Nairobi — Education continues to receive the largest share of government spending among ministries, but critical funding gaps remain, particularly in school capitation and scholarships, Treasury Principal Secretary Chris Kiptoo has told Members of Parliament.
Speaking during the National Assembly leadership retreat Thursday, Kiptoo said the education sector will take up about 27 per cent of total ministerial allocations in the 2026/27 financial year, making it the single biggest beneficiary of funds available to ministries under the national budget.
However, he cautioned that despite the large share, the sector is still not fully funded due to mounting pressures from rising enrolment, expanding basic education programmes and limited fiscal space caused by high debt servicing costs.
"Education takes the largest chunk of what is available for ministries, but it is still not fully funded. There are issues around capitation that are not fully accommodated, as well as challenges in scholarships and other support programmes," Kiptoo said.
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According to the Treasury, while total government expenditure is projected at about Sh4.6 trillion, only about Sh2.8 trillion will be available for distribution to ministries after debt repayments, pensions and other Consolidated Fund Services are deducted.
The remaining Sh1.8 trillion, Kiptoo said, will be used to service external and domestic debt and meet pension obligations, significantly limiting resources available for service delivery across sectors, including education.
This has forced the government to prioritise recurrent obligations such as salaries and statutory transfers, while development spending continues to shrink. Treasury data shows that the share of the budget allocated to development projects has fallen to about 11.2 per cent, down from nearly 28 per cent in the 2016/17 financial year.
The pressure on education financing comes amid persistent complaints from schools over delayed and inadequate capitation, as well as rising costs linked to the implementation of the competency-based curriculum and increased enrolment at both primary and secondary levels.
Universities and technical institutions have also been grappling with funding shortfalls, leading to growing reliance on student fees and loans to cover operational costs, even as access to scholarships remains limited for students from low-income households.
Kiptoo told MPs that the government is increasingly turning to alternative financing models, including public-private partnerships and the planned National Infrastructure Fund, to move commercially viable projects off the budget and free up more resources for social sectors such as education and health.
"If we can take some infrastructure spending off the budget and finance it through the infrastructure fund and private capital, we can create more fiscal space for sectors like education that cannot be commercially financed," he said.
However, the Treasury PS warned that without improvements in revenue collection, even social sectors will continue to face funding constraints, regardless of how budgets are reprioritised.
He noted that Kenya's tax-to-GDP ratio has declined over the past decade, reducing the government's capacity to fund growing social demands. Tax revenue as a share of GDP has fallen to about 14.4 per cent from nearly 18 per cent in 2013 and 2014, driven by compliance gaps, tax incentives and limited taxation of some major economic sectors.
At the same time, nearly half of ordinary revenue is now consumed by debt servicing and pension payments, up from about 16 per cent ten years ago, further squeezing funds available for ministries.
"This is why we are saying fiscal space is shrinking. Even when we allocate the biggest share to education, the resources are still not sufficient to meet all needs," Kiptoo said.
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Members of Parliament at the retreat raised concerns about persistent underfunding of schools and universities, warning that learning institutions are increasingly struggling to maintain quality amid rising costs.
Treasury officials urged legislators to support both revenue-enhancing measures and expenditure reforms to stabilise public finances, arguing that sustainable education funding depends on broader fiscal consolidation.
Kiptoo said the government is pursuing zero-based budgeting, procurement reforms and digitisation of payroll and pension systems to improve efficiency and reduce wastage, while also seeking to strengthen tax administration to boost collections without overburdening already compliant taxpayers.
"We must manage our expenditures better and at the same time raise revenues more efficiently if we want to sustainably fund education and other critical services," he said.
