategic interventions: - Review the existing labour laws to align
them with emerging issues in the labour employment sector, upgrade and expand
the existing industrial and training centres, strengthen the linkages between
training institution and industry. Social Development and Children services,
National safety programs that supports Social Economic growth and development
(NGAAF, WEF) and Sports, Arts and Social Development Fund (SASDF) to
promote and develop Sports, Arts and social development including Universal
Health. Moreover, other Sector priority programmes for implementation during the
medium term include the following among others: Promotion of Harmonious
Industrial Relations, Provision of Skilled Manpower for the Industry, Improvement
of youth employability, Conservation of Heritage and facilities, Youth
Empowerment Services, Youth Development Services, General Administration,
Planning and Support Services, Talent development in the areas of sports, music
and arts, Development of sports infrastructure to international standards and
Establishment and operationalization of Government-run shelters for victims of
human trafficking.
266. To implement these programmes, the Sector has been allocated Kshs.71.9
billion, Kshs.73.1 billion and Kshs.75.0 billion for financial years 2024/25,
2025/26 and 2026/27 respectively
Environment Protection, Water and Natural Resources Sector
267. The sector contributes directly and indirectly to the Country’s economy
through revenue generation, wealth creation and job creation. The sector plays a
critical role in securing, stewarding and sustaining the environment and natural
capital of the Country. The sector has a great potential in contributing to
transforming Kenya into a newly industrialized middle-income country by the year
2030 as envisioned in the Vision 2030 and the successive 5-year Medium Term
Plans (MTPs). According to the Economic Survey report 2023, the contribution of
the sector to the Gross Domestic Product (GDP) was 3.6 percent for the year 2022.
268. During the FY 2020/21 – 2022/23 period the Sector’s key achievements
include; domestication of ten (10) Multilateral Environmental Agreements
(MEAs); training of small scale gold miners on mercury free gold mining;
monitoring pollution and effluent discharging facilities and conducting inspections
on plastic ban. Meteorological Services were modernized thus providing reliable
weather and climate information. The sector realized improved national forest and
tree cover by 8.83% and 12.13% respectively, protected 7.8 million Ha of closed
canopy forests and rehabilitated 16,589 Ha of degraded forests. In an effort to
increase access to water and sanitation, the sector increased access to improved
water services from 65.5 % 2020/21 to 68% in 2022/23, improved urban sewerage
services from 27.7 % in 2020/21 to 32% and increased national sanitation coverage
from 78% to 81.5%. In addition, 1,117,492 people were connected to water and
sanitation services in low urban income areas/informal settlements and rural

marginalized/ASAL areas. On water harvesting and storage, Karimenu dam, Yamo
dam and three (3) peace dams namely Kases in West Pokot, Forolle in Marsabit
and Naku’etum in Turkana were completed. The sector also fast-tracked the
construction of Thwake dam (86%), and Siyoi-Muruny Dam (77.5%). In addition,
156 small dams and pans were constructed, 258 schools and 45 health facilities
were connected to clean and reliable water in various counties. The sector further
enhanced flood control through constructing 34.134 kilometres of dykes / flood
control structures, completed the designs for the Igembe Dam and produced Design
Review Reports for the Badasa and Umaa Dams. The sector completed
construction of Thiba Dam; completed 97% of Galana 10,000 acres’ model farm;
put 5,000 acres under production and increased the capacity of water stored for
irrigation by 29.9 million cubic meters. The sector continued to sustainably reduce
wildlife poaching; increased human Wildlife Conflicts response rate to 100% of all
reported cases; constructed 124.0 km; rehabilitated 120.5Km and maintained
4,725km of fences.
269. During FY 2024/25 and the medium term key outputs for the Sector include:
completion of Thwake, Itare, Thambo Dam, Kanjogu Dam; complete 70 water and
sewerage projects across the county; connect 120 public learning institution and
140 health centres with clean and safe water; rehabilitate 200 rural water schemes
targeting approximately 1,500,000 people under Horn of Africa Groundwater
project; improve access to water services for approximately 2.02 million in urban
water supply and sanitation services; and expand water and sanitation
infrastructure in 28 towns across the country. The Sector will decentralize online
cadastre system; generate 10.5B in revenue; rehabilitate 10 mines; and train 7,500
Artisanal and Small-Scale Miners on appropriate technologies. The Sector will
reduce and compensate cases of human wildlife conflicts; maintain access roads
and airstrips in Conservancies and parks; implement plastic ban in protected areas
across the country; rehabilitate Research & Training Facilities at WRTI Naivasha;
and construct four Research and Training Centres. To foster environment
protection and mitigate climate change impact the Sector plans domesticate four
(4) Multilateral Environmental Agreements; restore and rehabilitate 36 wetlands;
establish 12 model waste demonstration centres country-wide; and establish 10
Material Recovery Facilities (MRF) and collection points for plastic recycling
countrywide. To enhance forest, cover the sector will produce 104,000 Kgs of
seeds to support in the Tree planting programme; distribute 102,000 Kgs of seeds;
produce 566 Million tree seedlings; refurbish and establish 149 tree nurseries;
rehabilitate 25,950 Ha of degraded forests; protect 2.6 Million Ha of existing forest
canopy; establish 4,140 Ha of forest plantations; plant 17,575 Ha of commercial
farm forests; and rehabilitate 606 Ha of Bamboo forests.
270. To achieve these outputs, the Sector’s total allocation is Kshs.127.9 billion,
Kshs.157.6 billion and Kshs.167.7 billion for the FY 2024/25, 2025/26 and
2026/27 respectively.

3.5 Public Participation/ Sector Hearings and Involvement of
Stakeholders
271. Public participation and involvement of stakeholders in the medium-term
budget process is a Constitutional requirement. In fulfilment of this requirement,
while preparing the 2024 Budget Policy Statement (BPS), the resolutions adopted
by Parliament on the previous Budget Policy Statements were taken into account.
Annex 3 explains how the resolutions by Parliament on the 2022 BPS and 2023
BPS have been taken into account in the 2024 BPS and the reasons thereof.
Additionally, Sector Working Groups (SWGs) were convened to develop the
sector reports, which were subjected to public hearings for the FY 2024/25 and
medium-term budget were held between 13th and 15th December, 2023.

IV. COUNTY FINANCIAL MANAGEMENT AND
DIVISION OF REVENUE
4.1 County Governments’ Compliance with Fiscal Responsibility
Principles
272. The following Fiscal Responsibility Principles (FRPs) need to be adhered to
in line with the relevant legal provisions:
i) Development budget: In line with the PFM Act 2012, over the medium term
a minimum of thirty percent of the National and County Governments’ budget
shall be allocated to the development expenditure. In this regard, there is need
to ensure the adherence to this fiscal responsibility principle both at the
budget approval stage as well as during the actual implementation of the
budget;
ii) Wages: Regulation 25 (1) (a) and (b) of the PFM (County Governments)
Regulations 2015 provides that the County Governments’ expenditure on
wages and benefits for its public officers shall not exceed thirty-five (35)
percent of the county government’s total revenue. Adherence to this fiscal
rule has been weak and there is need for concerted effort to ensure that the
wage bill is within the threshold provided in law;
iii) Borrowing: Regulation 25 1 (d) of the PFM (County Governments)
Regulations 2015 provides that the county public debt shall never exceed
twenty (20%) percent of the County Governments’ total revenue at any one
time. Any County Government intending to borrow should adhere to this
public finance fiscal requirement.
iv) Taxes: In line with Section 15 2 (e) of the PFM Act 2012, County
Governments are called upon to maintain a reasonable degree of predictability
with respect to the level of tax rates and tax bases taking into account any tax
reforms that may be made in the future while putting in place legislations for
own source revenue collection; and
v) Fiscal risk: County Governments are required to also manage fiscal risks
prudently in line with PFM Act Section 15 2 (e).
273. Table 4.1 below provides a summary of total expenditures and total revenues
for medium term FY 2020/21 to 2022/23.

Table 4.1: Summary of County Revenues and Expenditures from FY 2020/21
to 2022/23
Source of Data: Controller of Budget
4.1.1 Allocation to Development Expenditure over the Medium-Term
274. As indicated in Table 4.1 above, the total County Governments’ approved
Development expenditures over the medium-term account for 37%, 36% and 31%
translating to an average of 35 % of the total budget. Section 107 (2) (b) of the
Public Finance Management Act (PFMA) 2012 requires County Governments to
allocate a minimum of 30 percent of their budget over medium-term to
development expenditure. However, the approved budget of 14 counties, namely
Kajiado, Vihiga, Kisii, Kitui, Kisumu, Mombasa, Bomet, Meru, Nandi, Wajir,
Kiambu, Laikipia, Nairobi and Tharaka Nithi did not conform with this
requirement over the medium term as shown in Figure 4.1 below
Figure 4.1: FY 2022/23 Budgeted Development Expenditure as a Percentage
of Total County Expenditure

4.1.2 Actual Development Expenditure over the Medium Term
275. The total actual development expenditure for the FY 2020/21, FY 2021/22,
FY 2022/23 accounted for 29%, 25% and 23% of the total actual budget for the
same period as indicated in Table 4.1 above. This translates to an average
allocation of 26% of actual total expenditures to development expenditures. For
the FY 2022/23, only seven counties have individually met this requirement as far
as the actual expenditure as a percentage of total budget is concerned. These
counties include: Marsabit (35.4%), Mandera (31.2%), West Pokot (31.0%), Uasin
Gishu (30.8%), Samburu (30.4%), Baringo (30.0%) and Kericho (30%). On other
hand, Busia (16.8%), Machakos (16.8%), Nairobi City (13.9%), Kiambu (10.2%)
and Kisii (5.7) spent the lowest budgets on development in the reporting period as
shown in Figure 4.2.
Figure 4.2: FY 2022/23 Actual Development Expenditures as a Percentage of
Total Expenditure
276. As evidenced from the expenditures reported by counties, whereas most

counties allocate expenditures for approval by the respective assemblies in line
with the legal requirement to allocate a minimum of 30% to development, the
actual allocation to development expenditures is quite minimal over the medium.
This therefore implies that county development may be compromised with higher
allocations going to recurrent expenditures.
277. The relevant institutions, including the Controller of Budget need to put
measures in place to ensure increased allocation and increased actual expenditures
by county government on development expenditures
278. Counties have not reported any borrowing to finance their expenditure.

4.1.3 Compliance with the Requirement on Expenditure on Wages and
Benefits
279. Regulation 25(1) (b) of the PFM (County Governments) Regulations 2015,
requires County Governments to ensure that expenditure on wages and benefits for
employees does not exceed 35 percent of their total revenue. Over the medium -
term expenditure on wages and benefit for the FY 202/21, FY2021/22, and FY
2022/23 accounted for 40%, 44% and 42% of the total revenue, respectively as
shown in Table 4.1. The report by the Controller of Budget on review of County
Government’s budget implementation for FY 2022/23 shows the total expenditure
on wages reported by County Governments amounted to Ksh 195.1 million. During
the same period, the total revenue available to the County Governments was Ksh
475.4 billion. This means that on average County Governments spent 41.7 percent
of their total revenue on wages and benefits which is higher than the threshold of
35 percent provided by the PFM Act, 2012. Within this period, only six Counties
(Migori, Kilifi, Mandera, Kwale, Turkana and Tana River) were able to maintain
their allocation to wages and salaries below the 35 percent threshold as shown in
Figure 4.3 below.
Figure 4.3: FY 2022/23 County Governments’ Actual Expenditures on Wages
and Benefits as a Percentage of Total Actual Revenue
4.2 Enhancement of County Governments’ Own-Source-Revenue

280. The report by COB on County Governments Budget Implementation Review
Report for the FY 2022/23 provides the Own Source Revenue (OSR) for the county
governments some inclusive of Appropriation in Aid (AiA) while others are exclusive as
indicated in the Table 4.2 below.

