Pre-election budget raises fears of fiddling to beef up campaign kitty

By Juma Kwayera

The Budget Policy Statement read in Parliament by Finance Minister Uhuru Kenyatta is set to determine how the country navigates through political and legal hurdles to the next elections, the misgivings it has equally elicited notwithstanding.

In what has now become a tradition since 1992, the ministries of Defence and Internal Security, both under the Office of the President (OP), will receive the largest budgetary allocations in the next financial year. The marshalling of resources for the OP is, therefore, not anything new.

But the re-allocation of Economic Stimulus Programme funds has touched off a row in the Grand Coalition with claims the Executive wants to use the Internal Security and Defence ministries as avenues to channel funds for campaign, as the two votes are rarely subjected to scrutiny.

Thus, Uhuru, also Deputy Prime Minister, will be hard-pressed to convince Parliament to give him unstinted backing when he unveils the Budget in June.

Chairman of the Parliamentary Budget Committee, Martin Ogindo, says the Finance minister will have to justify the re-allocations that have in principle reduced budget for social programmes and development capital because it comes at a time the Department of Defence and the Internal Security are smarting from allegations of fraudulent procurement.

In the Budget Policy Statement, security has been given top priority, benefiting from the scaling down funds for the stimulus programmes, which in principle target the youth and the vulnerable. They are the power kegs that explode when political tensions soar.

However, Ogindo says the concentration of the funds in Defence and Security deprives key development areas of the necessary lifeline for an economic lift-off.

Past experience

The MP for Rangwe raises questions about the cuts in the ministries of Agriculture, Roads and Health.

"We know from past experiences that it has become routine for the Government to allocate colossal sums of money to Defence and Internal Security on the eve of General Elections. It has been so since 1992 when the Government precipitated economic collapse through the Goldenberg swindle, which we are yet to recover from," says Ogindo.

The Goldenberg scandal, Kenya’s biggest financial scam executed through the Ministry of Finance resulted in more than Sh300 billion haemorrhage on the economy, the effects of which were free fall in value of the shilling against all international currencies, steep inflation and mass unemployment.

Ogindo says with The Hague processes getting priority, the reallocation of the money from development votes is a lead-up to some financial fiddling to pay legal fees and other expenses for the ‘Ocampo Six’.

Public benefit

"We know that the public benefits when money is spent on education, health, infrastructure development. The Department o Defence and other security agencies have become conduits through which the Executive pilfers public funds under the pretext of confidential acquisitions to protect the country against external aggression or security," says the chairman of the Budget Committee.

In the policy statement read by Uhuru, recurrent expenditure will go up by Sh20.5 billion in the next financial year. The minister announced the Government’s intention to raid the domestic money market to raise Sh20 billion to step up security as the country gears up for the first General Election under the new Constitution. The OP’s budget would soar by Sh6.8 billion.

According to the minister, the money will be spent on general administration and planning that would soak up Sh2 billion. Sh1.9 billion would be spent on Administration Police, while regular police would be allocated Sh95 billion.

The Department of Defence, which has lately been in the news over purchase of unserviceable F-5 jetfighters from Jordan, would be allocated Sh3.4 billion to offset expenses in general administration and planning. Home Affairs under the Vice-President would get Sh.6 billion more in the next budget.

However, as Defence and Internal Security kitties were boosted, that of the Ministry of Finance was cut by Sh8 billion while that of the Ministry of Roads by Sh5.8 billion. Budget for the Ministry of Public Health went down by Sh16 billion.

The vote for the Ministry of Medical Services was sliced by Sh2.1 billion, Ministry of Agriculture by 3.8 billion, Ministry of Environment by Sh1.8 billion, and that of the Ministry of Information and Communication by Sh1.2 billion.

Despite fears of the re-allocation of the economic stimulus programmes funds to national defence and security, Nominated MP Musikari Kombo is of the view the policy statement is consistent with the prevailing economic conditions.

"The stimulus package was a one-off thing necessitated by economic hiccups around the world. You cannot have it as a permanent feature of the budget. There are other priority programmes and security and defence are critical as we head to an election next year," says Kombo, who has a strong academic background in economics and accounting.

Requires Security

He adds: "The economy can only remain stable if investors are assured of security. Even farmers and livestock keepers require security to prosper. No economic activity can take place if security is lax." He appears to agree with a World Bank report on Kenya.

In its economic outlook survey of Kenya, the World Bank says in its 2009-10 report that the country’s economy fluctuates significantly between election cycles, resulting in long-term economic stagnation.

The report says the economy picks in the second year after an election only for the gains to reverse in the last year to an election because of insecurity and electoral violence.