EXPLAINER: How Kenya plans to spend Sh4 trillion 2025/26 budget

The national government on Thursday, June 12, 2025, unveiled a Sh4.29 trillion budget for the 2025/26 financial year, with education, national security, and infrastructure emerging as the biggest beneficiaries.

Treasury Cabinet Secretary John Mbadi, addressing the National Assembly on Thursday, said the budget focuses on stimulating economic recovery and creating jobs under the Bottom-Up Economic Transformation Agenda (BETA), with continued investments in manufacturing, ICT, and the creative economy.

Mbadi said the 2025-26 budget captures the soul and spirit of Ruto’s economic plan, and reaffirms the priority policies and strategies aimed at stimulating economic recovery articulated in the Bottom-Up Economic Transformation Agenda.

“At its core, the budget for the upcoming financial year adopts a value chain approach, focusing on strategic investment in areas that generate the highest impact, particularly in job creation and income generation at the grassroots level,’’ he said.

Despite mounting debt concerns, Mbadi assured that Kenya’s public debt remains sustainable.

“In present value terms, we expect debt to decline from 63 per cent of GDP in 2024 to the target range of 55±5 per cent by 2028,” he noted.

To diversify funding sources, the government will also explore sustainability-linked bonds, diaspora bonds, and debt swaps.

As Kenya navigates a tough fiscal environment, Mbadi urged unity and discipline in managing limited resources.

“We must all pull in the same direction to secure long-term economic stability,” he said.

Here is a breakdown of where the money will go in the Financial year beginning July 1, 2025.

Agriculture and Food Security

-Sh10.2 billion National Agricultural Value Chain Development Project (NAVCDP);

-Sh 8.0 billion Fertiliser Subsidy Programme;

-Sh 5.8 billion Food Systems Resilience Project

-Sh 5.2 billion Blue Economy Priority Projects

-Sh3.8 billion Settlement of the Landless

-Sh2.3 billion De-risking, Inclusion & Value Enhancement of Pastoral Economies Programme

-Sh1.6 billion Kenya Livestock Commercialisation Programme

-Sh5 billion Sugar Reforms

-Sh1.2 billion Food Security and Crop Diversification Project

-Sh1.1 billion Processing and Registration of Title Deeds

-Sh0.9 billion Digitisation and Construction of Land Registries

-Sh 0.8 billion Small Scale Irrigation and Value Addition Project

-Sh 0.3 billion Towards Ending Drought Emergency in Kenya (TWENDE).

Housing and Urban Development and Public Works

The government committed to facilitating the construction of decent, safe and affordable houses for citizens of Kenya.

Through the Affordable Housing Programme, the Government is creating jobs for the youth directly in the construction sector and indirectly through the production of building products.

In the FY 2025/26 budget, Sh 120.2 billion has been allocated for the housing programme.

-Sh 64.5 billion Construction of Affordable Units

-Sh 16.5 billion Social and Physical Infrastructure

-Sh 13.4 billion Kenya Urban Support Programme

-Sh 10.5 billion Construction of Social Housing Units

-Sh 7.2 billion Kenya Informal Settlement Improvement Project – Phase II

-Sh 3.5 billion Institutional Housing

-Sh 0.45 billion Construction of County Headquarters

Health Sector

The government affirmed to promote access to quality and affordable healthcare through the Universal Health Coverage (UHC) programme, ensuring all Kenyans can receive the care they need without financial hardship.

