Spending on development projects in the nine months of the current financial year dipped to an 11-year-low following a 17.69percent year-on-year cuts, slowing down economic activity such as job creation opportunities.
State Ministries, Departments, and Agencies (MDAs) spent Sh170.83 billion on development projects between July and March 2025, disclosures by the National Treasury show, compared with Sh207.55 billion in the same period a year earlier.
That marked the slowest spending directly from the government’s main account, the exchequer, since the financial year ended June 2024.
This came in a year when President William Ruto’s administration made a couple of cuts on the development budget because of below-target revenue performance and the emergence of unbudgeted “priority expenditure” since the year began, resulting in stalled projects.
"Since the approval of the financial year 2024-25 budget, the National Treasury has received additional requests for funding to cater for emerging priorities and shortfalls under critical expenditures," the National Treasury wrote in the second Supplementary Budget which was approved by lawmakers in February.
"Included in the financial year Supplementary Estimates No.II are additional expenditures to cater for salaries shortfall, security-related interventions, and drought-related expenditures, among other emerging priorities."
The State departments that were hardest hit by the expenditure rationalisation included Housing and Urban Development whose budget was slashed by Sh13.94 billion, Water and Sanitation (Sh8.73 billion), and Energy (Sh7.636 billion).
The Treasury data shows the absorption rate for the development budget stood at less than half (48.13 percent) of the total revised full-year budget of Sh354.93 billion, three months to the end of the financial year in June.
Economists say increased spending on development projects such as roads, water, power plants, housing, and electricity transmission lines lifts economic activities in a country whose growth largely depends on public expenditure on infrastructure projects, helping create new job opportunities and government taxes.
Cement makers, steel manufacturers, contractors and the thousands of workers employed in the infrastructure pipeline benefit from public spending and usually feel the pinch of a drop in public expenditure on development.
Since taking power in September 2022, the Ruto administration has come under sharp scrutiny for abandoning some of the projects initiated by the previous regime of Uhuru Kenyatta.
Development projects have been the main casualties of budget cuts as the Ruto administration seeks to realign expenditure through supplementary budgets to cater for programmes that were not approved amidst the perennial shortfall in revenue estimates.
This resulted in the spending on development falling below the legal threshold in the year ended June 2024 for the second time running.
Budget review documents showed that development projects made up a quarter of the total expenditure for the national government last fiscal year, short of the provisions of the Public Finance Management law.
The PFM Act requires the national and county governments to allocate at least 30 percent of their respective budgets to development projects over the medium term (about three to five years).
“The committee noted that the reduction in development expenditure has been consistent over the last three years. Indeed, development expenditure as a share of GDP reduced from an annual average of 6.3 percent between 2010 and 2020 to 3.2 percent in the financial year 2024/25 revised estimates,” the Budget and Appropriations Committee of the National Assembly said in a report tabled in the House earlier in the year.
