The Cabinet Secretary for National Treasury Hon. John Mbadi has assured the Committee on Finance and National Planning that there is no cause for alarm on the Kenyan economy even as the ongoing war in the Middle East threatens to dampen global growth prospects.

He was speaking when he appeared before the Committee to apprise the lawmakers on the policy responses the government was undertaking to cushion Kenyans from economic shocks as a result of the war.

Hon. Mbadi told the Committee that though the heightened geopolitical tensions had threatened to disrupt energy markets, trade and financial stability, Kenya’s economy remains resilient with real GDP projected to grow at 5.3 per cent in 2026 and 2027, up from 5.0 per cent in 2025.

He told the lawmakers that the government had formed an inter-ministerial team to monitor the situation and recommend any necessary interventions to ensure the crisis does not impact heavily on the economy.

“Hon. Members, as any responsible government would do, we are taking a whole government approach to monitoring the situation. In fact, I have just come from a meeting where we were deliberating on a few scenarios as a result of the ongoing war and how we would respond to them”, he informed the Members.

Highlighting the oil supply chain risks emanating from the Middle East Conflict, Hon. Mbadi noted that the implications for Africa remain acute because the Middle East plays a central role in global energy supply.

“The Middle East serves as the continent’s largest external supplier of petroleum products and natural gas, making African economies highly vulnerable to supply disruptions and price shocks arising from instability in the region”, CS Mbadi observed.

However, he sought to reassure the Committee Members that the Government- Government arrangement on oil supply reached a few years ago would largely cushion the Kenyan oil market from a significant influx of oil prices.

According to the CS, Kenya imports all petroleum products requirements (super diesel and aviation fuel) under the G-G arrangements. The suppliers are Aramco Trading Fujairaj FZE, ADNOC Global Trading Ltd and Emirates National Oil Company Limited (ENOC) domiciled in Dubai, Abu Dhabi and Singapore respectively.

“The G-G arrangement between Kenya and the three largest suppliers of oil in the Middle East is expected to somehow cushion us from the energy shocks being experienced across the world today with the disruption caused by the closure of the Strait of Hormuz because the arrangement binds the companies to supply Kenya with oil from whatever sources”, he stated.

The CS revealed that according to reports from the Ministry of Energy and Petroleum, as at 30th March, 2026, the country was sufficiently stocked with 138,623 metric tons of Super Petrol (16 days cover), 207, 841 metric tons of diesel (19 days cover)and 150,398 metric tons of jet fuel (49) days cover.

He added that there were expected deliveries for March and April schedule with 290,000 metric tons for Super Petrol (47 days cover), 182, 900 metric tons for Diesel (20 days cover) and 60,000 metric tons for Jet fuel (25 days cover), with initial supplies expected to arrive today.

He cautioned that while the supply remains adequate in the short term, imports for May and June were likely to reflect higher global prices, posing a significant risk of further increases in domestic pump prices with attendant inflationary and fiscal pressures.

CS Mbadi however noted that, this situation not withstanding, he did not expect such a significant price increase, and warned oil marketers against hoarding oil for speculation purposes.

Citing the oil supply shocks experienced during the Covid Pandemic, Members led by the Committee Chairperson Hon. Kuria Kimani sought to know what measures the government would take in case the war prolonged.

“Hon. CS we reduced taxes during the Covid Pandemic to cushion the people from the price surges experienced then. How do we ensure that we can make an intervention earlier rather than later?”, Hon. Kimani asked.

In response, CS Mbadi disclosed that the government was considering imposing an ad valorem tax rather than charge the usual value added tax on the surged prices should the situation warrant the same.

Ad valorem tax is a levy based on the assessed monetary value of an item, such as real estate, personal property, or imported goods. The tax is calculated as a percentage of the item's fair market value rather than a fixed fee.

Further, Members led by Hon. Peter Kaluma (Homabay Town) urged CS Mbadi to consider incentivizing the e-mobility sector to reduce over reliance on oil.

On their part, Hon. David Mboni (Kitui Rural) and Hon. Julius Rutto (Kesses) also urged the government to consider exploring other African markets for the supply of oil as well as leveraging on Turkana Oil to supplement oil exports from the Middle East.

At the same time, the CS informed the Committee that disruptions to key shipping routes, rising freight and insurance costs, and weakening trade agreements such as the Kshs. 5.6 billion bilateral agreement with Iran, are likely to reduce export volumes and earnings from tea.

Tea remains a leading export commodity and a critical source of foreign exchange for Kenya with the country retaining its position as the world’s largest exporter of black tea.

CS Mbadi also noted that the war had caused Kenya a revenue loss of Kshs. 250 billion per week with live animal live exports and meat exports ground to a halt. Approximately 85 per cent of live animal products and 68.9 percent of meat exports are destined for Gulf Cooperation Council markets notably the United Arab Emirates and Saudi Arabia.

At the same time, the Cabinet Secretary noted that Kenya had recorded an increase in revenue collections from Lamu Port with revenues rising from Kshs. 15 mn to Kshs. 350mn per day attributed to increased transshipment volumes.

“Conversely, the disruption presents a strategic opportunity for Kenya with increased rerouting of global shipping elevating the importance of Lamu Port as an alternative logistics hub”, the CS stated.