The document outlines Kenya's national financing strategy aimed at achieving the Big Four Agenda, which focuses on universal health coverage, affordable housing, increased manufacturing, and food security. To fund these initiatives, an estimated $17.68 billion is required, primarily sourced from both domestic and international public and private channels, though domestic resources are inadequate. The paper emphasizes the need for reforms in the tax system, credit access for the private sector, and the establishment of robust financial markets to support these developmental goals.

1. NATIONAL FINANCING STRATEGY FOR KENYA TO ACCESS ADDITIONAL
SOURCES OF FINANCE FOR DEVELOPMENT –BIG FOUR AGENDA
The Big Four Agenda refer to flagship project that the government is committed to undertake in
the current government term that will end in 2022. The projects involved are universal health
coverage, affordable housing, and increasing manufacturing contribution to the economy and
food and nutrition security. These are in line with the sustainable development goals;
KENYA’S BIG FOUR AGENDA SDG GOAL
Universal health care Goal3-Good health and well being
Affordable housing Goal 11- sustainable cities and communities
Increasing manufacturing contribution to the economy Goal 9- Industry innovation and infrastructure
Food and nutrition security Goal 2-Zero Hunger
What are the estimated financing needs for the country’ development.
During the budget statement for the financial year 2019/2020 treasury allocated $4.42billion to
the big four agenda. These are the funds that will be used in this financial year on the big four
agenda projects. The projects run for the next 4 years therefore approximately based on one year
allocation, the total funds needed amount to $17.68bn. The above required funds account for
17% of the GDP, this is what the government need to source in order to achieve these goals.
Kenya being one of the Emerging Market and Developing Economies-EMDEs, requires to
mobilize the resources domestically and internationally both public and private.
Sources of finances available
The available sources of the funds for the country are; domestic and international both public and
private sources. The domestic public sources are not sufficient even to fund the annual budget.
The revenue system is not productive enough to fund the government expenditures, which has
resulted to fiscal deficit year after year that is funded through the domestic and foreign
borrowing.
The Domestic private sources have come through to fund the fiscal deficit, but I believe there is
need to mobilize more private resources to be used in archiving the sustainable development
goals. The private sector growth suffered after the rate capping in September 2016 as the lending
rate was capped at 4% above the central bank rate. Most of the private credit consumers did not
qualify for the loans as the 4% was not considered sufficient to cater for their credit risk. There is
need facilitate the credit to private sector which can go a long way in empowering the private
sector in their effort to contribute positively in the economy.

2. The Government can also get sources for the international development partners such as the
World Bank and Africa development board. For example for housing the government had
already secured a credit line of $343million from World Bank and Africa development bank
according to the budget statement for FY 2019/20.
The official development Assistance is part of the international source of funds where, Kenya
received a total net receipt ODA amounts to USD 3291.5 million, health and population
receiving 34% of the financing followed by economic infrastructure and services at 25%. The
top two donors are the United States and International Development Association contribution
40.9% of the funds on average in 2016-2017. ODA is 5% of GNI.
Below is the chart for the country sources of funds in the year 2017/2018 according to the World
Bank
Access
The tax system needs to continue with the appropriate reforms on policies, which involve
increasing the tax base by including the informal sector and modernizing the tax administration
in order to increase the tax revenue. This will encourage the foreign direct investments (FDI) to
ensure that it’s productive and increase its revenue contribution above the 15% of the GDP.
The rate cap policy need to be reviewed and be scrapped, which currently hindering efficient
monetary policy transmission and eventually the flow of the credit to the private sector. When
the private sector is empowered than the government can undertake the public private
partnership; a strategy that can be embraced in achieving some of the big four agenda like
affordable housing and Increasing manufacturing contribution to the economy.
With the new era of choice for the developing countries, this means that the countries are in a
better position. They have more external finance beyond the traditional ODA, and also have a
bargaining power. Kenya can take advantage of this by choosing the partners who are in line
with the big four agenda, in order to have real impact and achieve the above goals.

3. The Addis Ababa Action Agenda (AAAA) idea of the multilateral development banks to invest
billions in order to mobilize trillions from the other sources of funds; private, public global and
local in both capital and capacity in order to achieve SDG financing. The MDG can assist Kenya
in her quest to achieve the big four agenda and eventually the SDGs; both in finances and in
technical skills and policy formulation
There is need to build a robust financial markets, which will help in attracting investors as they
look to diversify their investments. Financial inclusion and financial sector deepening will go a
long way in the quest for the country to mobilize the public and private resources both
domestically and internationally. Currently the Nairobi securities exchange has launched its first
derivative market which is the first in the East Africa region and 2nd
in Africa. It will help
investors to diversify their investments, manage risk and deploy funds more efficiently.
Embracing the different sources of funds such as issuing of Eurobonds which Kenya has already
undertaken and green bonds which is currently in discussion.
The government needs to maintain stable macroeconomic environment; investors are keen to
invest in markets where there is stable macroeconomic factors. Strong monetary policy
management is key for any country. Price stability as key role of the monetary policy and Kenya
as enjoyed stable foreign exchange rate relative to other markets in the region. Interest rates have
been on a down ward trend and inflation has been well within the central bank target 2.5% below
or above the 5%.
Domestic savings in the country remain very low and the government has taken initiatives to
inculcate the saving culture to the people. In 2011 the government issued the longest bond (30
years) known as the savings development bond (SDB) and recently introduced another channel
dubbed M-akiba bond for saving starting with a minimum of approximately 3dollars. M-akiba is
a facility accessible through mobile phone. This is helping every citizen to contribute to funding
the government as they earn interest. These will a long way in growing the domestic funding
which is more stable compared to external sources.