President William Ruto in Othaya town on the final day of his Mt Kenya development tour on April 5, 2025.
The Parliamentary Budget Office (PBO has accused President William Ruto’s administration of evading its responsibility by forcing households to finance programmes such as affordable housing, universal health, social security and university education.
The PBO—which advises lawmakers on economic and budget affairs— said that the extra money from taxpayers is constraining demand for goods and services and stifling the country’s economic growth amidst falling employment and real wages, in both public and private employment.
“Although not explicitly stated as a government policy, there has been a noticeable trend of transferring the financial responsibility of government programmes indirectly onto households rather than financing them through conventional taxation,” said PBO in its analysis of the Budget Policy Statement for the 2025/26 financial year published by the National Treasury.
“This encompasses initiatives such as the affordable housing programme, the social health insurance fund, the new university funding model and proposed adjustments to the social security fund. These changes could potentially reduce household disposable income, thus adversely impacting aggregate demand,” it added.
The Higher Education Loans Board offices in Nairobi.
The previous government led by Uhuru Kenyatta had similar policies to boost access to affordable housing, universal healthcare, social security, and tertiary education, but were mostly financed from public coffers.
President Ruto’s first policy shift after taking office was to increase the National Social Security Fund (NSSF) deductions by over 10-fold from a flat rate of Sh200 to a maximum of Sh4,320 depending on income level.
Then came the new university funding model that not only increased the fees for higher learning institutions but also forced parents to pay most of the charges from their pockets or take loans from the Higher Education Loans Board (Helb) to fund their children’s university studies.
This was a shift from the previous model in which the government shouldered most of the higher education fees and the money from Helb, was mostly used just for the students’ upkeep.
Last year, parliamentarians passed the Affordable Housing Act which effectively rolled out a 1.5 percent income-affordable housing levy, matched by employers, further increasing the financial burden on households.
An affordable housing project in Ngara, Nairobi, on December 4, 2020.
In addition to the hit on households, the mass rollout of affordable housing projects has also stalled private investments in the construction industry and generally slowed down the sector.
“The anticipated active role of public investment in the construction industry may have slowed down private investments in the sector, thereby reducing the overall contribution of the sector to the GDP,” said PBO.
In most countries across the globe, such programmes are financed through tax revenues in partnership with private firms.
To add more economic pain, the government introduced the Social Health Authority to replace the National Health Insurance Fund, whose premiums are more expensive for the working population.
While universal health coverage and social security are solely funded through taxes, a direction that the Ruto government seems to be deviating from.
