(NAIROBI) – Tax authorities across East Africa are under growing strain to fund larger national budgets for the 2026/2027 financial year, even as revenue collections fall and fiscal gaps widen across the region. Finance ministers presented their spending plans on Thursday, each seeking to raise more money at home while external funding sources continue to shrink.
Tanzania has laid out an ambitious target to raise 75 percent of its budget from domestic sources. The move piles fresh pressure on its tax agency to fill a gap left by declining external support, a situation linked in part to ongoing concerns among donors over the country’s civil rights record following the October 2025 General Election.
In Uganda, where the debt stock has climbed sharply over the past ten years to reach Ush130 trillion ($34.6 billion) by January 2026, according to the Bank of Uganda, debt servicing for the new financial year is expected to consume Ush33.4 trillion ($8.89 billion). That sum equals nearly 40 percent of the national budget and stands as the single largest item of expenditure. In South Sudanese Pound terms, Uganda’s total debt stock of $34.6 billion represents about SSP 200.68 trillion at the prevailing market rate of $1 to 5,800 SSP. The government of President Yoweri Museveni is counting heavily on future oil revenues to drive the economy forward.
Rwanda’s total budget for the new financial year stands at $5.3 billion, a 12 percent rise from the $4.72 billion approved for the 2025/2026 fiscal year. The government expects domestic resources to supply 68 percent of total financing, or about $3.61 billion. Spending under the Second National Strategy for Transformation will channel the largest share, some $3.42 billion, towards key development pillars and economic transformation. Social transformation programmes will receive $1.14 billion while transformational governance has been allocated $776 million.
Kenya is pursuing a different course, turning to a set of tax concessions agreed by East African Community member states to protect revenues and spur economic activity. The country is managing a record Ksh4.82 trillion ($37.36 billion) spending plan, with funding prospects clouded by limited fiscal space and public resistance to further tax rises. National Treasury Cabinet Secretary John Mbadi, while presenting the budget, promised to steer clear of new taxes and rate increases to shield households and businesses already struggling with heavy taxation and a high cost of living.
“I have deliberately chosen not to introduce new taxes or increase tax rates that would further overburden the hardworking Kenyans,” Mr Mbadi said. “Instead, the measures are focused on reforms that improve efficiency in tax collection, create fairness in the tax system and broaden the revenue base without burdening the mwananchi.” The budget arrives against a backdrop of falling revenue collections, mounting debt servicing costs, renewed inflation and interest rate pressures, as well as the US Israel war on Iran which has disrupted global supply chains and shaken international financial markets.
Mr Mbadi said EAC member states had agreed on a package of customs taxation measures designed to support Kenya’s local manufacturing, promote value addition and strengthen industrial competitiveness. The measures also aim to boost Kenya’s food security, protect jobs and align the regional tariff structure with the country’s economic objectives. They were agreed during this year’s Pre Budget Consultations held in Arusha on 15 May 2026.
Among the concessions, Kenya will continue importing wheat at a duty remission rate of 10 percent instead of the Common External Tariff rate of 35 percent, helping keep food and animal feed affordable. Kenya will also continue importing inputs for the manufacture of animal feeds duty free under the EAC duty remission scheme and apply a zero percent import duty on dates during Ramadhan in 2027.
On rice, Kenya secured approval to continue applying an import duty of 35 percent or $200 per tonne, whichever is higher, instead of the CET rate of 75 percent or $345 per tonne. The country also gained approval to continue applying a duty remission rate of 10 percent on selected inputs used in furniture and door manufacturing, as well as on completely knocked down kits for motorcycle assembly. “Through these measures, jobs created by the industries in these categories remain protected to support livelihood of our people,” Mr Mbadi said.
To promote local value addition for farmers, Kenya was allowed a stay of application of EAC CET rates and may now apply a duty rate of 35 percent or equivalent specific duty rates on selected processed food products including preserved vegetables, peas, sweet corn, tomato products, sauces, jams, edible oils and malt extract.
EAC Finance ministers also approved Kenya’s request for an extension of a stay on EAC CET rates, allowing higher duty rates of between 25 percent and 35 percent on imported textiles, apparel, blankets, bed linen, carpets, tarpaulins, leather products and worn clothing. At the same time, a zero percent duty remission was kept on selected inputs for leather processing. The goal is to protect local manufacturers in the textile, apparel, leather and footwear sectors.
Kenya was also granted a zero percent duty remission on inputs used in the assembly of smartphones, laptops and tablets. In a related move, optical fibre cables and recorded software products will now be imported at a higher tariff rate of 10 percent instead of the EAC CET rate of zero percent. “Expanding access to affordable smart telecommunication devices will enable more Kenyans participate in the digital economy and benefit from emerging opportunities in business and innovation,” Mr Mbadi said.
Further concessions included a zero percent duty remission on selected inputs used in the local assembly of motor vehicles. To support local manufacturing of paper and paper products, Kenya was allowed to continue applying stays of application at a rate of 35 percent on kraft paper and paperboard, printed poly bags, sacks and bags, and related packaging materials, instead of the EAC CET rate of 25 percent.
Other tax concessions granted to Kenya by EAC member states included a zero percent duty remission on selected inputs for the manufacture of roofing materials and related industrial products. Kenya was also permitted to continue applying stays of application at duty rates ranging from 25 percent to 35 percent, together with equivalent specific duty rates where applicable, to discourage the under declaration of import values.
Mr Mbadi said that given the limited fiscal space, Kenya is exploring alternative financing models, particularly Public Private Partnership arrangements for developing infrastructure projects. In line with this, Kenya negotiated and was granted a stay of application of EAC CET rates, allowing a zero percent import duty on goods, materials and equipment imported for use in PPP projects.
Kenya also received an extension of stays of application of EAC CET rates, allowing it to apply rates of 25 percent to 35 percent, plus equivalent specific duty rates where applicable, on products including LPG stoves, cookware, aluminium products, steel products, electrical equipment and related manufactured goods. The aim is to protect local manufacturers of household and industrial products as well as jobs.
Under the region’s revised four band CET which took effect on 1 July 2022, imports of finished products from countries outside the bloc attract a duty of 35 percent, intermediate products available in the EAC region attract 25 percent, intermediate products not available in the region attract 10 percent, and raw materials and capital goods enter duty free.
Kenya’s total spending plan for the 2026/2027 fiscal year is projected at Ksh4.82 trillion ($37.36 billion). Recurrent expenditure is set at Ksh3.56 trillion ($27.59 billion) while development spending is projected at Ksh750 billion ($5.81 billion). For South Sudanese readers, Kenya’s total budget of $37.36 billion equates to roughly SSP 216.69 trillion at the current market rate. The resulting fiscal deficit, including grants, stands at Ksh1.14 trillion ($8.83 billion) and will be financed through net external borrowing of Ksh116.2 billion ($900.77 million) and net domestic borrowing of Ksh1.03 trillion ($7.98 billion).
For South Sudan, which operates its own young tax system and relies heavily on oil revenues to fund public spending, the East African experience offers a clear picture of the pressures facing tax authorities across the region.