Cabinet sees positive economic outlook, adopts budget policy statement and sweeping education reforms

The Cabinet expressed confidence in the country’s macroeconomic outlook, with GDP growth projected at 5 per cent in 2025 and 5.3 per cent in 2026, supported by favourable weather conditions, improved agricultural productivity, climate-smart investments and continued implementation of the Bottom-Up Economic Transformation Agenda (BETA).

The outlook is outlined in the 2026 Budget Policy Statement (BPS), themed “Accelerating Gains under the Bottom-Up Economic Transformation Agenda for Inclusive and Sustainable Growth.”

The BPS signals a shift from fiscal stabilisation to scaled-up investment aimed at driving the next phase of economic growth.

Priority spending under the policy framework targets education, health, energy, infrastructure, agriculture, social protection and national security, alongside reforms in public finance management, digitisation, State-owned enterprises and public-private partnerships.

The 2026 BPS, the fourth under the Kenya Kwanza Administration, has been approved by Cabinet and will now be submitted to Parliament to guide the Government’s fiscal strategy.

In the same meeting, Cabinet considered, adopted and forwarded to Parliament a comprehensive package of education reform Bills, marking a far-reaching overhaul of Kenya’s education system.

The reforms seek to align governance, curriculum, assessment, financing, teacher training and qualifications with the Constitution and the Competency-Based Education and Training (CBET) framework.

The proposed legislation implements recommendations of the Presidential Working Party on Education Reform and aims to eliminate long-standing duplication, overlaps and inefficiencies across the sector.

At the tertiary level, the Tertiary Education Placement and Funding Bill, 2024, proposes the consolidation of the Higher Education Loans Board, the Universities Fund, the TVET Funding Board and the Kenya Universities and Colleges Central Placement Service (KUCCPS) into a single authority. The move is intended to streamline student placement, loans, scholarships and career guidance.

Cabinet also approved the Kenya National Qualifications Framework (Amendment) Bill, 2024, which clarifies the mandate of the Kenya National Qualifications Authority by confining it to setting national qualifications standards, while leaving accreditation and equivalence of qualifications to respective sector regulators.

At the basic education level, the Basic Education Bill, 2024, aligns the system with the Competency-Based Education structure, clarifies national and county government roles, strengthens quality assurance, rationalises school governance, and introduces coordinated administration of bursaries and scholarships.

Additional reforms include approval of the Kenya National Educational Assessments Bill, 2025, which replaces the examination-centric model of the Kenya National Examinations Council with competency-based assessments, and the Kenya Institute of Curriculum Development (Amendment) Bill, 2024, which limits the Institute’s mandate to basic and teacher education and restructures its Board to eliminate institutional overlaps.

Teacher training and professional development are addressed through the Pre-Service Education and In-Service Training in Basic Education Bill, 2025, while the Education Administrative Tribunal Bill, 2024, establishes a formal mechanism for resolving education-related disputes.