The Elephant in Kenya’s Budget Is Not Revenue but Leakage
Here is a number that should stop every Kenyan taxpayer cold, and it comes straight from the government’s own ledger. In the nine months to March 2026, for every Sh100 the national government actually paid out, nearly Sh46 went to debt servicing, about Sh40 to recurrent costs such as salaries and day-to-day operations, and less than Sh10 to development.
Fewer than Sh10 in every Sh100 built anything new — a clinic, a classroom, a kilometre of road. Almost half went straight to creditors. These figures are not drawn from opposition rhetoric or activist estimates. They come from the National Treasury’s own Statement of Actual Revenues and Net Exchequer Issues as at 31 March 2026, the document the constitution requires it to publish.
They explain a contradiction that confuses many Kenyans: how a country can tax its formal workers so visibly, and yet deliver so little that anyone can point to. The answer, uncomfortable as it is, lies in two holes through which public money disappears. The first is large and legal. The second is larger and is not.
Start with the legal drain. The national budget this year is roughly Sh4.3 trillion, and the overwhelming majority goes to running costs rather than building anything — salaries, pensions, day-to-day operations and, above all, repaying old loans. Debt servicing alone consumed nearly Sh46 of every Sh100 the government released in the nine months to March. When the state picks up your shilling, close to half of it walks straight back out to banks and bondholders before it touches a single public service. That is the product of years of borrowing to cover gaps that were never closed.
Now the larger hole, the one the state prefers not to name. The Ethics and Anti-Corruption Commission, in its 2024 report, estimated that Kenya loses Sh608 billion every year to corruption — roughly Sh8 out of every Sh100 the entire economy produces. The EACC is not a hostile witness. It is the state’s own institution, established by law, reporting on its employer.
The African Development Bank, working independently, puts outright corruption losses lower, at Sh194 billion a year. But it adds two categories the EACC omits. General waste and inefficiency in public spending — not theft as such, but money that produces no value — costs at least Sh650 billion annually. Tax exemptions handed to politically connected interests cost a further Sh105 billion in revenue never collected in the first place.
The Auditor General supplies the granular detail. Of Sh515 billion allocated to flagship projects between 2019 and 2024, the Auditor found that Sh304 billion — nearly 60 per cent — was simply never spent. It sat idle in accounts while the loans that funded it kept accruing interest. The IMF reports that nearly half of the country’s more than 1,000 active government projects are stalled, and that finishing them would now cost an additional Sh1 trillion.
Individual cases reinforce the pattern. Kenya Power sits under audit query for Sh49 billion in inflated, unexplained and irregular payments. Wajir county was found by the Auditor General to have run up over Sh1.5 billion in unaccounted expenditure and Sh825 million in irregular procurement. The Mombasa Gate Bridge, announced in 2019 and budgeted at Sh49 billion, had spent under a billion four years on, leaving more than Sh48 billion untouched while the project sat as a hole in the ground.
Now put the numbers side by side. The state says it must borrow about Sh923 billion this year to cover the gap between what it spends and what it collects. The EACC’s corruption figure alone — Sh608 billion — is two-thirds of that borrowing gap. Add the AfDB’s separate waste figure of Sh650 billion and the leakage exceeds the gap twice over. Recovering even a third of what is lost each year would close the borrowing gap entirely. Recovering half would double development spending.
The conclusion is unavoidable. Kenya does not have a revenue problem. It has a leakage problem the size of its borrowing gap. Every new loan, every new tax, every levy presented as unavoidable, is in effect financing the leak rather than development. The state borrows because it leaks, not because it taxes too little.
How does Kenya compare globally? Badly. The world loses about five per cent of its output to corruption. Kenya, on its own institution’s count, loses eight. Transparency International’s 2024 index ranks Kenya 121st out of 180 countries, scoring 32 out of 100, where higher means cleaner. The sub-Saharan African average is 33. The global average is 43. Kenya scores below both, and over five years has moved a single point. On the newer 2025 index, it slipped further still, to 30.
Strip the argument down to the transaction every Kenyan can feel. You hand the state Sh100. Nearly Sh46 goes straight back out to creditors. Most of the rest pays salaries and keeps the lights on. Less than Sh10 is left to build anything you could ever see, use or stand on. The bucket is not too small. It is almost all holes. And no amount of new water poured in at the top will fill a bucket that no one is willing to repair at the bottom.
Image Source: GHANAMMA
