Kenya’s economy is projected to expand to 5.3 per cent in 2026, signalling a strengthening recovery supported by improved macroeconomic stability and renewed growth in key sectors such as agriculture, construction, tourism, transport and financial services.
The outlook, outlined by the National Assembly’s Budget and Appropriations Committee, reflects growing confidence in the country’s economic direction after growth stood at about 4.7 per cent in 2024.
According to the committee, government revenue for the 2026/27 financial year is expected to reach KSh3.588 trillion, representing 17.1 per cent of GDP. The increase is attributed to ongoing reforms in tax administration, improved compliance and the continued digitalisation of revenue collection systems aimed at strengthening Kenya’s fiscal independence while reducing reliance on borrowing.
Total government expenditure is projected to rise to KSh4.74 trillion, an increase of more than KSh435 billion from the previous fiscal year. The additional spending will prioritise sectors considered critical to economic productivity and citizens’ welfare, including education, healthcare, infrastructure, agriculture and national security.
The committee also highlighted the Affordable Housing Programme as a major driver of job creation and economic activity. Beyond addressing Kenya’s housing deficit, the programme is stimulating growth in the construction sector while generating employment across supply chains and supporting urban development.
In addition, the government plans to accelerate industrialisation through the establishment of 47 County Aggregation and Industrial Parks (CAIPs) across the country. The parks are expected to promote value addition, support agro-processing, reduce post-harvest losses and create employment opportunities closer to rural production zones.
Infrastructure development remains a central pillar of the government’s economic strategy. Continued investments in roads, electricity generation, irrigation systems and logistics networks are expected to lower the cost of doing business, improve connectivity and strengthen Kenya’s position as a regional economic hub.
The country also plans a significant expansion of its electricity generation capacity, targeting an additional 10,000 megawatts from geothermal, solar, wind and hydropower sources. The move is expected to support industrial growth, enhance reliability of electricity supply and reinforce Kenya’s leadership in renewable energy development in Africa.
Meanwhile, inflation has remained relatively stable at about 5 per cent, within the Central Bank’s target range. Stable prices are expected to protect household purchasing power and create a more predictable environment for businesses and investors.
To support grassroots entrepreneurship, the government continues to expand access to financing for Micro, Small and Medium Enterprises (MSMEs) through programmes such as the Hustler Fund, Youth Enterprise Fund, Women Enterprise Fund and the NYOTA initiative. These programmes aim to unlock credit for entrepreneurs who traditionally face barriers in accessing formal financial services.
Under the proposed fiscal framework, county governments are set to receive KSh420 billion as equitable share allocation to support devolved services and local economic development.
The government is also targeting a fiscal deficit of 5.3 per cent of GDP, part of a broader strategy aimed at stabilising public debt while maintaining development spending.
Read: Treasury Projects 5.3% Growth as Mbadi Tables 2026 Budget Policy Statement
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