Kenya’s budget up 15 times since 2002

CS Henry Rotich at a past budget ceremony (PHOTO: FILE)
NAIROBI, KENYA: At Sh3.07 trillion, Kenya's budget for the next financial year that starts on July 1 is close to 15 times bigger than it was in 2002.

Government's expenditure has increased substantially since former President Mwai Kibaki took power in December 2002. It more than doubled in his first term in office to hit Sh700 billion in 2007/2008 financial year.

This again went up to Sh1.2 trillion by the time he was leaving office after the second term in 2013, as devolved units continued to take shape. The 2010 Constitution created 47 counties, whose own source of revenue has remained low, leading to increased dependency on the National Government.

Kenya spends a lot on infrastructure, with projects such as Thika Super Highway, the Standard Gauge Railway as well as the upgrading of airports.

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During Kibaki's tenure, the size of Kenya's economy also grew in tandem with Government expenditure, going up from Sh1 trillion in 2003 when he took over power to more than Sh3 trillion in 2012.

In the first five years of Uhuru Kenyatta's presidency, Kenya's budget has increased by 90 per cent to Sh3 trillion for the 2018/2019 financial year, from Sh1.6 trillion in 2013/2014. "Just before Moi left power, our budget was about Sh220 billion. Out of that Sh160 billion was tax collections and the balance would be loans, appropriations in aid and such," said Michael Mburugu, a tax partner at PKF.

"In 2003, just after Kibaki got in power, we had a shift that resulted in the expansion of the budget to Sh600 billion at around 2006, of which Sh400 billion was from taxes that was informed by, among others, the tax amnesty that was given in 2003 and 2004." There has been gradual shift in laws, which may have contributed to growing tax revenues.

However, he said, KRA has over the years targeted the same group of people to pay taxes. The taxman has failed in innovation that would rope in the less formal industries, which could be accounting for about 34 per cent of the economy.

Follow the conversations about the 2018 Budget on @StandardKenya. #BudgetKE2018 

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BudgetCS Henry Rotich