Kenya is facing a turning point in its economic strategy as Treasury Cabinet Secretary John Mbadi emphasizes the need for greater self-reliance in light of reduced foreign aid. Following the recent suspension of U.S. assistance through USAID and expectations of a similar move from the European Union, Mbadi has stressed that Kenya must prioritize internal resource mobilization to navigate its financial challenges.
Speaking at the launch of the Anti-Corruption Strategic Guiding Framework for Kenya’s justice sector, Mbadi acknowledged the country’s strained fiscal space, largely due to past borrowing decisions. With external and domestic debt standing at approximately KSh 10 trillion, he highlighted the urgency of responsible financial planning and the importance of ensuring that key sectors, including justice, remain funded despite economic pressures.
“As we look at our priorities, I assure you that the justice sector will receive positive attention from the Treasury. However, things are not easy our fiscal space has no legroom anymore, especially as foreign countries like the USA have stopped funding us, and we soon expect the EU to follow suit,” Mbadi said.
Kenya recently opted out of the final review of its IMF lending program, a decision that has sparked debate about the country’s approach to external financing. While the move was seen as a break from strict financial conditions, Mbadi clarified that Kenya continues to service its debts and remains focused on stabilizing its economy.
The shift away from foreign aid is expected to impact multiple sectors, particularly health and humanitarian initiatives that have long benefited from external funding. However, experts argue that this moment presents an opportunity for Kenya to enhance domestic revenue collection, streamline government spending, and create sustainable economic policies that reduce long-term dependence on external support.
As Kenya prepares for a future with less foreign assistance, policymakers and economic strategists are now focused on crafting innovative solutions to ensure stability, growth, and fiscal responsibility in the years ahead.