In the FY 2025/26 Budget, the sector has been allocated Sh 133.4 billion:

-Sh 18.7 billion Kenyatta National Hospital

-Sh17.3 billion Global Fund (HIV, Malaria, TB)

-Sh 13.1 billion Primary Healthcare Fund

-Sh 10.8 billion Moi Referral and Teaching Hospital

-Sh8.0 billion Emergency, Chronic and Critical Illness Fund

-Sh 6.2 billion Universal Health Coverage Coordination and Management

-Sh 4.6 billion Vaccines and Immunisations Programme

-Sh 3.8 billion Reproductive, Maternal, Neonatal, Child & Adolescent Health Communities

-Sh 1.3 billion KNH Burns and Paediatrics Centre

-Sh 1.3 billion Construction and Strengthening of Cancer Centres

-Sh 1.1 billion Health Emergency Preparedness, Responses& Resilience Programme

-Sh 1.1 billion Building Resilience and Responsive Health System Project

Digital Superhighway and creative economy

The Government continues to invest in the Digital Superhighway and creative economy to boost productivity and competitiveness under the BETA agenda.

Enhanced ICT infrastructure and wider internet access are key goals, while the creative industry provides vital job opportunities for youth and helps tackle unemployment.

This thematic area has an allocation of Sh 12.7 billion in the FY 2025/26.

Allocations include:

-Sh 3.7 billion Kenya Digital Economy Acceleration Project

-Sh 3.1 billion Konza Data Centre & Smart City Facilities

-Sh 2.3 billion Construction of KAIST at Konza Technopolis

-Sh 1.4 billion Digital Superhighway, Government Shared Services and Digital Hubs

-Sh 1.0 billion Maintenance & Rehabilitation Connectivity Networks

-Sh 0.7 billion E-government Procurement.

Safety and well-being of its citizens

The government continues to ensure the safety and well-being of its citizens as a key enabler of economic advancement and national prosperity.

 Recognising the critical role, Sh464.9 billion has been allocated in the FY 2025/26 to support operations of the National Police Service, Defence, the National Intelligence Service and Prison Services.

Other proposed allocations include:

-Sh 10.0 billion Lease Financing of Police Motor Vehicles

-Sh 3.6 billion Police Modernisation Programme

-Sh 1.1 billion Construction and Modernisation of National Forensic facilities

Local industries

Sh 18.0 billion has been allocated under various implementing Ministries, Departments and Agencies.

Key proposed allocations to the sector include:

-Sh 4.5 billion Establishment of County Integrated Agro-Industrial Parks

-Sh 4.0 billion Coffee Debt Waiver and Coffee Cherry Revolving Fund

-Sh 2.8 billion Finance & Enterprise Recovery (SAFER) Project

-Sh 1.3 billion Rural Kenya Financial Inclusion Facility

-Sh 1.1 billion Development of SEZ Textile Park Naivasha and Athi River Textile Hub

-Sh 0.7 billion Flagship Export Processing Zone Hubs (EPZA)

Road Construction

The government will continue to invest in transportation networks in roads, railways and air travel to reduce travel time and logistics costs, making markets more accessible and facilitating the movement of goods and people.

A total of Sh 217.3 billion has been allocated in the FY 2025/26.

This includes:

-Sh 115.6 billion Maintenance of Roads

-Sh 70.8 billion Rehabilitation of Roads

-Sh 30.9 billion Construction of Roads and Bridges

Rail, Sea and Air Transport

The government continues to ensure national connectivity through rail and port infrastructure to open many areas to economic activities and spur growth in other sectors of the economy.

To improve rail transport and construction of ports, the following allocations have been proposed in the FY 2025/26:

- Sh 37.1 billion Rail Transport and Infrastructure

-Sh 0.6 billion Kenya Ferry Ramp in Mombasa and Acquisition of Ferries for Lake Victoria

-Sh 0.3 billion Nairobi Bus Rapid Transport Project

-Sh 0.3 billion Airstrips Construction/Expansion

-Sh 0.3 billion Promotion of E-Mobility Project

Reliable Energy Supply

The government has boosted energy access and clean power generation, added 774,000 electricity connections, and expanded infrastructure.

Plans include more renewables, oil field development, wider LPG use, and accelerating the shift to electric mobility to cut emissions and improve transport.

The sector has been allocated Sh 62.8 billion in FY 2025/26 as follows:

-Sh 31.6 billion National Grid System

-Sh 16.3 billion Rural Electrification

-Sh 11.5 billion Geothermal Generation

-Sh 2.1 billion Alternative Energy Technologies

-Sh 0.7 billion Development of Nuclear Energy.