Table 4.2: Total OSR Collection for the FY 2022/23 (Including A-i-A)

281. Analysis of OSR performance in the FY 2022/23 shows that County
Governments were able to raise a total of Ksh 47.1 billion from Own Source
Revenue (OSR) against an annual target of Ksh 66.1 billion representing an outturn
of 71.3 percent.
282. Forty-two (42) County Governments were able to collect more than fifty
percent of their annual OSR target. The top performing counties in OSR collection

were Kisii (150.3 %), Garissa (142.5%), Nyeri (135.0%) and Lamu (119.8) while
the least performing counties were Murang’a (43.9%), Mandera (42.2%), and
Nyamira (36.4%) as shown in Figure 4.4 below.
283. In order to support the County Governments to enhance their Own Source
Revenue, the National Treasury is in the process of implementing the National
Policy to support Enhancement of County Governments Own Source Revenue.
Some of the activities underway include awaiting enactment of the National Rating
Bill, the County Revenue Raising Process Bill by Parliament, a training on tax
policy and enhancement of own source revenue administration measures.
Figure 4.4: FY 2022/23 Actual Revenue Collected by the County Governments
as a percentage of Annual Revenue Target
284. The National Treasury notes that a number of County Governments are
having challenges in setting realistic revenue targets. To address this, the National
Treasury in collaboration with other stakeholders are planning to roll out a training
on tax analysis and Revenue Forecasting in the next financial year. The team is
currently working on the training module on revenue forecasting.
285. The National Rating Bill was passed by the National Assembly and forwarded
to the Senate on 31st October, 2023 for consideration. The Bill provides for among
others, standards in the way rating and valuation is conducted in the country; how
to deal with properties cross-cutting in more than one County Government;
procedure for claiming and payment of Contribution in Lieu of Rates (CILOR);
and timely updating of valuation rolls by the County Governments. More
importantly, the Bill will repeal the outdated Valuation for Rating Act, Cap 266
and Rating Act, Cap 267 and align the property rating legal regime with the
devolved system of governance.
286. The County Governments (Revenue Raising Process), Bill 2023 provides for
a process by which the County Governments introduce revenue raising measures
in conformity with Article 209 (5) of the Constitution. The Bill has gone through
the First Reading and is currently before Senate.

287. In addition, the National Treasury is planning to build the capacity of County
Governments to generate statistics that conform to the Government Finance
Statistics 2014 Manual beginning in FY 2023/24. This will strengthen the County
Government’s fiscal policy making including realistic revenue forecasting.
4.3 Prudent Management of Fiscal Risks

4.3.1 Pending Bills
288. According to Section 94 (1) (a) of the PFM Act, 2012, failure to make any
payments as and when due by a State Organ or a Public Entity may be an indicator
of a serious material breach or a persistent material breach of measures established
under the Act. In this context, Article 225 of the Constitution read together with
Section 96 of the PFM Act gives the Cabinet Secretary responsible for Finance
powers to stop transfer of funds to the concerned State Organ. Over the years,
County Governments have accumulated pending bills. As at 30th June, 2023
Counties reported accumulated pending bills amounting to Ksh 164.76 billion, an
increase of Ksh 11.74 billion of the pending bills as at 30th June, 2022 which were
reported as Ksh 153.02 billion. This amount is as reported by County Governments
to the Office of the Controller of Budget and therefore not audited.
289. The Office of the Auditor General (OAG) conducted a special Audit Reports
of pending bills for County Governments as at 30th June, 2020 for the FY 2018/19
and 2019/20 which were conducted from May 2021 to December 2021. According
to the analysis of the Special Audit Reports, a total of Ksh 156.18 billion pending
bills presented for audit to OAG, bills amounting to Ksh 48.13 billion were
reported as payable while Ksh 108.05 billion lacked sufficient documentation to
support services rendered or work done and therefore were not recommended for
payment.
290. A report by the Controller of Budget (CoB) indicates that by 16th February,
2023; Counties had settled Ksh 23.96 billion (49.78% of the eligible pending bills)
leaving an outstanding balance of Ksh 24.05 billion (49.95% of the eligible
pending bills).
291. In relation to the ineligible pending bills, the Intergovernmental Budget and
Economic Council (IBEC) through a resolution of 5th June, 2023 instructed all
County Governments to finalize verification of ineligible pending bills. Once
verified, County Governments should prioritize payment of these arrears. As at
16th February, 2023 a total of Ksh 1.8 billion of the ineligible pending bills had
been paid by the County Governments, leaving a balance of Ksh 106.2 billion.

Table 4.3: Payment of 30th June, 2020 Audited Pending Bills by County
Governments as at 16th February, 2023
Ineligible Pending
County Name Eligible Pending Bills Amount Paid so far Balance Amount Paid so far Balance Total Outstanding
Bills
Baringo 404,682,061 171,302,755 233,379,306 57,709,448 - 57,709,448 291,088,754
Bomet 575,277,293 540,142,991 35,134,302 177,803,997 - 177,803,997 212,938,299
Bungoma 280,568,664 247,016,877 33,551,787 102,669,258 - 102,669,258 136,221,045
Busia 735,462,434 516,476,629 218,985,805 160,041,266 - 160,041,266 379,027,071
Elgeyo/Marakwet 97,250,631 62,848,774 34,401,857 11,657,517 - 11,657,517 46,059,374
Embu 376,985,675 289,645,685 87,339,990 260,720,598 119,943,842 140,776,756 228,116,746
Garissa 1,173,876,512 622,602,867 551,273,645 4,428,629,228 - 4,428,629,228 4,979,902,873
Homa Bay 525,179,984 286,039,857 239,140,127 400,219,060 - 400,219,060 639,359,187
Isiolo 963,669,236 562,336,466 401,332,770 208,912,399 - 208,912,399 610,245,169
Kajiado 1,389,961,092 420,893,832 969,067,260 1,627,807,464 - 1,627,807,464 2,596,874,724
Kakamega 1,198,949,826 1,015,355,470 183,594,356 251,246,426 9,807,390 241,439,036 425,033,392
Kericho 1,259,577,667 544,182,280 715,395,387 268,911,420 - 268,911,420 984,306,807
Kiambu 3,365,130,484 143,373,054 3,221,757,430 881,170,421 56,081,899 825,088,522 4,046,845,952
Kilifi 610,835,144 464,842,712 145,992,432 581,780,751 - 581,780,751 727,773,183
Kirinyaga 983,032,372 531,737,395 451,294,977 494,719,011 - 494,719,011 946,013,988
Kisii 758,725,977 466,730,539 291,995,438 516,389,488 - 516,389,488 808,384,926
Kisumu 1,064,082,741 828,429,512 235,653,229 817,392,020 - 817,392,020 1,053,045,249
Kitui 1,068,323,966 625,807,850 442,516,116 1,652,024,506 27,769,948 1,624,254,558 2,066,770,674
Kwale 30,395,083 18,421,465 11,973,618 2,929,346,292 - 2,929,346,292 2,941,319,910
Laikipia 857,616,477 425,879,073 431,737,404 1,187,938,976 137,228,268 1,050,710,708 1,482,448,112
Lamu 166,052,981 163,862,932 2,190,049 126,554,441 99,256,365 27,298,076 29,488,125
Machakos 1,829,505,555 1,104,322,827 725,182,728 519,755,508 - 519,755,508 1,244,938,236
Makueni 300,407,810 280,416,891 19,990,919 11,921,955 258,823,577 - 246,901,622 - 226,910,703
Mandera 195,606,061 195,606,061 - 211,731,110 - 211,731,110 211,731,110
Marsabit 427,725,791 219,826,370 207,899,421 561,882,902 - 561,882,902 769,782,323
Meru 1,645,514,751 1,489,716,055 155,798,696 252,142,550 - 252,142,550 407,941,246
Migori 606,362,615 582,590,982 23,771,633 791,428,051 490,545,104 300,882,947 324,654,580
Mombasa 3,629,365,578 2,228,797,144 1,400,568,434 273,639,725 - 273,639,725 1,674,208,159
Murang'a 591,589,896 590,386,662 1,203,234 1,683,941,778 8,291,985 1,675,649,793 1,676,853,027
Nairobi City 10,609,369,860 975,251,721 9,634,118,139 75,142,481,171 - 75,142,481,171 84,776,599,310
Nakuru 504,225,508 422,996,705 81,228,803 309,435,561 - 309,435,561 390,664,364
Nandi 999,961,375 738,865,952 261,095,423 424,863,941 - 424,863,941 685,959,364
Narok 911,820,629 237,684,009 674,136,620 983,780,638 - 983,780,638 1,657,917,258
Nyamira 278,105,607 275,698,124 2,407,483 67,438,141 - 67,438,141 69,845,624
Nyandarua 1,104,557,249 434,777,239 669,780,010 849,222,218 - 849,222,218 1,519,002,228
Nyeri 477,332,318 477,332,318 - 20,507,256 - 20,507,256 20,507,256
Samburu 100,097,274 95,476,412 4,620,862 638,141,800 485,194,368 152,947,432 157,568,294
Siaya 239,440,577 239,440,577 - 0 69,732,235 - 69,732,235 69,732,235
Taita/Taveta 713,199,641 649,923,111 63,276,530 192,854,197 - 192,854,197 256,130,727
Tana River 594,862,915 282,718,273 312,144,642 1,663,178,525 - 1,663,178,525 1,975,323,167
Tharaka -Nithi 619,348,506 408,436,947 210,911,559 244,289,602 - 244,289,602 455,201,161
Trans Nzoia 619,607,056 549,360,530 70,246,526 372,066,151 - 372,066,151 442,312,677
Turkana 472,120,183 316,914,391 155,205,793 585,037,816 - 585,037,816 740,243,609
Uasin Gishu 494,815,241 453,581,511 41,233,730 140,056,169 125,575,115 14,481,054 55,714,784
Vihiga 1,278,738,001 844,279,732 308,458,269 410,172,194 - 410,172,194 718,630,463
Wajir 329,022,136 310,279,035 18,743,101 4,335,524,264 - 4,335,524,264 4,354,267,365
West Pokot 673,361,710 607,434,712 65,926,998 153,836,525 16,516,318 137,320,207 203,247,205
Total 48,131,700,143 23,960,043,307 24,045,656,836 108,052,705,970 1,835,034,179 106,217,671,791 130,263,328,627
Source of Data: Office of the Auditor General and Controller of Budget

4.3.1.1 Status of Pending Bills
292. Most of the County Governments owe money to the various pension funds
(LAPTRUST, LAPFUND and County Pension Fund) which have accumulated
over the years. As at 31st August, 2023, the status of pension pending bills
submitted by the different pension schemes to the Retirement Benefits Authority
(RBA) was Ksh. 73.4 billion. A breakdown of the outstanding pension pending
bills is shown in the Table 4.4 below:
293. However, some County Governments are not reflecting these pension
liabilities in their pending bills stock hence posing a great risk that these liabilities
may not be prioritized for payment. There is need for the County Governments to
take stock of all the pension liabilities and ensure proper recording in the stock of
County pending bills. In addition, Counties should prioritize the settling of these
liabilities to ensure County staff do not retire without a pension.
Table 4.4 Outstanding Pension pending bills owed by County Governments
Source: Retirement Benefits Authority
4.3.1.2 Status of Debt owed to Kenya Power & Lighting Company (KPLC)
by County Governments
294. The outstanding pending bills owed to Kenya Power & Lighting Company
(KPLC) by County Governments as at 24th September, 2023 amounts to Ksh
3,492,122,613.47 with Nairobi County Government having the largest outstanding
bill amounting to Ksh 2,171,944,344.79. The amounts have been accumulating
over the years. Consequently, the National Treasury has issued a Circular to
County Governments reminding them to settle debts owed to KPLC and ensure
that these pending bills are included in their budgets and repayment plans in line
with the Public Finance Management Act, 2012 and in order to avoid disrupting
operations and other financial obligations of the Company.
4.3.2 County Governments Capacity Building on Public Finance

Management
295. The Public Finance Management Act (PFMA), 2012 mandates the National
Treasury to develop and oversee the implementation of a comprehensive county
financing systems that ensures financial controls for efficient and effective
utilization of public resources. The National Treasury is further required to

strengthen county public finance management institutional capacities to
implement, manage and support governance, development and service delivery.
296. The August 2022 General Election ushered in the current county
administration. Since many county administrations had completed their second
terms in office, changes in key financial management leadership positions were
inevitable. In view of the above changes, there is need for a proper capacity
building to the new Chief Executive Committee Members and Chief Officers
responsible for Finance, Heads of accounting, finance/budget, procurement,
economic planning, revenue, and internal audit and County Assembly Chair budget
/Finance Members at the County Governments on PFM matters. County capacity
building is a responsibility assigned to the National Treasury by the PFM Act,
2012.
4.4 Division of Revenue for FY 2024/25

