President Uhuru Kenyatta has spelt out a raft of measures aimed at putting money in people’s pockets and jump-starting an economy that has largely been in limbo.
In an address to the nation yesterday, the Head of State drew a plan on how he will inject money into the economy. The money-making measures include efforts to pay government suppliers and break up corruption syndicates that have been siphoning farmers’ earnings.
Suppliers owed by the national and county governments; milk, coffee and tea producers as well as small and medium enterprises (SMEs) are some of the potential beneficiaries as President Kenyatta seeks “economic kingdom.”
Speaking in Mombasa, Uhuru sought to align political activities to the country’s economic aspirations.
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“I want the economy to be a more important focus than politics. This is because our practice throughout our history has been to pursue the political kingdom as opposed to the economic kingdom. But that focus has been wrong,” said Kenyatta.
He even re-organised his government with a special focus on the Exchequer and the Ministry of Agriculture- two ministries that determine whether he will lead Kenyans to the economic kingdom.
Ukur Yatani was confirmed as the National Treasury Cabinet Secretary even as Mwangi Kiunjuri, until yesterday in the morning the CS for Agriculture, was given the boot. Towards the end of last year, the president tasked high-ranking government officials to end a cash crisis that has snuffed life out of several businesses and left scores jobless.
Kenyatta noted his government had cleared almost 70 per cent of the verified pending bills. As of December 31, ministries, departments and agencies (MDAs) had paid Sh10.2 billion out of Sh14.9 billion of validated pending bills. Counties had paid Sh28.6 billion as of December 18, last year.
The government will also float a Sh150 billion bond, debt, through which it will pay bills related to infrastructure as the government continues its quest to build roads, bridges, railways and ports. Small businesses which ply their trade in the ubiquitous informal sector, including jua-kali artisans and mama mboga, will occupy a special place in Kenyatta’s strategy for the next 12 months.
The president hopes that the removal of interest rate caps which Parliament repealed late last year, will herald cheap loans to SMEs. The head of state also instructed the Central Bank of Kenya to guard small businesses against predatory lending, where they are charged exorbitant interest rates.
He noted that five commercial banks have so far set aside Sh10 billion, which will be given out to SMEs at a low interest rate of nine per cent. This will be provided through a mobile app known as STAWI. The loans will range between Sh30,000 and Sh250,000.
But it is the agriculture sector that is likely to experience the most reforms, with the president keen on breaking the spine of cartels and brokers that have gripped the economy’s mainstay. To put more money in the pockets of farmer, the government says it will pursue those managing the sector in what is aimed at bursting a syndicate of corruption and conflict of interest which has seen brokers pocket billions as producers return home empty-handed.
Tea farmers, who in recent times, have protested low earnings with some pointing an accusing finger at KTDA - though depressed global prices of the leaf are also to blame - might benefit hugely from the president’s reforms. The reforms will involve the restructuring of KTDA to address the scourge of low tea prices, delayed payments, low initial payment and fluctuations in net income of tea farmers.
“It is clear the governance of KTDA and entire marketing of tea will require to be restructured if we are to assure our tea farmers get more revenue from their tea sales,” said the president.
The head of state regretted that due to poor corporate governance, rather than farmers earning about Sh91 per kilo for their tea, they are “currently earning about Sh41, with Sh50 shillings per kilo going to brokers and middle men.”
He thus directed the Agriculture ministry to implement Tea Regulations 2019 which will ensure anyone who is not a registered tea grower, is not allowed to sell the produce. KTDA has also been asked to think of a system that will see farmers paid not less than half of their deliveries as monthly payments. The balance can be paid as annual bonus.
Such a system has already been implemented in the coffee sector through the roll-out of the Sh3 billion Coffee Cherry Revolving Fund.
Through the Fund, the Ministry of Industrialisation will advance cheap credit to small scale coffee farmers to boost production and quality of the crop. Farmers affiliated to different cooperatives including Kenya Planters Cooperative Union (KPCU) will receive loans at a rate of three per cent.
The amount that each farmer can access will depend on the amount of the coffee that they can produce.
“A member of a registered co-operative society or a smallholder estate affiliated to New Kenya Planters Co-operative Union shall be advanced forty per-cent of the prevailing average sales price at the Coffee Exchange; Sh20 per kilogramme of cherry delivered and forty per-cent of the payment rate to members by a co-operative society for the immediate past crop year,” reads the regulations in part.
On tea, the president directed the National Treasury, the Ministry of Trade and Industry, the Ministry of Agriculture and the Attorney General to finalise and gazette the newly developed Tea Regulations (2019) within the next two weeks. This would help with value-addition.
Milk farmers that have been getting poor returns against their high yields might have a reason to smile if the president follows through his proposals. With dairy producers in areas like Nyandarua being forced to pour out their milk following a glut, the president has directed the National Treasury to release Sh500 million to the new KCC to purchase excess milk from farmers to convert it into powder milk for future use.
Moreover, another Sh575 million will be given to new KCC for set up of two milk plants- one in Nyeri and another in Nyahururu. This is aimed at enhancing their processing capacity. Meanwhile, milk products from outside of East African Community will be slapped with a 16 per cent of value-added tax (VAT) unlike the local milk which does not attract any tax.
Potato, banana and rice farmers in Nyandarua, Meru and Kisii will benefit from Sh300 million funds that will be used for the construction of cold storage facilities.
National Treasury has also been asked to release Sh660 million to the Kenya National Trading Corporation to purchase all the excess rice from Kano Plains and Mwea for onward selling to the country/’s disciplined forces, prisons services as well as boarding schools.
Content Service Providers who work with digital platforms such as Skiza and Viusasa, will be eliminated in what is aimed at unlocking royalties to entertainment artists.
“To receive royalties, Content Service Providers will be required to channel all payments of royalties through a single, centrally managed account at the Kenya Copyright Board,” said the president.