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Kenya's Sh1.45 trillion expansive Budget

By JACKSON OKOTH | Published Fri, June 15th 2012 at 00:00, Updated June 14th 2012 at 21:58 GMT +3

By JACKSON OKOTH

As expected, Finance Minister Njeru Githae delivered a Budget of containment that had few surprises.

And although the word “borrowing” was hard to come by in his statement, it was written all over the Budget, as Githae himself admitted Treasury had virtually zero new tax options to boost revenue.

“We have taxed Kenyans almost to the limit. The only way we can increase revenue is by taxing those who have not been paying,” Githae told journalists immediately after reading the 2012-2013 Budget.

This was in reference to new measures that will see Kenya Revenue Authority go after landlords who do not remit income on rent.

It fell in line with the conservative economics that marks the final year of an incumbent President not keen on rocking the boat.

Will the projected growth take place? It was a balancing act for Githae as he presented the last Budget under the watch of Othaya MP, President Kibaki.

While ensuring that limited funds are available to finance the 2013 General Election, and complete implementation of crucial sections of the new Constitution, Githae steered clear of any surprises or bold measures, perhaps not to rock the Kibaki legacy boat and the succession politics chessboard.

Presentation of Githae’s financial statement for the fiscal year 2012/2013, whose theme was deepening our economic and social prosperity within a system of devolved government, almost hit a snag: Gwasi MP John Mbadi rose on a point of order demanding to know the contents of Githae’s ceremonial briefcase.

“This House did adopt a report on 2012/2013 Budget estimates on April 26, and we do not therefore see the need for this pomp and colour,” said Mbadi.  He was, however, overruled by the House Speaker Kenneth Marende, cutting short the drama and paving way for Minister Githae to make the traditional Budget speech.

While attention has shifted to financing the polls and pushing through constitutional reforms, measures to boost key sectors of the economy such as agriculture, manufacturing, tourism, and ICT appear to have received lukewarm attention.

Recruitment of 10,000 teachers

The biggest allocation in this year’s Budget is to infrastructure, which received Sh268.1 billion for various projects including roads, energy, rail, and ports. The overall budget for the Ministry of Roads is Sh123.6 billion, up from Sh104.3 billion in the 2011/2012 financial year.

The Ministry of Energy has been allocated Sh79.9 billion, up from Sh57.5 billion in the previous budget. The Education sector, also a big spender, was given an additional Sh19.2 billion pushing its envelope this financial year to Sh233.1 billion. Some Sh118.7 billion of this cash is to be spent on salaries for teachers, including recruitment of additional 10,000 teachers.

The Government also plans to spend Sh8.1 billion from this kitty for development of infrastructure and public facilities in public universities, Sh480 million to buy computers for schools, Sh1.6 billion to hire pre-unit teachers, and Sh1.9 billion on classrooms and physical facilities in primary and secondary schools.

Treasury has allocated Sh8.3 billion for the Free Primary Education programme, and Sh19.7 billion for free secondary education. The Government has also given Parliament Sh17 billion, and the Judiciary Sh15.4 billion for implementation of the new Constitution.

Treasury has allocated Sh148 billion for devolution and setting up of county governments, in addition to Sh3 billion for constitutional reforms.  This includes provision for setting up county offices where necessary.

The Government has allocated Sh17.5 billion to the Independent Electoral and Boundaries Commission (IEBC) for conducting the biggest polls exercise since independence.

The budget allocation for national security has been enhanced from Sh78 billion in 2011/2012 budget to Sh83.5 billion in 2012/2013.

 The Ministry of Internal Security has been allocated Sh65.9 billion, which includes Sh1.4 billon for purchase of motor vehicles to enhance police response and patrols, and Sh2.5 billion for recruitment of 3,500 police officers.

The National Police Service Commission and Independent Police Oversight Authority will get Sh300 million. The Health Ministry has received Sh85 billion, an increase of Sh12.3 billon from the previous financial year, to recruit an additional 5,200 health workers, allowances, and construction of more health facilities.

Urban commuter railway

In his speech, Githae warned that while there are positive economic prospects this year, significant risks remain. These include trouble in the European Union and a sluggish world economy.

On the domestic front, there is a possibility that inflation and a volatile shilling could rear their ugly heads again.

To modernise the urban commuter railway system, Treasury allocated Sh1.45 billion to link the Jomo Kenyatta International Airport to Nairobi’s Central Railway Station.

The Government expects that a new Private-Public-Partnership Bill will be debated and passed into law by Parliament to enable it overcome implementation challenges affecting most public sector investments.

Githae also proposed that supervision be enhanced for those financial institutions and commercial banks operating across the borders.

The idea is to cushion local commercial banks from events in other markets in the region where their subsidiaries operate.  At the moment, the Central Bank is not able to supervise such operations.

Also on the list of winners in this year’s Budget is the Civil Service Pension Scheme, which has been allocated Sh15.1 billion effective from July.

Githae plans to write to the Central Bank Monetary Policy Committee to bring down inflation to between five per cent and seven per cent by June 30. Since the beginning of this year, inflation has dropped from a high of 18.31 per cent in January, to 13.06 per cent in April, and 12.22 per cent last month.

THE WINNERS...
FARMERS: Coffee, rice and sugarcane loans written off.

TEACHERS: Sh118 billion set for hiring of 10,000 additional teaching staff.

ICT: Tax on imported digital TVs removed to aid digital migration.

MITUMBA: Minimum payable tax on imported second-hand clothes slashed.

HIV/AIDS: Duty on importation of food supplements scrapped.

ORPHANS: Orphans and poor children to benefit from Sh1.1 billion bursary kitty.

DOCTORS: Sh12b to go to hiring 5,200 health workers, including 915 doctors.

SANITATION: Sh300 million to buy sanitary towels for poor schoolgirls.

PROJECTS: Sh50 billion for education and health, infrastructure, urban commuter railway and recruitment of security personnel.

Elderly: Government has allocated Sh9.6 billion to continue cushioning the poor.

THE LOSERS...
SCRAP METAL: To curb vandalism a Sh1 million penalty awaits dealers found with stolen metal.

LANDLORDS: Tenants to pay more as KRA plans to impose tax on landlords.

STATE OFFICERS: Githae invokes Constitution to force all State officers including MPs to pay tax.
BREWERS: Beer companies face tough times as Treasury allocates Sh1 billion to Nacada to fight alcoholism.

 


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