297. Based on ordinary revenue projection of Ksh 2,958.6 billion in FY 2024/25,
it is proposed that Ksh 2,539.4 billion be allocated to National Government, Ksh
401.6 billion to County Governments as equitable revenue share and Ksh 17.6
billion to the Equalization Fund. The allocation to County Governments’ equitable
revenue share of Ksh 401.6 billion in FY 2024/25 is informed by the following
prevailing circumstances:
i) The implementation of the fiscal consolidation plan by the Government which
is aimed at reducing the fiscal deficit inclusive of grants from 5.6 percent of
GDP in FY 2022/23 percent to 4.7 percent of GDP in FY 2023/24, and further
to 3.9 percent of the GDP in FY 2024/25. In this regard, there is need for
continuous rationalization of expenditures by eliminating non-core
expenditures while improving efficiency in development projects
implementation so as to contain expenditure growth, stabilize debt and reduce
debt vulnerabilities;
ii) The National Government continues to solely bear shortfalls in revenue in
any given financial year. However, County Governments continue to receive
their full allocation despite the budget cuts affecting the National Government
entities.
iii) Increased expenditures for National Government for purposes of debt
servicing coupled with a weakening shilling against the dollar;
iv) Low ordinary revenue collections attributed to the ongoing geopolitical
shocks. This includes the Russia-Ukraine war which has negatively affected
the dollar and the international debt market;
v) In the spirit of devolution, the National Government is committed to fully
devolving functions that it has historically performed since devolution and
which are county government functions such as the library services which
was transferred to the County Governments together with the attendant
allocations in the FY 2023/24; and
vi) The proposal to increase the equitable share to Ksh 401.6 billion in the FY
2024/25 is equivalent to 25.5 percent of the last audited accounts (Ksh

1,573.42 billion for FY 2019/20) and as approved by Parliament. The
proposed allocation therefore meets the requirement of Article 203(2) of the
Constitution that equitable share allocation to counties should not be less than
15 per cent of the last audited revenue raised nationally, as approved by the
National Assembly.
4.5 Intergovernmental Fiscal Transfers

298. Article 202 (2) of the Constitution provides that County Governments may
be given additional allocations from the National Government’s share of revenue,
either conditionally or unconditionally. Management of intergovernmental fiscal
transfers is provided in the PFM Act, 2012, its Regulations and National Treasury
Circular No. 8 of 2017 on “Guidelines for the Management of Intergovernmental
Fiscal Transfers in Kenya”.
299. National Government Ministries Departments and Agencies (MDAs) are
responsible for development of frameworks for the management of conditional
additional allocations (read projects) made to beneficiary County Governments.
These frameworks outline the total allocation to each conditional additional
allocation and the specific amount apportioned to each participating county
governments; the conditions to be met by participating County Governments; and
the responsibilities of both MDAs, and beneficiary County Governments. The
Accounting Officers in the respective MDAs are responsible for submission of
these frameworks to the National Treasury, for concurrence with National Treasury
Departments and hence the subsequent inclusion in the County Governments
Additional Allocations Bill (CGAAB), 2024.
4.5.1 Additional Allocations

300. In the CGAAB, 2024, for FY 2024/25, the National Treasury proposes to
allocate total of Ksh 58.242 billion as additional allocations (Conditional and
Unconditional). Out of this Ksh 11.486 billion will be financed from the National
Government share of revenue and Ksh 46.756 billion as additional allocations from
proceeds of loans and grants from development partners. In order to continue
operationalizing the National Government’s programme on County Aggregation
and Industrial Parks, each County Government will be allocated Ksh 250 million
as a conditional grant in FY 2024/25. This conditional grant from the National
Government’s share of revenue translates to Ksh 7.25 billion to the twenty - nine
(29) County Governments that did not benefit in the FY 2023/24. The additional
conditional allocations are meant to support specific national policy objectives to
be implemented by County Governments (Table 4.5).

Table 4.5: Additional Allocations to County Governments for FY 2024/25
Source: The National Treasury

*Note that the preparation of the FY 2024 /2025 and the medium-term budget is ongoing
as communicated vide Treasury Circular No .8 of 2023 dated 7th August, 2023 and,
therefore, the figures provided for additional allocations are only tentative proposals. The
actual amounts for each additional allocation to County Governments will be determined
at the Budget Sector Working Group within the available resource envelope.

4.6 Equalization Fund
301. The Equalisation Fund is established under Article 204 (1) of the Constitution
with an allocation of a half percent (0.5%) of all revenue collected by the National
Government each year on the basis of most recently audited accounts of revenue
approved by the National Assembly. The National Treasury proposes to allocate to
the Equalisation Fund Ksh 8,368,574,00, being 5% of Ksh 1,573.418 billion (the
most recently audited account for FY 2020/21); and Ksh 9,976,766,000 towards
payments arising from Equalisation Fund arrears as per the National Treasury’s
Equalization Fund Arrears Financing Plan for FY 2024/25.
302. Article 204 (2) of the Constitution provides that the National Government
shall use the Equalization Fund only to provide basic services including water,
roads, health facilities, and electricity to marginalized areas to the extent necessary
to bring the quality of those services in those areas to the level generally enjoyed
by the rest of the nation, so far as possible.
303. The total entitlement to the Equalization Fund since its inception stands at
Ksh 62,403,758,050. Of the total entitlement, the Parliament has allocated at total
a total of Ksh 33,597,717, 433, through the annual Division of Revenue Bills out
of which a further Ksh 12,400,000,000 was appropriated through the Equalization
Fund Appropriation Act, 2018.
304. A balance Ksh 21,197,717,433 of the Equalization Fund’s entitlement is still
outstanding, out of which Ksh 3,261,843,222 and Ksh 7,068,474,211 for the FYs
2021/22 and FY 2022/23 respectively has been appropriated through the
Equalization Fund Appropriation Act, 2023.
305. Owing to the challenges in revenue collection observed FY 2023/24, the
National Treasury is proposing to allocate Ksh 8,368,574,000 for FY 2024/25 and
a further Ksh 9,976,766,000 as partial payment for the Equalization Fund
Entitlement arrears from the previous years.
4.7 Emerging Issues and Policy Interventions

4.7.1 Transfer of Functions and Cooperation between National and
County Governments
306. Article 6 (2) of the Constitution provides that the governments at the national
and county levels are distinct and interdependent and shall conduct their mutual
relations on the basis of consultation and cooperation. The National Government
is committed in ensuring that intergovernmental relations between the County
Governments and the National Governments are conducted in line with the
Constitutional provisions. Articles 187 and 189 of the Constitution provides for the
transfer of functions and powers between levels of Government as well as
cooperation between the National and County Governments. In this regard, The
National Treasury through an inter-agency taskforce developed the Public Finance
Management (Amendment) Bill, 2023 to operationalize these provisions. The bill
is in the process of being submitted to the Cabinet for approval before its
submission to Parliament.

307. The enactment of this law by Parliament will facilitate the financing of
transferred functions and cooperation between the two levels of Governments. It
will also provide for cooperation between the two levels of Government and
amongst counties that intend to implement inter-county projects.
4.7.2 Integrated County Revenue Management System (ICRMS)

308. In order to support county governments, enhance their own source revenue
through automation, it is recommended that all the County Governments adopt an
Integrated County Revenue Management System. In view of the above, there is an
ongoing process to develop and commission this integrated system that will
enhance OSR administration and management at the County level for improved
service delivery. This will ensure uniformity in the collection, recording, and
reporting of own source revenues across the 47 County Governments. Further, it
will enable County Governments to generate reliable data for revenue forecasting
and revenue enhancement.
4.7.3 Sharing of Mineral Royalty Revenue with County Governments

and Communities
309. The National Government is committed to ensuring that the mineral royalties
due to the respective County Governments and communities in line with the
Mining Act, 2016 are disbursed. To address this matter, the State Department of
Mining will be forwarding to the National Treasury a framework for sharing the
20% share of mineral royalties among the County Governments for inclusion in
the annual County Governments Additional Allocations Bill. Additionally, the
Ministry of Mining, through a multiagency team is currently finalizing the
development of regulations with respect to the share of mineral royalty revenue
due to communities. The regulations with provide for the transfer and management
of the 10 percent share of mineral royalties due to communities.
4.7.4 Revenue from Court Fines emanating from County Legislation

310. During its 17th Ordinary Session held on 31st May, 2022, Intergovernmental
Budget and Economic Council (IBEC) considered and adopted a report and a
framework for sharing of funds arising from the contravention of County
Government legislation. Going forward, the National Treasury has proposed that
these revenues be captured in the annual County Governments Additional
Allocations Bill to enable its disbursement to the relevant County Governments as
tabulated by the Judiciary.
311. In line with the advisory by the Attorney General that transfer of revenue from
court fines emanating from county legislation to the County Governments can only
be done by way of appropriation or by enactment of an Act of Parliament
specifically excluding them from Consolidated Fund and Payable to the County
Revenue Fund, the CGAAB 2023 proposes to allocate Ksh 108.7 million to ten
County Governments in FY 2023/24. For FY 2024/25, the Judiciary has provided
a schedule indicating the revenue collected in FY 2022/23 was Ksh 7.4 million and
12.3 million for FY 2023/24. The Judiciary is called upon to budget this amount as

a transfer to the County Governments to enable it to be transferred in the FY
2024/25.
4.7.5 County Governments Public Finance Management

312. The County Governments are faced by a number of challenges in the
management of public finance as identified by a Multi-Agency Taskforce formed
by the National Treasury and Economic Planning in the financial year 2022/2023.
To address some of these challenges the National Treasury will prioritize the
capacity building of county governments and work closely with the County
Governments through the relevant bodies such as the Intergovernmental Budget
and Economic Council to enhance fiscal relations between the two levels of
Government.
4.7.6 Intergovernmental Agreements in respect of the Additional

Conditional Allocations
313. The County Governments Additional Allocations Act of 2021 amended the
PFM Act 2012 by introducing section 191A – 191E. The section provided, among
others things that County Governments and the National Government would enter
into Intergovernmental Agreements in respect of the additional conditional
allocations. It further provides that the agreements shall be the basis for the
requisition of conditional allocation funds from the County Revenue Funds. In
order to unlock access to additional allocations by the County Governments in line
with this legal provision, the National Treasury through a multi-agency task force
has finalized the development of the model Intergovernmental Conditional
Allocation Transfer Agreement, subjected it to public consultations countrywide
and submitted the draft to the office of the Attorney General on the 10th November,
2023 for legal drafting. A response on this is being awaited. Additionally, the
National Treasury has written to both the Clerk of the National Assembly and the
Clerk of Senate, requesting Parliament to fast-rack the approval of the CGAAB,
2023, which when enacted into an Act will trigger the operationalization of the
intergovernmental transfer agreements pursuant to sections 191A to 191E of the
PFMA, 2012. This will facilitate the processes leading to timely disbursements of
and requisition of the funds for additional conditional allocations made to County
Governments.
4.7.7 Transfer of the Library Services Function

314. The Fourth Schedule of the Constitution provides that library service is a
devolved function and hence the need to devolve it to the county governments. The
Library Services function was unbundled and attendant resources amounting to
Ksh 424,616,045, being the sum of Ksh 421,379,947.20 (payroll budget, and
operations and maintenance) and Ksh 3,236,100 (total leave allowance) were
factored in the equitable share for FY 2023/24. This means that the library function
will be fully transferred with the attendant resources in the FY 2023/24.

ANNEX 1: ADHERENCE TO FISCAL RESPONSIBILITY
PRINCIPLES
1. In line with the Constitution, the Public Finance Management (PFM) Act,
2012, the PFM (National Government) Regulations, 2015 and in keeping with
prudent and transparent management of public resources, the Government has
adhered to the fiscal responsibility principles as set out in the statute as follows
(Table 1):
Table 1: Performance of Fiscal Responsibility Indicators
a) A minimum of 30 percent of the national Government’s budget allocated

to the development expenditure over the medium term.
2. Consistent with the requirements of the law, the National Government’s

allocation to development expenditures has been set above the 30 percent of its
Ministerial expenditures. The allocation to development expenditures is projected
to increase to 35.4 percent in the FY 2024/25 and remain above the recommended
threshold over the medium term as shown in Table 1 and Figure 1.

