How the State plans to spend Sh2.1tr Budget

Treasury CS Henry Rotich

Kenyans should expect more pain from the taxman this financial year to fund the Sh2.1 trillion budget in the new financial year beginning June.

The big spending plan comes amid growing pressure by the Government to control wasteful spending and reduce recurrent expenditure, which is weighing heavily on the country’s development agenda.

Although the Government will spend the bulk of it revenues towards payment of salaries and wages, purchase of goods, services and operations, it also seeks to increase spending on security, infrastructure and energy projects as the Jubilee administration attempts to balance between spending on key sectors to reverse the slowdown of the economy.

According to the budget summary statement tabled in Parliament yesterday, Treasury says the budget aims at striking a balance between support for rapid economic growth and continued discipline.

The Government plans to spend a total of Sh132.4 billion towards road construction and maintenance. This amount includes Sh58.5 billion for road construction and another Sh42.3 billion for foreign-financed roads.

The Government hopes to receive Sh118.1 billion for the Standard Gauge Railway in the year, which is foreign-financed and raise an additional Sh25.7 billion from the railway development levy fund. Another Sh1.3 billion will be used to replace old ferries.

This means that in the next financial year starting June, the Uhuru administration will sink a total of Sh277.5 billion on transport and logistics sector. Security remains one of the top five spenders in the government. Sh43.5 billion will be spent on leasing cars, military and police security modernisation, police medical insurance, building houses and for anti-poaching initiatives.

From this amount Sh6.4 billion will be used for the AMISOM and peace keeping mission. “Security sector has been made a priority by the Government following the recent wave of crime and spate of terror attacks.

Arising from this, the sector will be receiving increased allocation of resources to modernise both the military and the police,” the budget summary statement signed by Treasury secretary Henry Rotich, said. The estimates were tabled by the leader of Major Aden Duale yesterday.

Kenya sent its troops to Somalia to fight the Al-Shabaab terror gang three years ago. The group has, however, engaged Kenya in a cycle of death with increased terror attacks linked to it. This has seen the country increase it’s spending on security.

Education will continue to gobble up the lion’s share of the budget. A total of Sh17.58 billion has been set aside for deployment of laptops to schools, development of digital content, building capacity of teachers and rolling out computer laboratories for class 4 to class 8 in all schools throughout the country.

An additional Sh32.7 billion will go towards free day secondary education, Sh14.1 billion for free primary education while Sh2.3 billion will be used to recruit additional 5,000 teachers. The government has also set aside money for promoting teachers, for technical training institutes, sanitary towels and school feeding programme.

Treasury has proposed to spend a total of Sh55.2 billion to power the energy sector. From this amount, Sh13.2 billion will be used for geothermal development, Sh21.1 billion for power transmission and another Sh14.9 billion will be channelled towards the rural electrification programme.

An additional Sh4.5 billion will be used to light up streets and Sh1.5 billion will go towards the last mile connectivity.

To deal with food security and agriculture, the Jubilee administration has allocated Sh13.8 billion for ongoing irrigation projects to grow food on 1 million acres. From this, Sh10.3 billion will be given to the National Irrigation board while the remaining Sh3.5 billion will be spent on the Galana irrigation project.

Rotich intends to use Sh44.2 billion to control floods and harvest water. Some of the projects listed in the sector include Sh29.5 billion for water supply and sanitation. The administration which recently appointed Eugene Wamalwa as the new cabinet secretary of water will use SH2.1 billion for water storage and food control, while Sh12.6 billion will be used for environmental protection, conservation and management.

Should parliament approve the spending plan, the government will spend Sh12.9 billion for access to primary health care in dispensaries, maternal health care, leasing medical equipment, and internship program. Kenyatta National Hospital and Moi Teaching Hospital have been allocated Sh9 billion and Sh5.5 billion respectively. Another Sh19.7 billion sourced from the global fund will be used for HIV/AIDs, Malaria and TB.

Rotich said that the medium term strategy to raise the money will focus on deepening tax reforms in order to broaden the tax base, reduce compliance cost, facilitate private sector growth and enhance revenue yield. He did not, however, say what sectors will be taxed more but said he will be revealed at his speech.

To support this spending, the Government hopes that the economy will grow at 7 per cent in the year under review.

Last year, the economy slowed from 5.7 per cent in 2013 to 5.3 per cent after it took a beating from the decline in tourism earnings and suppressed agricultural and manufacturing sectors. It is also hoping that it would keep inflation below the 5 per cent target and have a stable interest rates regime.