Political Economy Analysis

Kenya is the 13th largest refugee hosting country in the world, home to nearly a million refugees, most of them confined to Dadaab and Kakuma, two of the largest camps on earth, for up to three decades. For thirty years, Kenya's refugee policy has oscillated between hospitality and hostility, deploying security rhetoric to justify closure threats while remaining one of Africa's most generous hosts by volume. The Shirika Plan, launched in March 2025, promises to end that contradiction, transforming camps into municipalities, integrating refugees into the national economy, and shifting from aid dependency to self-reliance. Whether it delivers what every previous reform could not is the question this brief examines.

Kenya enters its 2027 electoral cycle carrying the weight of a KSh 12.3 trillion debt burden, a fragmented opposition reshaped by the death of Raila Odinga, and an incumbent administration that has been quietly rearranging the institutional landscape in its favour. The fiscal pressures are real, the political signals are concerning, and the window for informed preparedness is narrowing. This brief examines what is actually happening and what must be done before the country finds itself in a crisis it could have seen coming.

Kenya's engagement with the IMF under the Extended Credit Facility has exposed the structural weaknesses in the country's fiscal governance framework. Revenue underperformance, rising debt service costs, and the political economy constraints on expenditure reduction have combined to produce a fiscal position that is increasingly difficult to manage without external support.