Figure 1: Development Expenditures as a Percent of Total National
Government Budget
Source: National Treasury

b) The National Government’s expenditure on wages and benefits for its
employees not to exceed 35 percent of the national Government equitable
share of the revenue.
3. The law requires that the National Government’s expenditure on the

compensation of employees (including benefits and allowances) shall not exceed
35 percent of the National Government’s equitable share of the revenue raised
nationally plus other revenues generated by the National Government pursuant to
Article 209 (4) of the Constitution. In conformity to this regulation, the National
Government share of wages and benefits to revenues was 29.2 percent in the FY
2022/23, and is projected at 23.4 percent in the FY 2023/24, and to further decline
to 21.7 percent by FY 2025/26 (Figure 2).
Figure 2: Wages as a Percentage of National Government Revenues
1Wages: For teachers and civil servants including the police. The figure includes the funds
allocated for the pension contributory scheme

c) Over the medium term, the National Government’s borrowings shall be
used only for the purpose of financing development expenditure and not
for recurrent expenditure.
4. The Government is committed and continues to adhere to the principle as per

the PFM Act section 15(2) (c) which requires that national Government`s borrowed
resources be used only for purposes of financing development and not for recurrent
expenditure. In the FY 2022/23, a total of Ksh 493.7 billion was spent on
development expenditure. This amount is projected to increase to Ksh 762.6 billion
in FY 2023/24, Ksh 881.3 billion in FY 2024/25 and Ksh 1,129.3 billion over the
medium term.
d) Public debt and obligations shall be maintained at a sustainable level as
approved by Parliament for National Government
5. The public debt and obligations remain at sustainable levels though with high
risk of debt distress due to global shocks that has led to a slowdown of economic
growth (IMF Country Report No. 23/266-July 2023). Under external Debt
Sustainability Analysis (DSA), the Present Value of the external debt to GDP ratio
remain sustainable through 2026. However, the Present Value of external debt to
exports and debt service to export ratios breach the sustainability thresholds even
in the medium term due to subdued growth in exports. These ratios are expected to
improve with economic growth recovery boosting growth in Kenya’s export sector
expected to improve external public debt sustainability ratios.
6. The debt service to revenue ratio in 2024 is worsened by the maturity of USD
2.0 billion international sovereign bond in June 2024 (Table 2).
Table 2: Kenya’s External Debt Sustainability
Indicators Thresholds 2022 2023 2024 2025 2026 2027
PV of debt–to-GDP 40 27.8 29.5 30.5 29.4 28.0 27.1
ratio
PV of debt-to-exports 180 228.3 220.4 210.8 195.6 181.7 170.3
ratio
PPG Debt service-to- 15 21.2 22.0 31.1 21.7 22.0 19.7
exports ratio
PPG Debt service-to- 18 14.8 16.6 24.9 18.2 19.2 17.6
revenue ratio
Source: IMF Country Report No. 23/266-July 2023
7. Overall, the Present Value (PV) of debt to GDP ratio is projected to remain
above the 55 percent sustainability threshold in the medium-term but will gradually
improve by 2027 (Table 3). The improvement in debt levels is anchored to fiscal
consolidation through broadening the tax revenue base and minimizing overall
expenditures tied to implementation of the fiscal reforms under the IMF Extended
Credit Facility program.
Table 3: Kenya's Public Debt Sustainability Analysis
2022 2023 2024 2025 2026 2027
Indicators Benchmark
Projections
PV of debt–to-GDP
55 63.1 64.4 61.9 60.2 58.3 56.6
ratio
Source: IMF Country Report No. 23/266-July 2023

8. As the economy recover from global shocks and fiscal consolidation
continues, Kenya’s debt indicators are expected to improve. However, Kenya debt
sustainability is vulnerable to exogenous shocks e.g., export and exchange rate.
e) Fiscal risks shall be managed prudently
9. Kenya’s risk remains high due to volatile international commodity prices,

tighter external financing conditions, elevated inflation and continued drought. The
Government established a Fiscal Risk Committee which will continue playing a
key role in identification, quantification and management of fiscal risks going
forward. In addition, the Government through the recently established pending
bills verification committee will minimize accumulation of arrears to suppliers;
and with continued fiscal consolidation programme, debt vulnerabilities will be
reduced and ensure a stronger debt sustainability position going forward. The
Government will also continue reviewing its macroeconomic forecasts and
regularly to ascertain the impact of the macroeconomic projections and their
implications on the budget. Potential fiscal risks arising from contingent liabilities,
including from Public Private Partnership projects among others are taken into
account and a contingency provision made to cushion the economy from
unforeseeable shocks.
f) A reasonable degree of predictability with respect to the level of tax rates
and tax bases shall be maintained, taking into account any tax reforms
that may be made in the future
10. On the principle of maintaining a reasonable degree of predictability with
respect to the level of tax rates and tax bases, the National treasury will implement
the National Tax Policy that will guide tax reforms and ensure certainty in taxation
and the Medium Term Revenue Strategy (MTRS) which contains revenue-raising
tax policy and administrative reforms to be undertaken over the medium-term..
Further, the Government continues to carry out tax reforms through modernization
and simplification of tax laws in order to lock in predictability and enhance
compliance within the tax system.

ANNEX 2: STATEMENT OF SPECIFIC FISCAL RISKS
Introduction
1. The economy is expected to remain strong and expand by 5.5 percent in 2023
and 5.4 percent in 2024 (5.5 percent in FY 2023/24 and 5.4 percent in FY 2024/25).
The growth outlook will be supported by broad-based private sector growth,
resilient services sector, and the rebound in agriculture. The growth outlook will
be reinforced by implementation of policies and reforms under the priority sectors
of the Bottom - Up Economic Transformation Agenda geared towards economic
turnaround and inclusive growth. There are, however, downside risks to the
macroeconomic outlook envisaged in this 2024 BPS emanating from domestic as
well as external shocks.
2. For prudent management of risks, the PFM Act, 2012 requires the preparation
of a “Statement of Fiscal Risks. Thus, this section provides an assessment of fiscal
risks that the Kenyan economy is exposed to that may affect the achievement of
the macroeconomic targets and objectives detailed in this BPS. The fiscal risks
arise from assumptions that underline fiscal projections, the dynamics of public
debt, and operations of state corporations, contingent liabilities, financial sector
vulnerabilities and natural risks. Emergence of these risks could make it difficult
for the Government to actualize and sustain macroeconomic policies detailed in
this BPS. Thus, this section also details the measures that the Government is
implementing to mitigate such risks.
Risk in Changes in Macroeconomic Assumptions
3. Macroeconomic variables play a key role in the formulation of the budget as
they form a baseline in revenue projections and determine the Government’s
spending priorities. The macroeconomic assumptions underlying the FY 2024/25
budget entail an estimated growth of 5.5 percent in both 2023 and 2024. Inflation
is projected to gradually ease towards the Government target range of 5.0 percent
in 2024 and remain within the target range over the medium term. The External
sector is expected to remain relatively stable despite the projected global economic
slowdown, geopolitical fragmentation and uncertainties and tight global financial
conditions. The unexpected changes in the macroeconomic projections in this BPS
may pose risks to the projected revenue and expenditure.
4. Table 1 summarizes the likely impact of changes in the 2023 BPS outcomes
on the fiscal projections.

Table 1: Fiscal Sensitivity to Key Macroeconomic Variables, FY 2023/24 –
2026/27 (Ksh billion)
5. The reduction of the projected real GDP in 2024 by one percent (from 5.4
percent to 4.4 percent) has the adverse impact of reducing revenue collection by
Ksh 12.6 billion in FY 2024/25. Expenditures would also decline by Ksh 6.2 billion
resulting to an increase in fiscal deficit of Ksh 6.4 billion in the same period. This
shock would persist over the medium term with the decline in revenues more than
the decline in expenditures leading to a higher than projected fiscal deficit.
6. A shock of a one percent increase in the projected inflation rate for 2024, from
5.0 percent to 6.0 percent, would result in an increase in revenues and expenditures
by Ksh 12.8 billion and Ksh 6.9 billion respectively in FY 2024/25. The higher
revenues compared to expenditures would result to an improvement of the fiscal
deficit by Ksh 6.0 billion in FY 2024/25. The impact of the shock would persist
over the medium term thereby improving the fiscal deficit by Ksh 8.1 billion by
FY 2027/28.
7. A 10 percent depreciation of the Kenya shilling to the dollar would have a
higher impact on the revenues as compared to the expenditures. The revenues and
expenditures would increase by Ksh 24.1 billion and Ksh 3.7 billion respectively
in FY 2024/25 thereby reducing the projected fiscal deficit by Ksh 20.3 billion.
The effect of this shock would persist over the medium term with the increase in
revenues offsetting the increase in expenditures leading to a lower than projected
fiscal deficit. Fiscal deficit would reduce by an estimated Ksh 25.8 billion by FY
2027/28.
8. A shock of 10 percent increase in the value of imported goods in the FY
2024/25 would increase revenue collection by Ksh 15.4 billion in the same period.
However, the shock would have a negative effect on revenue collection over the
medium term due to change in consumer behaviour but a negative impact over the
medium term. The shock would not significantly affect expenditures.
9. Overall, if all the four shocks were to hit the economy concurrently in the FY
2024/25, revenues would increase by Ksh 40.0 billion as the movements in
inflation and exchange rate would offset the risk posed by a slowdown in real GDP
growth. The adverse impact of the shocks to expenditures would be significantly

lower compared to the increase in revenues thereby eliminating the fiscal risk on
the budget from macroeconomic shocks.
Assessment of Past Forecast Accuracy of Underlying Assumptions and
Budgetary Aggregates
10. Overall, the actual real GDP growth and revenue projections have been within
their respective set targets for the past three years with minimal deviations as
shown in Figure 1. However, expenditures have been performing below the target
leading to a lower than targeted fiscal deficit.
Figure 1: Deviations in Macroeconomic and Fiscal Aggregates
11. Over the period 2019/20-2022/23, the average deviation between the assumed
and provisional actual real GDP growth rates was -0.3 percentage point with a
standard deviation of 0.8 percentage point. With respect to inflation assumptions,
the standard deviation was at 0.7 percentage point over the four years, with the
largest deviation being recorded in FY 2021/22 at 1.3 percent mainly due to the
unanticipated inflationary pressures resulting from external pressures (Table 2).
12. The actual performance of fiscal aggregates against their targets was mainly
below target. Total revenue between FY 2019/20 and FY 2022/23 fell short of its
target by an average of Ksh 68 billion. This shortfall was from both ordinary
revenues by Ksh 24 billion and Ministerial A-I-A of Ksh 44 billion. The average

deviation of total expenditure and net lending between FY 2019/20 and FY
2022/23 was an underspending of Ksh 193 billion. This shortfall was mainly due
to lower absorption in development expenditures by Ksh 95 billion and recurrent
expenditures by Ksh 72 billion. The lower recurrent spending is in line with the
fiscal consolidation programme by the Government that targets to curtail
unproductive expenditures.
13. The lower-than-projected spending on development expenditure poses a risk
to the fiscal program, going forward. In order to prevent this risk from
materializing and improve efficiency of public investments, the National Treasury
froze initiation of new capital projects until the completion of the ongoing ones.
The Public Investment Management Unit will ensure that all capital projects are
planned, appraised, and evaluated before funds are finally committed in the budget.
Table 2: Deviations in Macroeconomic and Fiscal Aggregates
14. The Kenyan economy slowed down to a growth of 5.2 percent in FY 2022/23
from a growth of 6.2 percent in FY 2021/22 mainly due to three major constraints
affecting the economy during the period. These included the supply constraints of
major products due to conflict between Russia and Ukraine that disrupted global
trade leading to increased fuel, fertiliser and food prices; the lingering effects of
the COVID-19 pandemic; and a severe drought witnessed in the region and most
parts of the country.
15. The economy is projected to recover to 5.6 percent in FY 2023/24 with a 95
percent confidence level ranging between 7.2 percent and 4.0 percent at 0.8 percent
standard deviation. The economy is projected to improve further in FY 2024/25 to
grow by 5.9 percent and at a growth range of around 7.5 percent and 4.2 percent
using the same standard deviation at 95 percent confidence interval (Figure 2).
16. There is a 95 percent chance that the forecasted total revenue of Ksh 3,022.8
billion in FY 2023/24 will be within the actual revenue range of Ksh 3,196.8 billion

and Ksh 2,848.7 billion and a 50 percent possibility between Ksh 3,083.1 billion
and Ksh 2,962.4 billion with a standard deviation of Ksh 77 billion. The Projected
revenue of 3,407.8 billion for FY 2024/25 will fall at an actual range of Ksh 3,581.8
billion and Ksh 3,233.8 billion at 95 percent confidence interval.
17. The forecasted expenditure of Ksh 3,930.8 billion in FY 2023/24 has a 95
percent chance to range between Ksh 4,329.4 billion and Ksh 3,532.3 billion with
a 219.0 billion standard deviations. The expenditure is projected to increase further
in FY 2024/25 to Ksh 4,257.3 billion and to range between Ksh 4,655.9 billion and
Ksh 3,858.8 billion at 95 percent confidence interval. The fiscal deficit will
therefore fall between Ksh 1,175.1 billion and Ksh 546.4 billion in FY 2023/24
and between Ksh 1,114.6 billion and Ksh 485.8 billion in FY 2024/25 at a 95
percent confidence interval.
Figure 2: Confidence Intervals
SPECIFIC FISCAL RISKS
18. This section covers specific fiscal risk that Kenya faces and elevates the
importance of effective risk management. The specific fiscal risks include:
a) Fiscal Risks Associated with Public Debt;
b) Crystallization of Contingent Liabilities;
c) Fiscal Risks Related to Devolution; and
d) Other fiscal risks.
a) Fiscal Risk Associated with Public Debt
19. Kenya debt sustainability is vulnerable to exogenous shocks e.g, export

