The draft Budget Policy Statement for the 2026/27 financial year shows President William Ruto has concentrated government spending on four key sectors that anchor his economic and social agenda.
Treasury figures indicate that housing, education, health, and infrastructure will together consume Sh1.66 trillion out of the Sh2.88 trillion total budget for the year beginning July 1, 2025.
According to the draft document, which is yet to be submitted to Parliament, the allocations place heavy emphasis on development while maintaining large recurrent budgets to support ongoing programmes across the four sectors.
Health has been allocated Sh167.4 billion, with Sh136 billion set aside for recurrent expenditure and Sh31.4 billion for development. The Treasury says the funding will support the employment of Community Health Promoters and the ongoing enrolment of Kenyans into the Social Health Authority.
By 2025, more than 27 million people had been registered under the new health system, compared to fewer than nine million members previously covered by NHIF. The government says over 21 million of those enrolled are new members, representing growth of more than 200 per cent.
“Over the medium term, the government plans to complete enrolment of all eligible Kenyans in the Social Health Authority, targeting 35 million people,” the draft BPS states.
The policy document further outlines plans to strengthen healthcare delivery through the expansion of Primary Healthcare Networks across all 47 counties.
“The government also intends to expand Primary Healthcare Networks in all 47 counties, integrating community health units, health centres and hospitals into coordinated systems that provide a continuum of care.”
The networks are expected to improve referrals and promote coordinated care at community level. Planned investments include construction of new health facilities, upgrading and equipping existing centres with modern medical equipment, and rehabilitation of hospitals.
The Treasury notes that 107,831 Community Health Promoters have already been deployed to support 8.8 million households, while 228 Primary Healthcare Networks have been established nationwide, against a target of 315.
“Community health services will be strengthened through expansion of the Community Health Promoter workforce to 120,000 CHPs receiving monthly stipends, ensuring at least two CHPs serve each community health unit,” the report states.
Housing has been allocated Sh139.3 billion, with development accounting for Sh133.6 billion and recurrent expenditure set at Sh5.7 billion. The government plans to establish 15 Constituency Appropriate Building Materials and Technologies centres aimed at supporting affordable housing delivery.
“These centres will promote the use of locally sourced, climate-appropriate building materials and provide technical training in modern construction methods,” the draft Treasury document says.
The housing programme also includes construction of 506 markets to strengthen local trade and improve commercial infrastructure.
In addition, the government plans to continue developing satellite towns and rolling out urban renewal programmes in major cities to ease congestion and promote planned urban growth.
The Treasury further states that the Housing Fund will be strengthened through expansion of the Boma Yangu affordable mortgage product, partnerships with lenders to offer long-term low-interest loans, and the disbursement of Sh1 billion in rural housing loans.
“The Kenya Mortgage Refinance Company has been pivotal in this process, disbursing Sh21.4 billion by August 2025 and unlocking more than 4,500 affordable home loans across 39 counties,” the BPS states.
“Reduced interest rates for refinanced mortgages – 10 per cent compared with a commercial average of 16.2 per cent in 2024 – have made home ownership more affordable for low- and middle-income households.”
The government says 214,057 housing units are currently under construction across all 47 counties.
Education has received the largest allocation at Sh767.3 billion. Of this amount, Sh737.2 billion has been set aside for recurrent spending, while Sh30.1 billion will fund development projects. Technical and Vocational Education and Training has been allocated Sh39.8 billion, including Sh32.7 billion for recurrent expenditure and Sh7.1 billion for development.
Higher education and research will receive Sh155.2 billion for recurrent spending and Sh4.9 billion for development, while Basic Education has been allocated Sh119.7 billion for recurrent costs and Sh16.1 billion for capital projects.
The Teachers Service Commission will receive Sh422.2 billion for recurrent expenditure and Sh742 million for development.
The government says it is prioritising the rollout of Competency-Based Education and Training from Grade Nine through TVET and university levels as the country transitions from the 8-4-4 system to the 2-6-3-3-3 education structure.
Plans also include construction of specialised Junior Secondary School classrooms and training of 50,000 teachers on competency-based teaching methods.
“To achieve optimal teacher–pupil ratios, the government will recruit 30,000 additional teachers, with priority given to Science, Technology, Engineering and Mathematics and technical subjects,” the draft report states.
“Classroom infrastructure will be expanded through construction of 20,000 new classrooms and rehabilitation of 15,000 existing classrooms to eliminate overcrowding.”
Under TVET, the government plans to establish 100 new centres equipped with modern tools and industry-aligned courses, targeting training of 200,000 youths every year. The Treasury also plans to expand the school feeding programme to reach three million learners in arid and semi-arid counties.
Infrastructure, energy and ICT have been allocated Sh193.9 billion, with Sh151.6 billion for recurrent expenditure and Sh42.3 billion for development. Priority areas include construction of water pans, small, large and mega dams, irrigation systems, expansion of road and transport networks, clean energy generation and distribution, and oil and gas exploration.
In the roads sector, the government is targeting construction of 1,891 kilometres, rehabilitation of 515 kilometres, and periodic maintenance of 1,224 kilometres of roads.
