NAIROBI: IF you have been privileged to have the wisdom of elders in your upbringing, you will have encountered their wise words.
One of the insights I gained during my childhood, while raised in Tarakea at the border with Kenya and studying at Loonkitok Primary School on the Kenyan side due to a good neighbourhood and friendship, is that it is exceedingly challenging to teach a teacher who was once, as the student believed, highly intelligent, particularly when obstacles arise and the teacher’s self-assurance is tested.
In this context, it is challenging to advise Kenya on how to address economic challenges and manage its economy, particularly given the World Bank’s assertion that it is the tenth poorest country in the world and the numerous issues associated with corruption, as clearly documented in the national ethics and corruption survey report published in February 2025, the Afrobarometer report from the University of Nairobi, Kenya, and other chilling reports on the extent of bribery and inefficiency in public service delivery, as reported by some highly trusted and respected Kenyan social media outlets about what is unfolding in Kenya.
But given that we are all comrades and one, and having benefited from Kenyan formal education, which at one time was highly respected for producing some of the good leaders who sailed the Kenyan economy to glory, I am of the opinion that a brief lecture from a child who benefited from that kind of good education can assist Kenya in today’s environment to strategically reflect on and reorganise itself to continue developing its economy to help serve Kenyans better.
Despite the politics surrounding the 2027 general election and the fact that some politicians regard its constitution as the best new constitution ever written, the nation could face even more severe economic challenges and upheavals that, in my view, could affect the Kenyan economy and investments immensely.
As an economist, I am sure my fellow Kenyans and my learned brother in particular, would agree that the country’s fiscal challenges are closely linked to its overarching development objectives, as is quickly evident from the evaluation of the Public Finance Review for Kenya as of December 2025.
Since numbers don’t lie, rising debt and budget cuts are symptoms of a deeper issue. How Kenya mobilises, allocates, and converts resources into inclusive growth, productivity, and employment does not align with what we are used to, suggesting that sustaining the current trajectory of rising debt and fiscal slippage will be challenging and a tall order.
As an economist who has closely examined Kenya’s fiscal and development trajectory, I am persuaded that the restoration of economic stability need not come at the expense of opportunity.
If Kenya could avoid the politicisation of the economy, it would have the opportunity to realign its public finances and lay the foundations for increased productivity and additional employment. Kenya needs to recognise that fiscal policy should be viewed not only as a tool for balancing budgets but also as an instrument for building a more resilient, equitable economy that delivers tangible benefits for all Kenyans.
In my evaluation of Kenya’s public debt, although many would not like to discuss it openly, I have observed that it has risen to nearly 68% of GDP. Since numbers don’t lie, debt servicing now consumes over a third of government revenue, displacing essential development spending. In the interim, tax collections have fallen from 16.2 per cent of GDP in FY2016/17 to just over 14 per cent, despite approximately 800,000 new workers entering the labour force each year.
For my non-economist colleague, this implies that Kenya is currently experiencing economic tough times. The investment in infrastructure, education, and health, which are the fundamental building blocks of productivity growth and job creation, is restricted by the diminishing fiscal space.
After critically assessing the Bank of Kenya’s publicly available reports and the Kenya Economic Survey 2005- 2023, released by the Kenya Bureau of Statistics, total productivity growth shows stagnation between 2011 and 2019, and job creation has remained concentrated in low-productivity informal sectors despite significant public investment. Reading the corruption survey report can help you draw your own conclusions about what is actually happening in Kenya, contrary to what many hear at public rallies. Since 2019, for example, real salaries have fallen by more than 13%. Consequently, fiscal reforms must not only facilitate stabilisation but also stimulate employment and economic growth.
Source: Kenya Economic Survey, 2005-2023. Kenya National Bureau of Statistics.