revenue patterns and exchange rate. To reduce debt vulnerabilities, the
Government has committed to reliance of concessional borrowing to finance

capital investments. Additionally, a steady and strong inflow of remittances and a
favourable outlook for exports will play a major role in supporting external debt
sustainability.
20. Performance of the economy and public revenues has a direct impact on the
debt sustainability. A slowdown in the growth of the economy worsens the debt
sustainability indicators. Market pressures due to the monetary tightening in the
USA and Europe have led reduced access to the international capital market. This
may hinder the Government from mobilizing resources to finance the budget.
21. High inflation rates stimulated high interest rates environment both
international and domestic markets making borrowing costly. This may hinder the
Government in performing liability management operation on its debt portfolio and
also increase the debt service costs on the existing portfolio. The Government will
continue to monitor the market conditions before performing any liability
management operations.
22. Limited access coupled with illiquid international capital market and domestic
market may hinder the Government’s plan to finance the FY2024/25 Budget. Thus,
there is need for adequate prioritizations and rationalization in the budget should
resources not be available. In addition, the on-going implementation of reforms in
the domestic debt market are expected to support Government against the
downside’s risks emanating from external debts as it provides an alternative,
though costlier funding source.
23. The risk of depreciation of Kenya shilling against major currencies may
increase in the cost of debt service as over 50 per cent of the total debt portfolio is
from foreign currencies. High interest rates have implication on the fiscal policy
as a larger proportion of revenue may be used to service debt. There is also
increased refinancing risk as most investors of new debt are increasingly preferring
short-term maturities due to uncertainty in the movement of interest rates.
24. Materialization of fiscal risks and contingent liabilities arising from state-
owned enterprises debts remain a key risk to the budget. Continuous monitoring of
these exposures is critical to avert any risks before they materialize.
b) Crystallization of Contingent Liabilities
25. Contingent liabilities are potential liabilities that may occur depending on the
outcome of uncertain future event. They are not reflected in the BPS financial
position, but must be given adequate disclosure. However, a contingent liability is
only recorded in the financial statements if the contingency is probable and the
amount of the liability can reasonably be estimated. Contingent liability can be
explicit or implicit. Explicit contingent liabilities are specific government
obligations established by law or a contract authorized by law. The Government is
legally mandated to settle such an obligation when it becomes due. On the other
hand, implicit contingent liabilities represent a moral obligation or expected burden
for the Government not in the legal sense, but based on public expectations and
political intervention.

26. Contingent liabilities are frequently not recorded directly in the budget and
thus are not subjected to budgetary oversight. These could lead to poor
quantification of Contingent Liabilities and the possibility of large unplanned
expenditures if the guarantee crystallizes. There is need therefore to monitor these
contingent liabilities to avoid fiscal difficulties in the budget year in the event they
happen.
i. State Corporations/State Owned Enterprises (SOEs)
27. Under the State Corporations Act, State Corporations have legal capacity to
contract debts and other liabilities to finance their requirements. Approval to
procure such loans however, must be obtained from the Parent Ministry with the
concurrence of the National Treasury as required under the State Corporations Act.
Government Loans to State Corporations are either direct or on-lent. Direct loans
refer to loans that the Government lends to State Corporations from exchequer
resources while on-lent refer to those loans that the government borrows on behalf
of the SOEs.
28. While Government at times has a stake in state owned enterprises and other
Government investments in public companies, its contractual obligations may be
limited. However, due to the strategic nature of those state-owned enterprises and
public companies in view of the national interest and the overall impact of their
failure to the economy, the Government may be morally obligated to bail out those
state-owned enterprises and public companies in financial distress. This may pose
serious fiscal risk and challenge to budget implementation.
Governance
29. The Government has continued to strengthen corporate governance of State
Corporations through the Mwongozo guidelines and subsequent trainings in the
area of governance. Further, the Government recommended establishment and
operationalization of audit committees and risk management frameworks for
Government entities including State Corporations. The Public Finance
Management Act and the Public Audit Act were geared towards enhancing
effective financial management and oversight for efficient delivery of strategic
objectives by State Corporations. In addition, the Capital Market Authority issued
Regulations under the Capital Market Act (Cap 485) on code of governance
requirements to be observed by companies listed at the NSE. This will enhance
accountability, transparency and full disclosure by Companies listed in NSE which
include Government-linked entities.
Privatization
30. State-Owned Enterprises face a number of challenges including: i) Inadequate
capital for investments and working capital due to dwindling Government
resources to invest in those entities; ii) Limited expertise in Government on
business and commercial operations; iii) Use of outdated technology due to lack of
capital for investments; iv) Dual mandate of regulatory and commercial functions
in some entities; and v) Government crowding out the private sector in production
of goods and provision of services hence lack of competitiveness leading to
inefficiencies; among others

31. In order to address these challenges, the Government has embarked on the
process of privatization and restructuring them. As part of the process, the
Government has identified and proposed 11 entities to be included in the 2023
Privatisation Programme in line with the provisions of the Privatisation Act, 2023.
This will support the Government’s efforts for fiscal consolidation and spurring
economic development through: i) Raising of additional revenue; ii) Reducing the
demand for Government resources among many demanding and competing needs;
iii) Improving regulatory framework in the economy by unbundling regulatory and
commercial functions among some entities; iv) Improving efficiency in the
economy by encouraging more private sector participation hence make the
economy more responsive to market force and competitions; among others.
Fiscal Risk Analysis of State Corporations
32. State Corporations (SCs) can be a major source of fiscal risk to public finances
if they underperform financially. In FY 2021/22 fiscal risk analysis was performed
on a sample of eighteen State Corporations whose report identified and disclosed
the fiscal risk exposure to Government arising from State Corporations.
33. In the eighteen major state corporations, detailed financial evaluations and the
assessment highlighted a number of fiscal risks that could materialize. These stem
primarily from liquidity challenges resulting from unfavourable revenue and
economic performance. They also reflected a high liquidity risk demonstrated by
their quick ratios being less than one implying their inability to service short term
obligations when they fall due. Subsequently, 14 SCs were found to have
accumulated sizable arrears. These SCs were chosen, given their size and strategic
importance to the economy and society, thus holding a high implicit risk to
government in that many of them are too strategic to fail.
34. In 2023/24 FY the National Treasury is undertaking financial evaluation for
fifty State Corporations, using their FY 2022/23 audited accounts, and report the
outcome to the Fiscal Risk Committee by end-June 2024. Further the National
Treasury has customized the IMF Health Check Tool that is being applied in the
process of undertaking the financial analysis.
35. Debt stricken state corporations constitute a potential source of fiscal risk.
However, the government is cautious in issuance of guarantees and other support
measures to state corporations upon such requests. However, as the principal owner
of all State Corporations the Government is the natural underwriter of risk that they
face.
ii. Public Private Partnerships (PPP) Projects
36. As one of the strategic and sustainable approaches towards managing the
current pressed fiscal space in meeting the planned development and investment
targets of the Government, Public Private Partnerships is key in realizing fiscal
affordability and sustainability for public infrastructure funding. This is by
enabling Government access to a more diversified less risky funding, off-balance
sheet financing, providing Government with flexibility to re-allocate its own
revenues to the urgently needed infrastructure development projects. The

Government has dedicated its efforts in towards projects focused on low-cost
housing, the provision of water, improving agricultural production, promoting
decent healthcare services, ports, roads, energy sectors and the development of
Special Economic Zones (SEZs) as per the BETA priorities.
37. Currently, the PPP Directorate has a pipeline total of 31 projects at various
stages of the PPP project cycle, with most of them being at procurement stage.
With these PPP pipeline projects, the Government envisages mobilizing Ksh 50
billion within the next FY 2024/25. With the Government’s focus in achieving
most of the infrastructural developments through the PPP framework, it plans to
work with the private sector to develop projects in priority sectors which include
Water, Transport, Ports, Housing, Industrial parks, Renewable energy,
Agriculture, ICT, Aviation, Hospitals, amongst others.
38. The summary of the targeted sector projects is here below:
a. The Water sector – rolling out of water and irrigation projects for the next
financial years has started with a number currently under the project
development stages. Most of the projects in water and irrigation are being
prepared as Privately Initiated Proposals (PIPs);
b. Energy sector- there are two projects under PIPs to support electricity
transmission lines currently under project development phase (i) Africa 50
covering 165km-400KV along Losuk – Lessos; Kisumu – Musaga 72 KM
-220KV. The Project is estimated to cost USD.313.25 million (KES.44B);
(ii) Adani Energy Solutions Ltd planning to do 197KM – 400KV along
Gilgil – Thika – Mala – Konza; 101KM-220KV along Rongai – Keringut-
Chemosit; 90KM – 132KV along Menengai – Olkalau – Rumuruti;
400/220KV sub stations at Lessos and Rongai; and 132/33KV thur –
dibuoro substation. Estimated cost USD.907 million (KES.127 billion);
and
c. Roads and Transport sector – Mobilization of private sector resources to
develop and expand key trunk networks in the country, such as the
Mombasa-Nairobi Express way, which is at advanced stages of
preparations, having been by been granted 1st stage approval by the PPP
Committee recently and therefore ready to progress to project
development phase. Estimated cost is USD.3.6 billion. The Roads and
Transport projects are intended to alleviate congestion, improve safety and
enhance connectivity to boost trade and investment. There is also JKIA
Terminals 1E and 2E which are at Feasibility Study phase, with the project
implementation targeted to commence in FY 2024/25.
39. There are potential fiscal risks stemming from the Public Private Partnership
(PPP) Projects including possible breaching of contract obligations, unfunded
additional obligations and those stemming from movements in inflation and
exchange rate. To mitigate these risks, the Government will reduce implementation
bureaucracy, strengthens PPP institutions, improve governance, promote the
framework for balancing risk with affordability and value for money, while
guaranteeing rapid service delivery through cutting down execution timelines, and
promoting local content for greater national value capture in PPPs. As part of de-

risking public investments in respect to capital mobilization for infrastructure
development, the Government will continue to provide Government Support
Measures (GSMs) to private investors in PPP projects in the form of Letters of
Support (LOSs), Partial Risk Guarantees and Indemnity Agreements. To date, a
total of fifteen projects have been issued with GSMs.
c) Fiscal Risks Related to Devolution

40. County Treasuries are required under Section 107 of the PFM, Act 2012 to
manage their public finances in accordance with the principles of fiscal
responsibility. Among the fiscal responsibility principles set out in Section 107 (2)
is the requirement for the County Treasury to manage its fiscal risks prudently. A
number of fiscal risks that require prudence in its management by the County
Governments are as follows;
i. High expenditure on personnel emoluments contrary to Regulation 25 (1)
(b) of the Public Finance Management (County Governments) Regulations,
2015 that sets the limit of the County Government’s expenditure on wages
and benefits at 35 percent of the County’s total revenue.
ii. Below target Own Source Revenue Collections that results to unfunded
budget deficits and accumulation of pending bills negatively affecting
service delivery to the citizens
iii. County Governments continue to report high levels of pending bills that
remain unpaid and have a negative impact on the business community as
well as the economy in general.
iv. Low actual development expenditure which is not in line with the County
Governments approved budgets and contrary to Section 107(2) (b) of the
Public Finance Management (PFM) Act, 2012, that provides that over the
medium term, a minimum of thirty percent of the County Government
budget shall be spent on the development expenditure.
d) Other Fiscal Risks
i. Natural Disasters and Man-made Hazards

41. Crises and disasters remain a major concern for various economies across the
globe including Kenya. The Government will continue to enhancing the country’s
disaster risk management and financing framework by fast tracking the enactment
of the Disaster Risk Management Bill (No. 24 of 2023). This will ensure that there
will be an over-arching framework that guides disaster risk management in the
country. In addition, the Government will fast track the finalization of the disaster
risk financing framework under the Public Finance Management Act, 2012 in order
to enhance efficient and effective resource mobilization for disaster risk
management in country as well as development of Disaster Risk Financing
Strategy 2023 -2027 and mainstreaming disaster expenditure reporting into the
Government financial reporting framework.

