Kenya faces wage bill pressures amid push for economic reforms
By Kenneth Mwenda, November 4, 2025Kenya’s Treasury Cabinet Secretary, John Mbadi, has acknowledged that lecturers and staff in public universities are not adequately paid. Speaking before a parliamentary committee on Monday, November 4, 2025, Mbadi warned that while improving salaries is important, the government faces severe fiscal constraints that limit its ability to increase pay.
Mbadi told lawmakers that the economic stability of Kenya is improving, but progress remains fragile. He noted that macroeconomic indicators are better than they were a year ago but cautioned that any misstep could reverse the gains.
“If we don’t maintain the trajectory we have taken in sustaining our economic stability, we will slide again to where we were, and the effect will be disastrous,” he said.
Mbadi highlighted the rising public wage bill, which he described as unsustainable. In 2013, only 16 per cent of Kenya’s ordinary revenue was used to pay public salaries. That figure has now surged to over 40 per cent.
“Up to January 2025, we were paying Ksh75 billion per month, translating to Ksh900 billion per year. Today, it has gone up by Ksh5 billion more per month. It is now Ksh80 billion, Ksh960 billion per year. This level is not sustainable. We will end up crowding out capital expenditure,” he explained.
The prolonged lecturers’ strike, has disrupted academic calendars, with students facing potential loss of the semester, graduations, and industrial attachments. The University Academic Staff Union (UASU) has criticised the government for proposing phased payments of Ksh7.9 billion, warning that splitting the payments could trigger further strikes.
Mbadi emphasised that the government supports fair pay for public university staff but must adopt a formula that does not put excessive strain on the economy. He acknowledged the importance of agreements but urged negotiations that balance workers’ demands with fiscal reality.
Privatisation drives long-term growth
In addition to wage concerns, Mbadi has defended the government’s ongoing economic reforms, including the privatization of select state corporations. Speaking in Homa Bay, he described privatization as part of a long-term strategy to drive sustainable development rather than a short-term measure to finance the national budget.
The government will channel all proceeds from privatization into the Sovereign Wealth Fund and the National Infrastructure Fund. These funds aim to ensure transparency and accountability, with money dedicated to infrastructure projects rather than recurrent expenditures.
Mbadi also called on Kenyans to embrace self-reliance, citing the global challenges facing lenders like the IMF and World Bank.
On external borrowing, Mbadi confirmed that Kenya continues talks with the International Monetary Fund (IMF) to secure a new lending programme following the expiry of the previous $3.6 billion deal in April. The key sticking point remains whether securitised loans used for major infrastructure projects should be classified as sovereign debt.
Kenya plans to issue a securitised bond this month to raise Ksh175 billion ($1.36 billion) for road construction, backed by a levy on fuel. The government also plans to raise funds for expanding Nairobi’s main airport and a key railway to the Uganda border.
Mbadi stressed that IMF funding is not yet part of the government’s current budget and described any future programme as a potential windfall rather than a necessary source of financing.
He dismissed concerns about the country’s exchange rate, noting that it is supported by strong foreign reserves, rising exports, tourism growth, and remittances from the diaspora.