Parliament budget office says Kenya’s growth targets are unrealistic

NAIROBI: The Parliamentary Budget Office says it is unlikely that the Government will achieve the growth target of seven per cent due to the failed rains, persistent drought in parts of the country, insecurity and slow down of tourism.

In a report on the Sh2.1 trillion budget that is currently before the National Assembly’s Budget and Appropriations Committee, the Budget Office noted that while the Government had placed its hopes on Agriculture to spur growth, it had ignored small-scale farmers who do over 80 per cent of the farming in the country.

The technocrats who advise MPs on the budget argue that the Jubilee administration was focused on fulfilling its campaign promise of cultivating a million acres of land at the Galana/Kulalu irrigation project, but had ignored the people who have been feeding Kenyans.

INFLATION

“This clearly shows a lack of Government commitment in maintaining the rate of inflation levels for food and non-alcoholic beverages at sustainable level,” the Budget Office stated in the report that also predicts that inflation will increase due to food shortage.

The inflation rate for last month was 7.08 per cent, a rise from 6.31 per cent in March, but this is within the government’s target. The low inflation has been attributed to low oil prices, but life is set to harden with the recent rise in fuel prices and food shortage being experienced in some parts of the country. “Despite enhanced investment in agriculture, the country is yet to achieve food security and with inadequate rainfall over most parts of the country, there is a high likelihood of food shortage and high food prices.

The country should therefore prepare for food support especially in arid and semi-arid areas,” notes the report.

Insecurity as a result of terrorist threats from the Somalia-based al-Shabaab militants and general crime have led to travel advisories against Kenya, which in turn, have reduced the number of tourists coming into the country.

The report notes that not much growth will occur if the State continues its optimistic talk with little action with regard to security.

“Insecurity will continue hurting the economy unless decisive measures are taken to address the crisis. Insecurity is not just a challenge to the tourism sector but it is also likely to adversely affect investor confidence which is assumed to be one of the key drivers of the economy in 2015/16,” said the Budget Office.

TOURISM

The Government has set aside Sh15 billion to modernise the military and Sh10 billion to modernise the national police service.

The report states that the future of tourism, which has been hit by low numbers of foreign visitors and closure of hotels is ‘unclear’ and questioned what the government wants to achieve with the Sh6 billion that has been earmarked for tourism recovery.

“The declining number of tourists is a worrying trend to the economy in terms of loss of jobs and reduced foreign exchange earnings”.

The Government hopes to deploy tax rebates to hotels on domestic travel and develop roads while also supplying power and water to areas with tourist attractions.