ii. Climate Change Related Fiscal Risks to the Economy
42. Climate change has become a pressing issue globally, and like other
economies, the Kenyan economy is vulnerable to its ravaging impacts. To
minimize the economic and fiscal risks of climate change phenomenon, the
Government will continue to pursue a low carbon- climate resilient development
path. Climate financing has emerged as an important means of implementation for
climate change and for promoting sustainable development and financial sector
development.
43. To enhance financial flows from the Green Climate Fund (GCF), the
Government will continue to implement the National Green Climate Fund
Strategy, which provides an elaborate framework of coordinating and attracting
resources from the GCF. The Government will also implement the Financing
Locally-led climate Action (FLLoCA) Program in collaboration with County
Government and development partners to manage climate risks. To further deepen
green financing, the Government will implement the Green Finance Programme
geared towards transitioning to a low-carbon, climate resilient and green economy.
iii. Money Laundering
44. In order to fight money laundering, the Government will continue to promote
financial integrity and compliance with international standards, particularly the
Financial Action Taskforce (FATF) Recommendations on Anti Money Laundering
and Combating the Financing of Terrorism (AML/CFT). This initiative will be
achieved through implementation of the AML/CTF National Risk Assessment
Report 2021 recommendations; the National AML/CFT Strategy, and the 2nd
Eastern and Sothern Africa Anti-Money Laundering Group (ESAAMLG) Mutual
Evaluation Report (MER) 2022.
45. In order to addressing the strategic deficiencies identified Mutual Evaluation
Report, 2022, various legislations relating to AML/CFT issues have been amended
through the Anti-Money Laundering and Combating of Terrorism Financing Laws
(Amendment) Act, 2023. These amendments necessitated the alignment and re-
issuance of various Regulations. These included the Proceeds of Crime and Anti-
Money Laundering Regulations, 2023; the Proceeds of Crime and Anti-Money
Laundering (Criminal Assets Recovery Fund) Regulations, 2023; and the
Prevention of Terrorism (Implementation of the United Nations Security Council
Resolutions on Suppression of Terrorism) Regulations, 2023. In this regard, Kenya
has filed a request with the ESAAMLG for Technical Compliance (TC) re-rating
as a result of these amendments. In addition, Kenya has completed the post-
evaluation observation period and the Post-Observation Period Report (POPR) will
be deliberated by the FATF Plenary in February 2024 in respect to the progress
made towards strengthening Kenya’s AML/CFT regime.
46. To address the recommendations in the Mutual Evaluation Report, the Central
Bank of Kenya has taken several actions including: conducting stand-alone
AML/CFT onsite inspections, revising Bank Supervision Operations Manual to
include AML/CFT risk-based supervisions, and undertaking institutional and
sectoral risk assessments.

ANNEX 3: MEMORANDUM ON HOW RESOLUTIONS BY PARLIAMENT ON PREVIOUS BUDGET
POLICY STATEMENTS HAVE BEEN INCORPORATED
Introduction
1. Section 25(8) of the Public Finance Management (PFM) Act, 2012 prescribes that the Cabinet Secretary for The National Treasury
shall take into account resolutions passed by Parliament in finalizing the budget for a given financial year. The National Assembly approved
the 2022 Budget Policy Statement and the 2023 Budget Policy Statement 24th February, 2022 and 15th March, 2023, respectively.
2. Section 38(1) (iii) of the PFM Act, 2012 requires the Cabinet Secretary to prepare a memorandum explaining how the resolutions adopted
on the BPS have been taken into account. In this regard, the following Section provides a brief to Parliament on the extent to which the
resolutions of the House on the 2022 BPS and 2023 BPS have been taken into account and the reasons thereof.
No. Resolution Action taken

A. Policy Resolutions on the 2022 BPS
1. • The National Treasury ought to prepare the Budget Policy The 2023 Budget Policy Statements has been prepared in line with the
Statement in line with the debt ceiling. debt ceiling of Ksh 10.0 trillion. Public and publicly guaranteed debt in
• The National Treasury ought to amend the debt ceiling to nominal terms as at end December, 2022 was Ksh 9,145.6 billion
enable them implement the budget as proposed, rationalize compared to the statutory public debt limit of Ksh 10,000 billion as per
expenditure or implement revenue enhancing measures. the PFM (National Government) (Amended 2022) Regulations, 2015.
The reforms on the revenue and expenditure side outlined in the 2023
BPS, are expected to result in the reduction of the fiscal deficit including
grants from Ksh 833.9 billion (5.7 percent of GDP) in the FY 2022/23

to Ksh 720.1 billion (4.4 percent of GDP) in the FY 2023/24 and further
to Ksh 826.1 billion (3.6 percent of GDP) in the FY 2026/27. This
reduction will result in reduction in the growth of public debt thereby
boosting the country’s debt sustainability position.
2. The National Treasury expedites the finalization of the proposed The National Treasury has already developed an action plan to guide the
Medium Term Revenue Strategy (MTRS) and submits it to the development of the MTRS and issued a Circular on 30th August, 2022
National Assembly by 30th April, 2022. inviting proposals from Government MDAs and the County
Governments for the development of the MTRS. The draft MTRS will
be developed by end February 2023 and will be circulated to MDAs for
their inputs, as part of public participation, before the Strategy is
finalized.
3. The National Treasury should prepare and submit a status report The National Treasury prepared and submitted to Parliament an annual
of the Credit Guarantee Scheme to the National Assembly. This performance report on the performance of the Credit Guarantee Scheme
report should contain details on the amount released and the on 30th September, 2022. In summary, from December 2020 to 30th June
number of beneficiaries. 2022, CGS disbursed a cumulative value of approximately Ksh 3.9
billion to 2,490 MSMEs, across 46 Counties and 11 sectors of economy
as reported by the banks through the Central Bank of Kenya. All the
three sizes of enterprises (micro, small, and medium) have benefitted
from CGS facilities issued where small enterprises received 1,501,
medium enterprises received 381 while micro enterprises received 608.
The enterprises owned by women, youth and persons with disabilities
(PwDs) received 20% of the total number of guaranteed facilities that
had been disbursed. Women beneficiaries were 327, youth beneficiaries
were 164, while PwDs were 9. The beneficiaries of the CGS so far
support a minimum of 13,901 jobs.

4. The National Treasury, Kenya Revenue Authority (KRA), The National Treasury, KRA, CRA and the Council of Governors will
Commission on Revenue Allocation (CRA) and the Council of fast track the development and implementation of the integrated County
Governors should fast-track the development of an integrated Governments revenue management system to ensure that the County
County Revenue Management system for a unified revenue Governments use a uniform system that seals revenue leakages and
collection system for all counties. The CRA should fast track the provides value for money invested in it.
development of model tariffs and pricing policy to guide counties
to develop their own.
5. For effective and smooth implementation and management of this The National Treasury has transferred allocation for School Feeding
school feeding programme, it should be fully transferred and Programme to the National Council for Nomadic Education in Kenya
domiciled in the National Council for Nomadic Education in (NACONEK) as resolved by the National Assembly.
Kenya (NACONEK).
B. Policy Resolutions on the 2023 BPS
6. The National Assembly to amendment to the Public Finance The National Treasury will comply with the effected amendments.
Management Act, 2012 and attendant regulations to extend the
timelines for consideration of the BPS by Parliament from 14 days
to 28 days.
7. The National Treasury should ensure that Ministries, Departments The budgets of MDAs have been prioritized and matched with the
and Agencies (MDAs) have aligned their budgets, projects and BETA Value Chain priorities. The FY 2023/24 Budget Estimates
key performance indicators to the proposed value chain approach include specifics about the BETA priorities and performance indicators.
under the Bottom-Up Economic Transformation Agenda (BETA)
within the approved ceilings.
8. The deficit financing strategy and public debt mix be undertaken The National Treasury will continue monitoring implementation of
in accordance with the resolutions of the National Assembly based MTDS, alternative borrowing strategies and the fiscal deficit approved
on the Report of the Public Debt and Privatization Committee on by parliament.
the 2023 Medium Term Debt Management Strategy.

9. The National Treasury should provide a list of all projects to be The National Treasury has ensured that MDAs prioritized projects for
completed in FY 2023/24 for all MDAs reconcilable with the completion by consolidating thinly spread allocations to high impact
development budget; with a view to consolidating thinly spread priority projects. The details of the projects to be completed in the FY
allocations to high impact priority projects to ensure completion. 2023/24 and will be submitted alongside the FY 2023/24 Budget
Estimates
10. Before submission of the 2023/24 annual estimates, the National The National Treasury will assess donor-funded programs and projects,
Treasury reviews donor funded projects including the existing including existing financing frameworks, and create a portfolio review
financing framework and develops a strategy to fast-track their and assessment report to expedite externally funded project
implementation and review the terms of the facilities. implementation.
11. The National Treasury spearheads a review of the State The National Treasury has formed a High Level Fiscal Risk Committee
Corporations and Semi-Autonomous Government Agencies to assess and report fiscal risks from State Corporations and SAGAs,
(SAGAs) with a view of rationalization to remove overlaps, with a year-long study planned.
duplication and redundancies.
12. Prior to the submission of the 2023/24 Annual Estimates, the The Government has allocated resources for infrastructure development
National Treasury in collaboration NG CDF should develop a for schools. In addition, the Ministry will be engaging NG-CDF to
framework for implementing National Government initiatives at support some of the infrastructure needs.
the constituency level before the submission of the 2023/24
Annual Estimates.
13. Prior to April 2023, the National Government reviews taxation The National Treasury received proposals from the aviation industry on
levied in the aviation industry and addresses the heavy taxation on taxation on purchase of spare parts were considered in the Finance Bill,
purchase of spare parts in the aviation sector. This should be 2023.
submitted to the National Assembly during consideration of the
Finance Bill, 2023.
14. From the onset of FY 2023/24, the National Treasury through the The National Treasury has done the following in readiness for accrual
Public Sector Accounting Standards Board should start accounting: i) revised the Standard Chart of Accounts; ii) prepared and
preparations for migration from the cash basis accounting system published policy guidelines on identification, measurement and
presentation of assets and liabilities; iii) updated the register of bank

to an accrual system in line with Sections 81 and 164 of the Public accounts; and iv) prepared a Cabinet Memorandum on transition to
Finance Management Act, 2012. accrual accounting for Cabinet approval.
15. The National Assembly proposes amendment to the Public-Private Section 88 (3) of the PPP Act already provides for regular reporting to
Partnership Act to require regular submission of project lists by Parliament by the Cabinet Secretary, National Treasury and Economic
the National Treasury which are under consideration for funding Planning. The National Treasury will continue to adhere to the
through the Public Private Partnership (PPP) framework before provisions of the Act.
the end of the FY 2023/24.
16. The National Treasury, in collaboration with stakeholders, to The National Treasury formed an Inter-Agency Taskforce in 2021 to
establish a collaboration framework between the County and the operationalize Constitutional Articles 187 and 189, resulting in a draft
National Government for the implementation of shared policy legislative proposal. Public participation took place between March 20th
proposals by September 30, 2023. and 23rd, 2023.
17. The National Treasury and the State Department for ASALs and The National Treasury will collaborate with the State Department for
Regional Development undertakes review Regional Development ASALs and Regional Development to review the mandates, legal
Authorities’ mandates, contribution to national development implications, and contributions of Regional Development Authorities.
agenda, and revitalization options by 30th December, 2023. This will inform recommendations for the revitalization of the Regional
Development Authorities.
18. By June 2023, the National Treasury develops a framework for In order to manage the distribution of conditional grants to County
governing conditional grants to the County Governments to ensure Governments, MDAs have presented frameworks to the National
that they meet their intended objectives. This should include the Treasury that specify terms, responsibilities, criteria for allocation, and
role, criteria and counterpart contribution by the counties to ensure requirements for counterpart contributions.
the initiatives take off.

