Kenya’s budget cuts hamper key development projects in health, housing and transport
From July to December 2024, the government allocated Sh320.6 billion for development projects but only spent Sh217.4 billion, resulting in a Sh103.2 billion shortfall.
In the first half of the 2024-25 fiscal year, the Kenyan government reduced its overall budget by Sh132.46 billion, from Sh3.981 trillion to Sh3.848 trillion, marking a 3.3 per cent decrease.
This reduction led to shortfalls in development spending, particularly affecting critical sectors such as health, housing, transport, and water.
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A National Treasury report revealed that from July to December 2024, the government allocated Sh320.6 billion for development projects but only spent Sh217.4 billion, resulting in a Sh103.2 billion shortfall.
The State Departments of Energy, Housing, Treasury, Economic Planning, Transport, and Water were the most affected, accounting for 88.8 per cent (Sh91.67 billion) of the underspending.
The State Department for Housing experienced the largest deficit, spending only Sh21.1 billion out of the Sh42.59 billion budgeted for development activities over the six months, missing the target by Sh21.48 billion.
This shortfall impacted key initiatives in housing development and affordable housing. Subsequently, the Treasury’s second supplementary budget reduced the department’s budget by Sh11.6 billion to Sh74.9 billion, with significant cuts affecting housing development and urban planning services.
The Treasury itself fell short by Sh18.5 billion in development spending, allocating only Sh7.7 billion of the planned Sh26.25 billion.
This underspending affected crucial health and financial services projects. The revised budget reduced funding for the treatment of tuberculosis (TB) cases from 85 per cent to 20 per cent and decreased the number of Kenyans to be tested for HIV from 7.6 million to 3 million.
“The change in current expenditure comprises additional funds to cater for shortfall in personnel emoluments, operations and maintenance, the Motor Vehicle Leasing Programme, and operations of the Kenya Revenue Authority,” reads the Treasury documents.
The State Department for Economic Planning underspent by Sh11.4 billion, implementing projects valued at Sh22.9 billion over the six months.
Similarly, the State Department for Transport, primarily responsible for railway projects, missed its development spending target by Sh15.27 billion.
It had planned to spend Sh16 billion but only utilized Sh726 million, leading to the scaling down or cancellation of projects like the construction of the Riruta-Lenana-Ngong Railway Line and the Longonot-Malaba Meter Gauge Railway Phase II.
The State Department for Water, overseeing major projects such as dam construction, underspent by Sh14.2 billion out of its six-month budget of Sh22 billion.
Budget revisions reduced the department’s allocation from Sh49.8 billion to Sh27.8 billion, resulting in the scaling down of the Thwake Multipurpose Dam project from a projected 95 per cent completion level to 80 per cent.
The State Department for Energy also faced a shortfall, spending just over half of its budgeted Sh22 billion, leading to a Sh10.7 billion underspend.
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