The National Government has revealed that Kenya could soon face limited external funding from development partners.
In the National Development Implementation Committee (NDIC), chaired by Prime Cabinet Secretary Musalia Mudavadi on Wednesday, March 26, it was noted that Kenya was entering a phase where there could be no funding from external partners.
Consequently, Ministries and State Departments were advised to ensure that current projects being implemented through external funding have a clear plan for completion.
The meeting indicated that Kenya would have to be self-reliant as a result.
"Kenya is entering a phase of limited external funding or no external funding at all. NDIC directed MDAs to develop draw-down plans for the completion of development partner-funded projects even as strategies are put in place for self-sufficiency," read the dispatch in part.
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What That Means
With limited funding from the external market, the government could be forced to look for ways to raise revenue from the country itself.
As a result, the government could explore this through taxation and review of the budget to prioritise key development projects.
Notably, this announcement comes even as the country prepares to usher in a new financial year, which includes the Finance Bill 2025 - which will outline tax measures to finance the 2025/2026 budget.
While the bill is expected to contain various tax adjustments, Treasury CS John Mbadi noted that the adjustments would not be major.
"Take it from me, we are not increasing VAT at all. Actually, the Finance Bill of this year may not have tax adjustments upwards in terms of rates," Mbadi stated during a public engagement in Nairobi in February.
In recent years, the government, including President William Ruto's administration, has relied on external funding, including loans, to undertake various development programmes.
However, owing to Kenya's debt status, the country can no longer afford to borrow more. Currently, Kenya's debt stands at Ksh11 trillion (Ksh5.93 trillion for domestic and Ksh5.09 trillion in foreign debt).
At the same time, a shift in global policies has seen countries withdraw funding for some projects. For instance, US President Donald Trump froze the USAID funding, pending a review of the programmes.
According to CS Mbadi, USAID was funding various development programmes in the country to the tune of Ksh52 billion.
