The National Treasury and Economic Planning Cabinet Secretary John Mbadi (centre) with youths during a public engagement process on the Budget and the Finance Bill 2026 at Asyana Gardens in Rongai, Kajiado county on May 14, 2026.
Today’s commemoration of 64 years of self-governance is overshadowed by anxieties over the Finance Bill, which place Kenya on the horns of a dilemma — between taxation and debt.
Debt servicing is consuming an alarming share of national income, yet government needs revenue. Taxes are rising faster than productive capacity. Citizens are being squeezed harder not because the economy is booming, but because it is struggling to sustain accumulated obligations.
Kenya is faced with three choices: to grow fast enough to outpace debt, restructure the debt, or tax citizens more.
The latest Economic Survey says Kenya’s exports crossed the Sh1 trillion mark for the first time. Government is chuffed, as it should be.
But what does Kenya actually export? Over 60 years after independence, the country still earns much of its foreign exchange from farm produce and transit trade. Tea remains among the country’s largest export earners while flowers and horticulture continue to sustain foreign exchange inflows.
Coffee survives despite decades of neglect, while apparel exports depend heavily on preferential access to the American market. Petroleum products passing through Kenya into neighbouring countries are also increasingly boosting export numbers.
Undeniably, Kenya has built one of Africa’s most sophisticated commercial economies. Roads have expanded, ports are being modernised and fibre-optic infrastructure is spread across the country. Nairobi is a regional banking and logistics hub, complete with innovative mobile phone money transfers.
Low-value commodities
Much of the recent increase in exports can be attributed to re-exports, especially petroleum products routed through Kenya to neighbouring states. Being a corridor for goods is not the same as being a powerhouse of factories. A bus station is economically active but it does not produce cars.
The Economic Survey contains many authentically impressive statistics, particularly in ICT, financial services, tourism and remittance inflows. Yet the same report exposes the republic’s deepest contradiction: Kenya has modernised circulation faster than production.
The country moves goods efficiently, processes transactions rapidly and taxes citizens aggressively. The manufacture of complex products, competitively and at scale, is still a dream deferred.
Conversely, Kenya continues to export relatively low-value commodities while importing many of the goods required for modern industrial life. The country ships out coffee beans and air freights instant coffee back in.
Similarly, Kenya’s manufacturing story reveals both achievement and limitation. Much of local industry survives because the East African Community absorbs Kenyan products that might otherwise struggle under global competition. Uganda, Rwanda, South Sudan and Congo quietly sustain sectors that are regionally competitive but these are not globally formidable. It is still a regional navel-gazing economy.
The country imports goods worth Sh4 trillion while exporting comparatively low-value products. This makes the economy remain vulnerable to external shocks. Global instability quickly translates into domestic inflation, pressure on foreign exchange reserves and rising public anxiety.
It is against this backdrop that the country needs to discuss its debt situation. Kenya has borrowed heavily for infrastructure in the past 15 years before fully answering the question of what is being transported on the roads, waterways and railways. The country is a continental leader in renewable energy and has a transformative geothermal expansion programme. Yet manufacturers still complain about production costs while supermarket shelves are piled with imported products.
Domestic loans
The advanced infrastructure sits side by side with an underdeveloped production capacity. Every fiscal season introduces new levies justified in the language of patriotism and fiscal responsibility. Through the Finance Bill 2026, the government is attempting to fatten a cow by milking it more aggressively.
No society becomes prosperous by repeatedly transferring money from exhausted citizens into a state that is not able to generate sufficient productive momentum by focusing now on markets that remain empty as hawkers chase motorists and pedestrians on pavements.
The debt debate can no longer be avoided, and some of the radical proposals include an outright default. Debt default sounds like a reckless proposition, but Kenya is already midstream in crossing this river.
A gradual debt restructuring of domestic loans — the lion’s share of liability — is an option government must begin to aggressively explore.
Kenya cannot continue to borrow like Japan in order to build sheds for selling potatoes. Manufacturing, agro-processing and export competitiveness should become national obsessions rather than political punchlines.
Finally, the Executive and the Legislature must embrace austerity before demanding any further sacrifice from citizens.
Kenya’s is an advanced commercial hub sitting atop a relatively shallow productive base. The country has built the skeleton of modernity, but now it must manufacture the productive organs required to sustain it.
Failure to make this hard transition will keep the country as a mere toll station with strong Wi-Fi.
The writer is a board member of the Kenya Human Rights Commission and writes in his individual capacity. @kwamchetsi; [email protected]