For economists and those with an instinct for numbers and statistics, this figure tells it all. In a nutshell, Kenya is currently experiencing severe economic challenges, including a debt crisis, with debt servicing accounting for over 60% of tax revenue. All put together, from an economic viewpoint, this is a result of the country’s substantial dependence on high-interest commercial loans (Eurobonds), high infrastructure expenditures, and a depreciating shilling.
Unlike other EAC member states, Kenya is caught in a cycle of borrowing to repay old debt, further exacerbated by economic disruptions and declining revenue collection. I am not inclined to tell them what to do, but as brothers, this is the best way for me to guide them. First, resolving these challenges requires comprehensive and holistic reforms.
Kenya’s fiscal structure remains constrained by high interest rates, an inefficient transfer system to stateowned enterprises, and a substantial wage bill, leaving little room for social spending and productive investment. On the revenue side, Kenya needs to take action because the tax base has eroded and competitiveness has weakened due to numerous tax exemptions, compliance gaps, and inconsistent incentives.
To rebalance fiscal policy, it is necessary to redirect spending from consumption to investment, from generalised subsidies to targeted support, and from public dominance to private-sector dynamism. This also entails establishing credible institutions that foster trust. This process requires a more robust social contract. Citizens’ willingness to pay taxes depends on the transparent and equitable allocation of revenue. Trust will enhance compliance, reduce enforcement costs, and create opportunities for sustainable fiscal consolidation.
If I were to deliver a lecture to Kenyans, it would be imperative to emphasise that Kenya’s debt-to-GDP ratio could be reduced by over 15% points over time, while productivity and wage growth could be enhanced by strengthening governance and reducing leakages. This should be implemented alongside improvements in procurement, the resolution of conflicts of interest, and the suppression of corruption.
The private sector in Kenya must also be made more competitive. Investment may be discouraged by Kenya’s complex corporate tax structure, which can introduce distortions and inconsistent incentives.
It is imperative to mitigate fiscal risks associated with state-owned enterprises. These enterprises consume substantial fiscal resources without consistently delivering value. In competitive sectors, divestiture can clear the way for private investment; however, in strategic sectors, stronger governance and transparency are essential. Reducing contingent liabilities improves fiscal stability and service delivery. There is a need to transform urban fiscal policy. Kenya’s cities possess substantial latent potential to stimulate industrialisation and innovation. In my view, the potential of Kenya’s cities as vehicles for productive employment and innovation can be unlocked through a combination of improved urban infrastructure and expanded property and land taxation.
A sound message to our brothers is that Kenya should re-establish fiscal credibility by phasing out regressive exemptions, reducing discretionary expenditures, and restricting procurement. Restructuring state-owned enterprises, broadening the tax base, and reducing the wage bill are all components of medium-term reforms. The long-term sustainability of an organisation depends on integrating reforms into institutions that can withstand political cycles and preserve fiscal discipline.
If these measures are implemented, Kenya’s debtto-GDP ratio could fall to approximately 44 per cent by 2035, rather than continuing to rise under current trends, reflecting the sentiment that it is difficult for a pupil to instruct a teacher who once believed he was intelligent.
Real wages would also recover as workers transition to higher-productivity sectors, and growth would accelerate as a result of private investment and productivity gains. The most significant benefit would be Kenya’s ability to capitalise on its demographic dividend and to fortify social cohesion by providing improved employment opportunities that are currently absent due to misalignments.
It is crucial to bear in mind that Kenya is at a critical juncture: the 2027 general election is rapidly approaching, and rallies are gaining momentum on many social media platforms, spreading into churches. We all recall that thousands of young Kenyans took to the streets in June 2024 to reject the 2024 Finance Bill.
Young Kenyans, in my view, extended the appeal of tax policy. It was a call for the transparent and equitable allocation of public resources and for creating additional opportunities for young people. Unless drastic measures are taken, Kenya risks alienating a generation and deepening its debt if reform is not implemented. I believe fiscal reform can also create space for Kenya’s people, particularly its youth, whose eyes and ears are on how the government will strategically manage their affairs.