Kenya's economy at mid-term: Wins, struggles, and how they affect you

Prime Cabinet secretary for foreign and Diaspora Affairs Musalia Mudavadi addressed the media on 19, March, 2025. [ Jenipher Wachie, Standard] Kenya's economic recovery and key policy challenges took centre stage as the government conducted its Mid-Term Review, with Prime Cabinet Secretary Musalia Mudavadi emphasising growth, governance reforms, and improvements in social services. Speaking at the Kenya School of Government during the 1st National Development Implementation Committee (NDIC) meeting of 2025, Mudavadi outlined economic progress, citing an increase in GDP growth from 4.8 per cent in 2022 to 5.2 per cent in 2023, with further improvements projected for 2024. He highlighted a significant drop in inflation from 9.2 per cent in September 2022 to 3.5 per cent in February 2025, noting the positive impact on living costs and household incomes. "This has markedly reduced the cost of living and improved household incomes. Furthermore, the exchange rate has stabilised, and interest rates have fallen, improving credit access for the private sector," he stated. Reducing dependence on foreign financial aid The meeting also addressed the urgent need to reduce Kenya's reliance on external financial aid, particularly in light of shifting global economic conditions. Mudavadi pointed to the country's decision to terminate its multi-year programme with the International Monetary Fund (IMF), forfeiting Sh110 billion in budget and balance of payments support. "To bridge this gap, we must tighten our belts as we pursue a new IMF programme. There is a need for prudent resource management and tackling corruption, which remains the greatest existential threat to economic growth," said Mudavadi. To enhance governance, the PSC stated that the government has invited the IMF to conduct a Governance Diagnostic Assessment. Mudavadi revealed that an initial scoping mission has been completed, paving the way for a detailed governance review in June 2025 to identify systemic vulnerabilities and inform reforms. Challenges in Universal Health Coverage (UHC) implementation On Universal Health Coverage (UHC), Mudavadi acknowledged gaps in the rollout of the Social Health Authority (SHA). While 20.6 million Kenyans have registered, only four million have completed means testing, meaning 80 per cent of registered members cannot fully access benefits. "We are scaling up public communication and stakeholder engagement to ensure all Kenyans are fully onboarded onto the SHA platform," Mudavadi said. He also reaffirmed the government's commitment to settling Sh33 billion in historical National Health Insurance Fund (NHIF) debts, with Sh8.6 billion already paid. "Our endeavour is to restore services throughout the healthcare value chain while rethinking strategies for ensuring the long-term stability of the healthcare system. These include engaging members of parliament and county governments to build and equip more public health facilities and hire additional healthcare workers," he said. President William Ruto has assured that verified debts, starting with amounts below Sh10 million, will be cleared first to restore services. Affordable housing and job creation On affordable housing, Mudavadi reported progress in constructing 95,737 housing units, creating 200,000 jobs and generating Sh4.4 billion in business opportunities for small enterprises. He reaffirmed the government's commitment to building 250,000 houses annually, underscoring its impact on economic growth and equitable resource distribution. "Kenyans will see how much affordable housing stimulates economic growth and promotes equity and inclusivity," he said. Mudavadi stressed the need for closer engagement with citizens, acknowledging growing public expectations. "Kenyans remind us daily of our responsibility to deliver on our promises. We must engage more constructively with the people and persuade them to give us another term to realise our vision of an industrialised and prosperous Kenya," he said. The meeting, attended by top government officials, including the Head of Public Service and Principal Secretaries from all State Departments, served as a platform for assessing the Kenya Kwanza Administration's progress and challenges.

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