Environmental Protection, Water and Natural Resources

To safeguard natural ecosystems, ensure sustainable water use and tackle the impact of climate change, the following allocations have been set aside for the FY 2025/26:

-Sh 60.5 billion Expand Access to Clean and Adequate Water for Domestic and Irrigation

-Sh 13.2 billion Wildlife security, conservation and management.

-Sh 11.5 billion Kenya Financing Locally Led Climate Action Project

-Sh 10.7 billion Forest Resources Conservation and Management

-Sh 3.7 billion Environment Management and Protection

-Sh1.6 billion Forest Research and Development

-Sh 1.6 billion Meteorological Service;

-Sh 0.95 billion Wildlife Research and Development.

Quality and Relevant Education

The education sector plays a vital role in economic development by enhancing human capital, driving innovation and improving productivity.

In FY 2025/26, Sh658.4 billion has been allocated to the sector.

 Key allocations include:

-Sh 387.2 billion Teachers Service Commission

-Sh58.5 billion Higher Education Loans Board (HELB) and University Scholarships

-Sh 58.9 billion Free Primary and Day Secondary Education

-Sh 28.9 billion Junior Secondary School Capitation

-Sh 13.3 billion Kenya Primary Education Equity in Learning

-Sh 7.7 billion Capitation and Scholarships for TVET

-Sh 5.9 billion School Examination

-Sh 3.0 billion School Feeding Programme

-Sh 2.3 billion Kenya Secondary Education Quality Improvement Project

-Sh 0.7 billion Infrastructure Development in Primary and Secondary Schools

Protection for Vulnerable Groups

The government continues with programmes aimed at protecting the vulnerable segment of our society.

In FY 2025/26, Sh 41.3 billion has been set aside for social protection and affirmative actions.

These allocations include:

-Sh 25.1 billion Cash Transfers to Elderly Persons

-Sh 8.9 billion Cash Transfers to Orphans and Vulnerable Children

-Sh 3.9 billion Kenya Hunger Safety Net Programme

-Sh 1.5 billion Cash Transfer to Persons with Severe Disability

-Sh 0.6 billion National Funds for the Disabled

-Sh 0.6 billion Child Welfare Society of Kenya

-Sh 0.1 billion Presidential Bursary for the Orphans.

Equity, Poverty Reduction, Women and Youth Empowerment:

To empower the youth and support businesses owned by youth and women, Sh 105.6 billion has been allocated in FY 2025/26 for these initiatives:

-Sh 9.9 billion National Youth Service

-Sh 3.6 billion National Youth Opportunity Towards Achievement (NYOTA)

-Sh 0.8 billion Kenya Jobs Economic Transformation (KJET)

-Sh 0.6 billion Promotion of Youth Employment and Vocation Training in Kenya

-Sh 0.35 billion Women Enterprise Fund

Regional Equity

To promote regional equity, reduce poverty and enhance social development, the FY 2025/26 budget has set aside:

-Sh 58.8 billion National Government Constituency Development Fund (NG-CDF)

-Sh 15.9 billion Kenya Devolution Support Programme No. II

-Sh 9.6 billion Equalisation Fund

-Sh 4.0 billion National Government Affirmative Action Fund (NG-AAF).

Micro, Small and Medium Enterprises (MSMEs)

To address this challenge, the Government is enhancing access to finance by increasing support for key interventions.

In the FY 2025/26, Sh 0.3 billion has been allocated to the Financial Inclusion Fund, popularly known as the Hustler Fund

To scale up access to credit for households and MSMEs, Sh 0.3 billion for the Youth Enterprise Development Fund and Sh 0.6 billion for the Centre for Entrepreneurship Project.

Some Sh 1.3 billion was allocated for the Rural Kenya Financial Inclusion and Sh 0.2 billion for the MSME Agricultural Credit.