Annex Table 1: Macroeconomic Indicators
2022/23 2023/24 2024/25 2025/26 2026/27 2027/28
Budget Appr. BROP BPS

Prel. Act Proj. BROP 2023 BPS 2024 BROP 2023 BPS 2024 BROP 2023 BPS 2024
Estimates Suppl. I 2023 2024
annual percentage change, unless otherwise indicated

National Account and Prices
Real GDP 5.2 5.5 5.5 5.5 5.9 5.5 6.1 5.5 6.2 5.5 6.3 5.6
GDP deflator 6.6 7.6 6.7 6.7 5.6 5.5 5.4 5.7 5.4 5.7 5.6 5.6
CPI Index (eop) 7.0 6.6 5.7 5.7 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0
CPI Index (avg) 7.6 7.2 6.3 6.3 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0
Terms of trade (-deterioration) -2.9 -3.4 -2.5 -2.5 1.4 1.9 1.3 2.7 1.9 3.4 3.1 3.7
Money and Credit (end of period)

Net domestic assets 11.5 12.5 13.6 13.6 9.2 10.1 11.3 9.6 10.3 8.9 9.7 8.3
Net domestic credit to the Government 13.0 10.9 9.5 9.0 9.2 6.9 9.4 8.8 6.9 7.3 6.3 8.1
Credit to the rest of the economy 12.2 14.0 13.6 13.9 12.0 14.3 17.0 14.9 15.0 13.0 15.4 12.9
Broad Money, M3 (percent change) 13.4 13.3 13.0 13.0 11.7 11.7 11.0 11.0 10.9 10.9 10.9 10.9
Reserve money (percent change) -5.9 13.2 12.9 12.9 11.6 11.6 10.9 10.9 10.8 10.8 10.8 10.8
in percentage of GDP, unless otherwise indicated
Investment and Saving
Investment 19.2 16.3 19.2 19.4 21.1 19.7 22.4 19.9 23.3 19.8 23.7 19.8
Central Government 3.3 4.1 4.1 3.9 4.7 4.3 5.2 4.9 5.1 4.9 5.1 5.3
Other 15.9 12.2 15.1 15.5 16.4 15.4 17.2 15.0 18.2 14.9 18.6 14.5
Gross National Saving 14.8 8.7 15.3 15.4 15.5 15.6 17.0 15.8 17.6 15.8 18.1 15.8
Central Government -1.8 0.8 -0.3 -0.1 1.3 1.4 2.4 2.6 2.7 2.7 3.0 3.0
Other 16.6 7.9 15.5 15.5 14.2 14.2 14.6 13.2 14.9 13.2 15.1 12.8
Central Government Budget
Total revenue 16.5 18.3 18.9 18.9 18.9 19.1 19.2 19.2 19.7 19.7 20.2 20.2
Total expenditure and net lending 22.6 23.0 24.7 24.2 23.6 23.3 23.1 22.5 23.3 23.2 23.5 23.7
Overall Fiscal balance excl. grants -6.0 -4.7 -5.8 -5.3 -4.7 -4.2 -4.0 -3.4 -3.6 -3.4 -3.3 -3.4
Overall Fiscal balance, incl. grants, cash basis -5.6 -4.4 -5.5 -5.1 -4.4 -3.9 -3.7 -3.1 -3.3 -3.1 -3.0 -3.1
Statistical discrepancy -0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Overall Fiscal balance, incl. grants, cash basis- adj. descrepancy -5.6 -4.4 -5.5 -5.1 -4.4 -3.9 -3.7 -3.1 -3.3 -3.1 -3.0 -3.1
Primary budget balance -0.8 0.3 0.2 0.6 0.9 1.7 1.2 1.8 1.3 1.5 1.4 1.3
Net domestic borrowing 3.2 3.6 2.9 2.8 2.8 2.1 2.8 2.6 2.0 2.1 1.8 2.3
External Sector
Exports value, goods and services 12.7 12.1 12.7 13.0 14.1 12.8 13.2 12.7 12.3 12.6 11.6 12.7
Imports value, goods and services 21.6 20.6 21.6 21.4 23.3 20.7 21.5 19.7 20.3 19.1 19.3 18.8
Current external balance, including official transfers -4.4 -7.6 -4.4 -4.0 -5.6 -4.1 -5.4 -4.0 -5.6 -4.0 -5.6 -4.0
Gross reserves in months of next yr's imports 5.8 5.5 5.8 5.4 5.8 5.5 5.7 5.5 5.7 5.5 5.9 5.6
Gross reserves in months of this yr's imports 5.8 5.8 5.8 5.8 5.9 5.9 5.9 5.9 6.0 6.0 6.1 6.1
Public debt
Nominal central government debt (eop), gross 71.4 62.0 68.7 68.2 65.8 65.0 62.9 61.6 60.0 58.7 57.1 56.1
Nominal debt (eop), net of deposits 68.0 58.7 65.7 65.2 63.1 62.3 60.5 59.2 57.9 56.5 55.2 54.1
Domestic (gross) 33.9 32.3 32.9 32.8 32.1 31.4 31.7 30.9 30.6 29.9 29.4 29.2
Domestic (net) 30.5 29.0 29.9 29.8 29.4 28.7 29.3 28.5 28.5 27.8 27.5 27.3
External 37.5 29.7 35.8 35.5 33.7 33.6 31.2 30.7 29.4 28.8 27.7 26.8
Memorandum Items:
Nominal GDP (in Ksh Billion) 14,274 16,290 16,132 16,132 18,015 18,015 20,002 20,002 22,180 22,180 24,595 24,595
Nominal GDP (in US$ Million) 107,056 122,057 108,289 108,289 128,428 120,595 140,581 134,321 154,278 148,854 170,410 163,634

Annex Table 2: Government Fiscal Operations, Ksh Billion
2022/23 2023/24 2024/25 2025/26 2026/27 2027/28
Budget Appr.
Prel. Act Proj. BROP 2023 BPS 2024 BROP 2023 BPS 2024 BROP 2023 BPS 2024 BROP 2023 BPS 2024
Estimates Suppl. I
TOTAL REVENUE 2,360.5 2,985.6 3,047.6 3,042.8 3,407.8 3,445.6 3,835.5 3,833.1 4,379.2 4,376.5 4,978.4 4,978.4
Ordinary Revenue 2,041.1 2,571.2 2,576.8 2,596.8 2,918.9 2,958.6 3,294.4 3,294.2 3,776.0 3,775.7 4,305.8 4,305.8
Income Tax 941.6 1,198.5 1,198.5 1,198.5 1,325.7 1,325.7 1,500.1 1,500.1 1,734.5 1,734.5 1,979.0 1,979.0
Import duty (net) 130.1 173.3 173.3 173.3 199.4 199.4 229.0 229.0 258.1 258.1 290.8 290.8
Excise duty 264.5 352.7 352.7 352.7 401.1 401.1 460.0 460.0 521.5 521.5 591.2 591.2
Value Added Tax 550.4 703.3 703.3 703.3 804.7 804.7 926.2 926.2 1,061.3 1,061.3 1,220.0 1,220.0
Investment income 41.3 33.1 38.7 38.7 39.7 39.7 38.1 38.1 42.3 42.3 46.9 46.9
Other 113.2 110.3 110.3 130.3 148.3 188.1 141.0 140.8 158.3 158.1 177.8 177.8
Ministerial Appropriation in Aid 319.4 414.4 470.8 446.0 488.9 486.9 541.1 538.9 603.2 600.8 672.6 672.6
Railway Development Levy 39.9 37.4 37.4 37.4 56.4 56.4 61.5 61.5 67.1 67.1 75.6 75.6
African Union & Int't Subscription Fund 6.2 6.9 6.9 6.9 8.3 8.3 9.2 9.2 10.2 10.2 11.4 11.4
Road Maintenance Levy Transfer to Counties 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Recurrent 213.5 232.8 260.0 260.0 258.4 258.4 286.8 286.8 318.3 318.3 353.3 353.3
Export Promotion Levy (AIA) 0.0 0.0 0.0 2.0 0.0 2.2 0.0 2.4 0.0 2.7 2.7
PDL - Recurrent 20.5 24.9 54.2 29.4 23.3 23.3 24.9 24.9 26.2 26.2 27.5 27.5
Development/NMS 33.9 46.4 46.4 46.3 64.9 64.9 70.1 70.1 78.5 78.5 88.0 88.0
PDL - Development 5.5 2.8 2.7 2.8 5.8 5.8 6.2 6.2 6.6 6.6 7.1 7.1
Housing Development Levy 63.2 63.2 63.2 69.8 69.8 80.2 80.2 93.8 93.8 106.9 106.9
EXPENDITURE AND NET LENDING 3,221.0 3,746.6 3,981.5 3,904.9 4,257.3 4,198.8 4,627.2 4,506.7 5,174.8 5,137.6 5,786.0 5,823.3
Recurrent expenditure 2,311.6 2,536.3 2,793.9 2,761.3 2,851.0 2,873.6 3,020.0 2,980.0 3,371.2 3,371.2 3,799.9 3,799.9
Interest payments 687.3 775.1 918.8 918.8 966.1 1,008.7 979.4 979.4 1,018.1 1,018.1 1,089.0 1,089.0
Domestic interest 533.1 628.3 646.4 646.4 716.1 747.7 739.9 739.9 791.4 791.4 854.5 854.5
Foreign Interest 154.2 146.9 272.5 272.5 250.0 261.0 239.5 239.5 226.6 226.6 234.5 234.5
Pensions & Other CFS 120.4 165.4 165.4 165.4 181.4 181.4 199.3 199.3 250.3 250.3 287.8 287.8
Pensions 117.1 160.6 160.6 160.6 176.5 176.5 194.2 194.2 244.4 244.4 281.0 281.0
Other CFS 3.3 4.7 4.8 4.8 4.9 4.9 5.1 5.1 5.9 5.9 6.8 6.8
Contribution to Civil Service Pension Fund 29.6 28.5 28.5 28.5 31.3 31.3 34.4 34.4 45.7 45.7 49.2 49.2
Net Issues/Net Expenditure 1,234.1 1,302.7 1,360.0 1,352.2 1,382.2 1,362.2 1,486.0 1,446.0 1,702.4 1,702.4 1,981.6 1,981.6
O/W: Wages & Salaries 539.6 584.6 589.5 589.5 645.3 645.3 703.4 703.4 914.9 914.9 983.8 983.8
Free Secondary education 67.6 68.6 71.9 71.9 110.1 110.1 110.1 110.1 116.7 116.7 123.7 123.7
Free Primary Education 14.5 14.4 14.9 14.9 23.4 23.4 23.4 23.4 24.8 24.8 26.3 26.3
Junior Secondary School - Capitation 0.0
IEBC 19.9 4.6 4.3 4.3 6.9 6.9 6.9 6.9 7.3 7.3 7.7 7.7
Defense and NIS 172.2 183.3 192.4 190.8 170.0 170.0 170.0 170.0 176.8 176.8 183.9 183.9
Others 388.6 422.4 462.2 456.1 390.4 370.4 436.1 396.1 415.4 415.4 606.9 606.9
Ministerial Recurrent AIA 240.2 264.6 321.1 296.3 290.0 290.0 320.9 320.9 354.7 354.7 392.3 392.3
Development and Net lending 493.7 777.8 762.6 718.6 957.3 881.3 1,129.3 1,068.8 1,246.6 1,209.4 1,390.8 1,428.1
Domestically financed (Gross) 343.8 472.2 455.2 437.7 536.2 529.2 664.4 664.4 715.3 715.3 822.3 822.3
O/W Domestically Financed (Net)/NMS 264.5 322.3 305.5 288.0 339.3 332.3 446.4 446.4 469.2 469.2 544.6 544.6
Ministerial Development AIA 73.8 83.8 83.8 83.7 123.5 123.5 154.8 154.8 145.7 145.7 163.7 163.7
Foreign financed 137.6 280.6 277.6 251.1 390.0 321.0 431.7 371.2 512.7 475.3 554.0 591.4
Net lending 12.3 17.2 18.9 18.9 19.7 19.7 19.7 19.7 4.4 4.4 0.0 0.0
Equalization Fund 0.0 7.9 10.9 10.9 11.4 11.4 13.6 13.6 14.2 14.4 14.4 14.4
County Tranfers 415.8 429.7 423.9 423.9 444.0 438.9 472.9 452.9 552.0 552.0 590.3 590.3
Equitable Share 399.6 385.4 385.4 385.4 406.7 401.6 435.6 415.6 515.1 515.1 553.4 553.4
Conditional Allocation 16.2 44.3 38.5 38.5 37.3 37.3 37.3 37.3 37.0 37.0 37.0 37.0
Contingency Fund 0.0 2.8 1.2 1.2 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0
Fiscal Balance (commitment basis excl. grants) -860.5 -761.1 -934.0 -862.1 -849.5 -753.27020 -791.6 -673.6 -795.5 -761.1 -807.6 -844.9
Grants 23.1 42.2 47.4 47.4 49.3 49.3 53.2 53.2 68.6 68.6 73.8 73.8
Fiscal Balance (incl. grants) -837.4 -718.9 -886.6 -814.8 -800.2 -704.0 -738.4 -620.4 -726.9 -692.5 -733.8 -771.2
Adjustment to Cash Basis 37.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Fiscal Balance (incl. grants) Cash Basis -800.4 -718.9 -886.6 -814.8 -800.2 -704.0 -738.4 -620.4 -726.9 -692.5 -733.8 -771.2
TOTAL FINANCING 770.3 718.9 886.6 814.8 800.2 704.0 738.4 620.4 726.9 692.5 733.8 771.2
Net Foreign Financing 310.8 131.5 412.1 363.0 296.5 326.2 176.0 103.9 276.1 230.9 292.9 217.7
Disbuserments 548.2 607.1 978.7 996.0 626.2 670.1 602.8 542.4 663.7 626.4 717.2 754.6
Commercial Financing 102.2 270.0 175.1 175.1 151.0 151.0 166.1 166.1 182.7 182.7 200.0 200.0
O/W Export Credit 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Sovereign Bond & Other Commercial Financing 102.2 270 175.1 175.1 151 151.0 166.1 166.1 182.7 182.7 200.0 200.0
Total Project loans (AIA + Revenue) 136.2 271.6 263.4 236.9 377.6 308.6 415.4 354.9 481.0 443.7 517.2 554.6
o/w: Project loans (AIA) 74.2 149.1 148.7 134.7 263.0 203.0 289.3 233.5 307.6 291.9 330.8 364.8
Project Loans Revenue 62.0 122.5 114.8 102.3 114.6 105.6 126.1 121.4 173.4 151.8 186.4 189.8
Use of IMF SDR Allocation 42.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Programme Loans 266.9 65.4 540.2 583.9 97.6 210.5 21.3 21.3 0.0 0.0 0.0 0.0
Debt repayment - Principal -237.4 -475.6 -566.7 -633.0 -329.7 -343.9 -426.8 -438.5 -387.7 -395.5 -424.3 -536.9
Net Domestic Financing 459.5 587.4 474.5 451.7 503.7 377.7 562.4 516.5 450.9 461.6 440.9 553.5
Memo items
Gross Debt (Stock) 10,189.5 10,130.4 11,076.1 11,004.3 11,851.0 11,708.3 12,589.4 12,328.7 13,316.3 13,021.2 14,050.1 13,792.3
External Debt 5,357.4 5,065.6 5,769.5 5,720.5 6,066.0 6,046.7 6,242.0 6,150.5 6,518.1 6,381.4 6,811.0 6,599.1
Domestic Debt (gross) 4,832.1 5,064.7 5,306.7 5,283.9 5,785.0 5,661.6 6,347.4 6,178.1 6,798.3 6,639.7 7,239.2 7,193.2
Domestic Debt (net) 4,347.5 4,522.4 4,822.1 4,799.3 5,300.4 5,177.0 5,862.8 5,693.6 6,313.7 6,155.2 6,754.6 6,708.7
Financing gap -67.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Nominal GDP 14,274.4 16,290.3 16,131.5 16,131.5 18,015.2 18,015.2 20,002.3 20,002.3 22,180.5 22,180.5 24,594.5 24,594.5

