It was the Austrian-born American management guru, Peter Drucker, who coined the phrase “culture eats strategy for breakfast.” This famous quote suggests that no matter how brilliant a company’s strategy is, it will ultimately fail if the organisation’s culture—the shared values, behaviours and mindsets of its people—does not support it.
The phrase gained significant traction after being popularised by Mark Fields, a former president of Ford Motor Company, who used it in 2006 to emphasise the importance of culture in supporting the company’s turnaround strategy.
This popular phrase is likely to come alive in 2027 as the high-octane Kenyan political culture takes centre stage in the run-up to the general elections, which are expected to be highly competitive. Analysts fear that the fierce political activities could potentially undermine the fiscal consolidation strategy. Kenya’s fiscal consolidation strategy for the FY 2026/2027 is a growth-oriented plan that prioritises revenue mobilisation and expenditure optimisation to rationalise the skyrocketing public debt levels.
The current Budget Policy Strategy (BPS) outlines a framework totalling Sh4.7 trillion, with a forecast revenue target of Sh3.53–3.59 trillion, and a budget deficit targeted at 5.3–5.5 per cent of Gross Domestic Product (GDP). This translates to approximately Sh1.15 trillion.
The projected budget deficit financing mix shows a shift towards heavy reliance on domestic borrowing at about Sh890 billion–Sh924 billion, and external borrowing of approximately Sh225 billion. Out of the Sh4.7 trillion budget, the recurrent expenditure will gobble up approximately Sh3.46 trillion, while interest expenses on public debt repayments are expected to hit Sh1.2 trillion.
The external debt servicing cost is clearly unsustainable and probably explains the new focus on domestic borrowing at the expense of budget financing from offshore sources.
Development expenditure is estimated to consume about Sh749.5 billion, mainly to support the Bottom-Up Economic Transformation Agenda (Beta) initiatives. In terms of sectoral expenditure, education will receive the largest share (about 27 per cent). This fiscal consolidation strategy became necessary when the country began to tinker precariously at the verge of insolvency in late 2022, with public debt rising to about 67 per cent of GDP, and taking up nearly 70 per cent of ordinary revenue (income tax, VAT, Customs duty and Excise).
The strategy, therefore, aims to stabilise the struggling economy and ensure long-term sustainability through rebuilding fiscal buffers to reduce debt vulnerabilities and strengthen domestic revenue mobilisation. A key priority in domestic revenue mobilisation is to shift towards data-driven, intelligent and digitalised tax administration to achieve tax-base expansion without necessarily introducing new taxation measures.
On the expenditure side, the strategy aims to rationalise non-essential spending and adopt zero-based budgeting to eliminate budgeted corruption and wasteful expenditure. To achieve economic transformation and foster inclusive growth and shared prosperity, the strategy aims to directly fund Beta pillars (agriculture, MSMEs, housing, healthcare and digital innovation).
Unfortunately, forecasts are showing that the scheduled 2027 general elections present significant risks to the government’s fiscal consolidation effort. Experience shows that general elections in the country are typically characterised by continuous, intense and mostly aggressive political activity, reflecting the winner-takes-all architecture of the Constitution. In the forthcoming election, public discourse is likely to be charged, fuelled by high-stakes competition, vibrant ethnic mobilisation and heightened emotions.
The “Tutam” versus “Wantam” political sloganeering is expected to rent the air, driven by voter bribery and material incentives rather than competing ideas. The country is already gearing for a “perpetual political mood,” which is likely to endure up to the end of the 2027 election cycle, with a real possibility of fierce contestation of the presidential poll outcome. This could push economic uncertainties beyond August next year.
Analysts are already forecasting that politicians will inject into the economy a whopping Sh300 billion in campaign cash. Large cash injections into the economy can distort markets and increase inflationary risks. Besides, no government can afford to go into a campaign period with high commodity prices.
Should the war in Iran continue into 2027, the government will most certainly consider subsidies to reduce prices of basic commodities, including fuel. Subsidies have the long-term effect of re-allocating money away from productive sectors in order to support consumption.
Most of the tax revenues will thus be channelled to producers (mostly foreigners) and middlemen. Consequently, GDP will shrink or be stunted due to lack of adequate investments, compromising revenue collection and exacerbating the public debt and fiscal consolidation situation.
In addition, the government has started front-loading election costs from 2025/2026 across three fiscal years to avoid a massive shock in 2027. Analysts are further warning that the political pressure already building is likely to lead to “electoral survival” spending at the expense of fiscal discipline.
This could potentially push the fiscal deficit beyond the forecast 5.5 per cent of GDP, forcing the country to seek external support for budget financing. Such a situation could throw the fiscal consolidation strategy off-tangent. Consequently, the credit rating will suffer, returning the country to the periphery of the junk zone, where external credit will become more expensive (syndicated commercial loans).
Furthermore, small businesses, which are the engines of growth in Kenya, could be crowded out of credit access due to elevated domestic borrowing by the government to fund both the fiscal deficit and election-related activity. Consequently, unemployment is likely to worsen, resulting in constricted tax revenues from business income and personal income tax (PIT) sources.
There is a lot of work well cut out for Cabinet Secretary John Mbadi and his team at the National Treasury. How they juggle the fiscal ball will determine whether the country will come out of the 2027 general election badly bruised or barely scratched.
Professor Ongore is a Public Finance and Corporate Governance Scholar based at the Technical University of Kenya. [email protected]
