In a concerted effort to revitalise Kenya’s economy, the Kenya Private Sector Alliance (KEPSA) has joined hands with the Kenya Investment Authority (KenInvest) to address the pressing challenges hindering business growth. Recently, a high-level roundtable at Nairobi’s Serena Hotel centred on fostering a supportive environment for sustainable economic development.
Chris Kiptoo, Principal Secretary for the National Treasury, highlighted the fundamental role of a stable business landscape in stimulating job creation and boosting government revenue. He emphasised the government’s aspiration to curtail the fiscal deficit from 8.3% in 2021 to a targeted 4.5% by the 2025/26 financial year, with strategies focusing on enhanced tax compliance and the transition to digital systems for procurement. The introduction of an e-procurement platform, launched in April 2025, aims to bolster efficiency and transparency within public finances, ultimately reducing procurement costs by up to 15%.
Dr. Kiptoo’s remarks reflect Kenya’s gradual economic recovery, underpinned by a notable decline in inflation—from 9.6% in late 2022 to just 2.7%—and a stabilised Kenyan Shilling against the US Dollar. He noted the significant progress made, attributing it to prudent fiscal measures including a successful Eurobond buyback earlier in the year. With foreign exchange reserves reported at USD 9.7 billion, equating to nearly 5 months’ worth of imports, and remittances soaring by 14.5% to USD 4.96 billion, the country’s economic prospects appear to be gradually improving.
However, the journey towards fiscal stability has not been without challenges. Kiptoo recognised that the rejection of the Finance Bill 2024 along with civil protests had a detrimental effect on revenue collection. Ordinary revenue fell short by Sh142.8 billion by March 2025, contributing to an overall shortfall of Sh161.9 billion. Responding to this fiscal pressure, the government aims to enhance fiscal discipline through a combination of targeted spending cuts and reforms that focus on operational efficiency in public financial management.
Furthermore, the government’s proposed 2025/26 budget reflects a cautious approach to tax policy. Following last year’s significant public unrest and protests against tax hikes, Finance Minister John Mbadi has confirmed that this year’s budget will refrain from introducing new taxes. Instead, the focus lies in strengthening tax administration—a move intended to raise an additional Sh25-30 billion.
The Finance Bill prioritises closing loopholes in tax collection rather than increasing tax rates, a shift intended to ease public discontent while simultaneously meeting fiscal requirements. However, the proposal to grant the tax authority access to private financial data to combat tax evasion has stirred concerns about individuals’ privacy rights. Historically, the government’s attempts to implement tax measures have faced backlash, particularly following protests in June last year that forced President William Ruto to withdraw substantial proposed tax increases.
The business community remains hopeful, as Carole Kariuki, KEPSA’s CEO, praised the government’s commitment to structural reforms. Kariuki reaffirmed that the private sector stands ready to support government initiatives, contingent on an improved operational climate that encourages investment and job creation. The roundtable concluded with a renewed pledge from both sectors to collaborate on policy reforms and bolstered regulatory frameworks designed to pave the way for long-term economic stability.
This commitment to partnership and reform reflects a consensus that only through joint efforts can Kenya surmount the economic hurdles it faces and secure a robust and prosperous future. In a broader sense, experts project that Kenya’s economy will grow by approximately 5.3% in 2025, bolstered by advances in agriculture and a resilient services sector. Such growth forecasts underscore the underlying optimism driving Kenya’s economic revival amidst the challenges of recent years.
As the government turns to digital solutions and seeks to reform tax policies, the focus remains on enhancing the business environment, ensuring investor confidence, and ultimately working towards a more sustainable economic framework.
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Source: Noah Wire Services
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