Annex Table 3: Government Fiscal Operations, Percent of GDP
2022/23 2023/24 2024/25 2025/26 2026/27 2027/28
Budget Appr.
Prel. Act Proj. BROP 2023 BPS 2024 BROP 2023 BPS 2024 BROP 2023 BPS 2024 BROP 2023 BPS 2024
Estimates Suppl. I
TOTAL REVENUE 16.5 18.3 18.9 18.9 18.9 19.1 19.2 19.2 19.7 19.7 20.2 20.2
Ordinary Revenue 14.3 15.8 16.0 16.1 16.2 16.4 16.5 16.5 17.0 17.0 17.5 17.5
Income Tax 6.6 7.4 7.4 7.4 7.4 7.4 7.5 7.5 7.8 7.8 8.0 8.0
Import duty (net) 0.9 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.2 1.2 1.2 1.2
Excise duty 1.9 2.2 2.2 2.2 2.2 2.2 2.3 2.3 2.4 2.4 2.4 2.4
Value Added Tax 3.9 4.3 4.4 4.4 4.5 4.5 4.6 4.6 4.8 4.8 5.0 5.0
Investment income 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2
Other 0.8 0.7 0.7 0.8 0.8 1.0 0.7 0.7 0.7 0.7 0.7 0.7
Ministerial Appropriation in Aid 2.2 2.5 2.9 2.8 2.7 2.7 2.7 2.7 2.7 2.7 2.7 2.7
EXPENDITURE AND NET LENDING 22.6 23.0 24.7 24.2 23.6 23.3 23.1 22.5 23.3 23.2 23.5 23.7
Recurrent expenditure 16.2 15.6 17.3 17.1 15.8 16.0 15.1 14.9 15.2 15.2 15.5 15.5
Interest payments 4.8 4.8 5.7 5.7 5.4 5.6 4.9 4.9 4.6 4.6 4.4 4.4
Domestic interest 3.7 3.9 4.0 4.0 4.0 4.2 3.7 3.7 3.6 3.6 3.5 3.5
Foreign Interest 1.1 0.9 1.7 1.7 1.4 1.4 1.2 1.2 1.0 1.0 1.0 1.0
Pensions & Other CFS 0.8 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.1 1.1 1.2 1.2
Pensions 0.8 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.1 1.1 1.1 1.1
Other CFS 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Contribution to Civil Service Pension Fund 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2
Net Issues/Net Expenditure 8.6 8.0 8.4 8.4 7.7 7.6 7.4 7.2 7.7 7.7 8.1 8.1
O/W: Wages & Salaries 3.8 3.6 3.7 3.7 3.6 3.6 3.5 3.5 4.1 4.1 4.0 4.0
Free Secondary education 0.5 0.4 0.4 0.4 0.6 0.6 0.6 0.6 0.5 0.5 0.5 0.5
Free Primary Education 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Junior Secondary School - Capitation 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
IEBC 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
KRA 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2
Defense and NIS 1.2 1.1 1.2 1.2 0.9 0.9 0.8 0.8 0.8 0.8 0.7 0.7
Others 2.7 2.6 2.9 2.8 2.2 2.1 2.2 2.0 1.9 1.9 2.5 2.5
Ministerial Recurrent AIA 1.7 1.6 2.0 1.8 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6
Ministerial Recurrent AIA - NMS 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Development and Net lending 3.5 4.8 4.7 4.5 5.3 4.9 5.6 5.3 5.6 5.5 5.7 5.8
Domestically financed (Gross) 2.4 2.9 2.8 2.7 3.0 2.9 3.3 3.3 3.2 3.2 3.3 3.3
O/W Domestically Financed (Net)/NMS 1.9 2.0 1.9 1.8 1.9 1.8 2.2 2.2 2.1 2.1 2.2 2.2
Ministerial Development AIA 0.5 0.5 0.5 0.5 0.7 0.7 0.8 0.8 0.7 0.7 0.7 0.7
Foreign financed 1.0 1.7 1.7 1.6 2.2 1.8 2.2 1.9 2.3 2.1 2.3 2.4
Net lending 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.0 0.0 0.0 0.0
Equalization Fund 0.0 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
County Tranfers 2.9 2.6 2.6 2.6 2.5 2.4 2.4 2.3 2.5 2.5 2.4 2.4
Equitable Share 2.8 2.4 2.4 2.4 2.3 2.2 2.2 2.1 2.3 2.3 2.3 2.3
Conditional Allocation 0.1 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2
Contingency Fund 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Fiscal Balance (commitment basis excl. grants) -6.0 -4.7 -5.8 -5.3 -4.7 -4.2 -4.0 -3.4 -3.6 -3.4 -3.3 -3.4
Grants 0.2 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3
Fiscal Balance (incl. grants) -5.9 -4.4 -5.5 -5.1 -4.4 -3.9 -3.7 -3.1 -3.3 -3.1 -3.0 -3.1
Adjustment to Cash Basis 0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Fiscal Balance (incl. grants) Cash Basis -5.6 -4.4 -5.5 -5.1 -4.4 -3.9 -3.7 -3.1 -3.3 -3.1 -3.0 -3.1
TOTAL FINANCING 5.4 4.4 5.5 5.1 4.4 3.9 3.7 3.1 3.3 3.1 3.0 3.1
Net Foreign Financing 2.2 0.8 2.6 2.3 1.6 1.8 0.9 0.5 1.2 1.0 1.2 0.9
Disbuserments 3.8 3.7 6.1 6.2 3.5 3.7 3.0 2.7 3.0 2.8 2.9 3.1
Commercial Financing 0.7 1.7 1.1 1.1 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8
O/W Export Credit 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Sovereign Bond & Other Commercial Financing 0.7 1.7 1.1 1.1 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8
Total Project loans (AIA + Revenue) 1.0 1.7 1.6 1.5 2.1 1.7 2.1 1.8 2.2 2.0 2.1 2.3
o/w: Project loans (AIA) 0.5 0.9 0.9 0.8 1.5 1.1 1.4 1.2 1.4 1.3 1.3 1.5
Project Loans Revenue 0.4 0.8 0.7 0.6 0.6 0.6 0.6 0.6 0.8 0.7 0.8 0.8
Project Loans SGR _Phase I_ AIA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Project Loans SGR _ Phase 2A_AIA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Use of IMF SDR Allocation 0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Programme Loans 1.9 0.4 3.3 3.6 0.5 1.2 0.1 0.1 0.0 0.0 0.0 0.0
Debt repayment - Principal -1.7 -2.9 -3.5 -3.9 -1.8 -1.9 -2.1 -2.2 -1.7 -1.8 -1.7 -2.2
Net Domestic Financing 3.2 3.6 2.9 2.8 2.8 2.1 2.8 2.6 2.0 2.1 1.8 2.3
Memo items
Gross Debt (Stock) 71.4 62.2 68.7 68.2 65.8 65.0 62.9 61.6 60.0 58.7 57.1 56.1
External Debt 37.5 31.1 35.8 35.5 33.7 33.6 31.2 30.7 29.4 28.8 27.7 26.8
Domestic Debt (gross) 33.9 31.1 32.9 32.8 32.1 31.4 31.7 30.9 30.6 29.9 29.4 29.2
Domestic Debt (net) 30.5 27.8 29.9 29.8 29.4 28.7 29.3 28.5 28.5 27.8 27.5 27.3
Financing gap -0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Nominal GDP 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Annex Table 4: Summary of Expenditure by Programmes (Ksh Million)

Annex Table 4: Summary of Expenditure by Programmes (Ksh Million)…Contd

Annex Table 4: Summary of Expenditure by Programmes (Ksh Million)…Contd

Annex Table 4: Summary of Expenditure by Programmes (Ksh Million) …Contd








THE NATIONAL TREASURY AND ECONOMIC PLANNING
DECEMBER 2023

Draft 2024 Budget Policy Statement

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REPUBLIC OF KENYA

THE NATIONAL TREASURY AND ECONOMIC PLANNING

DRAFT 2024 BUDGET POLICY

SUSTAINING BOTTOM-UP ECONOMIC

To obtain copies of the BPS, please contact:

The National Treasury and Economic Planning

The document is also available on the website at: www.treasury.go.ke

Against this background, the Government continues to implement interventions

The agenda places special focus on increased employment, more equitable

Despite the challenging environment, we have noted significant success following

NJUGUNA NDUNG’U, CBS

DR. CHRIS KIPTOO, CBS

1 Draft 2024 Budget Policy Statement

2 Draft 2024 Budget Policy Statement

1.2 Core Pillars

3 Draft 2024 Budget Policy Statement

1.2.2 Transforming the Micro, Small and Medium Enterprise (MSME)

5. The Micro, Small and Medium Enterprise (MSME) Economy provides

4 Draft 2024 Budget Policy Statement

1.2.3 Housing and Settlement

1.2.3.1 Urban Housing

5 Draft 2024 Budget Policy Statement

6 Draft 2024 Budget Policy Statement

1.2.5 Digital Superhighway and Creative Economy

7 Draft 2024 Budget Policy Statement

8 Draft 2024 Budget Policy Statement

25. On the creative economy, the Government is committed in leveraging digital

9 Draft 2024 Budget Policy Statement

10 Draft 2024 Budget Policy Statement

1.3.1.4 Petroleum and E-mobility

11 Draft 2024 Budget Policy Statement

39. BETA identifies the adoption of electric mobility, or e-mobility, as a priority

1.3.2 Manufacturing Sector

43. To promote growth of the agro-processing sector, the Government will

12 Draft 2024 Budget Policy Statement

1.3.2.2 Leather and Leather Products

1.3.2.3 Building and Construction Materials

1.3.2.4 Garments and Textiles

1.3.2.5 Dairy Products

13 Draft 2024 Budget Policy Statement

1.3.2.6 Edible and Crop Oils

1.3.2.7 Tea and Coffee Sub-sectors

1.3.2.8 Sugar Sub-sector

14 Draft 2024 Budget Policy Statement

1.3.3 Blue Economy

1.3.4 The Services Economy

1.3.4.1 Financial Services

58. The Government continues to implement targeted interventions to strengthen

15 Draft 2024 Budget Policy Statement

16 Draft 2024 Budget Policy Statement

1.3.4.2 Tourism Sector

65. Tourism sector is a critical enabler of the Bottom-Up Economic

17 Draft 2024 Budget Policy Statement

1.3.4.3 Aviation Sector

67. The Government will continue to entrench Kenya’s position as regional

1.3.5 Environment and Climate Change

18 Draft 2024 Budget Policy Statement

1.3.6 Education and Training