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Uhuru team risks probe by MPs over controversial unga subsidy

Shoppers at a maize flour stand in a supermarket in Kisumu City in July 2022. [Collins Oduor, Standard]

The National Treasury wants Parliament to probe the maize subsidy implemented in the final days of retired President Uhuru Kenyatta's administration, casting doubt on whether it was value for money and had any impact on Kenyan lives.

The ministry has set aside Sh3.6 billion in the first supplementary budget to pay maize millers who had lowered the cost of their product.

Treasury, however, noted that concerns raised by Kenyans who say they never benefited from cheap unga prices deserve to be looked into before it pays out the money.

It now wants National Assembly's Budget and Appropriations Committee to look into the matter before making recommendations in its report on the mini budget to Parliament.

The subsidy, launched in July, was expected to bring down the cost of a two-kilogramme packet of maize flour to Sh100 from a high of Sh230.

The government, however, suspended the programme in early August due to insufficient funds. By then, however, some maize millers had released low-priced flour to the market and had been demanding that government pays them their dues.

Supplementary budget

Treasury Cabinet Secretary Prof Njuguna Ndung'u tasked the Budget and Appropriations Committee to further look into how the subsidy was applied, including to which extent Kenyans benefited.

He was appearing before the committee that is considering the supplementary budget before making recommendations to National Assembly.

"I have heard in the political circuits (that the subsidy was not effective). This requires some form of investigation and this is where this committee will help because we are not going to deal with it as a political issue but as an expenditure. It should be ratified and processed. It has to be justified," said the CS, asking the committee to do further digging and ascertain whether the subsidy had the impact of lowering maize flour prices before approving the supplementary budget.

"I have heard it being said that there is nowhere that the subsidy was felt, so where was the subsidy? I am hardly four months into this job and you can imagine that it (the subsidy) is already causing challenges. What is coming out is that we did not see the impact of the subsidy, then the next question is where did it go?"

"This committee should help us with the answers... you are a parliamentary committee and have the mandate, so essentially you can help people like us - myself the PS and my staff - who cannot do that ourselves."

Maize millers availed 117.35 million kilogrammes of maize flour over the two months, according to the Supplementary Budget.

In the mini-budget, Treasury increased allocations to the State Department of Crop Development and Agricultural Research.

The State Department housed by the Agriculture Ministry received an additional Sh25.1 billion to Sh66.6 billion from Sh41.5 billion. It will get an additional Sh3.6 billion in its recurrent budget, pushing it to Sh18 billion, with Treasury noting the additional funds be used to pay for the maize flour subsidy.

The development budget has been increased from Sh21.5 billion to Sh48.6 billion to cater for the current regime's cheap fertiliser programme.

Chairman of the Budget and Appropriations Committee Ndindi Nyoro said the MPs would look into the matter, noting that MPs from different parts of the country also reported that their constituents had not seen any reprieve in the cost of flour.

"When you spend Sh4 billion in a subsidy, prices ought to have come down. We have been asking wananchi across the country but they did not see this... prices of flour did not go down anywhere. Even if we find pockets where unga prices went down, probably that is a good basis," he said.

At the same time, Prof Ndungu said the government was not planning to raise taxes but instead aimed at growing the tax base to grow tax revenues. The government has recently set an ambitious tax collection target for the Kenya Revenue Authority (KRA) of Sh3 trillion by June 2024 and further grow to Sh4 trillion in the medium-term.

KRA is expected to collect Sh2.19 trillion in the course of the current financial year. Ndungu told the MPs that the increase would come from a combination of both tax administration and tax policy forms.

"We are not saying that we are going to increase the taxes. We want to lower the taxes so that we do not have incentives to avoid the tax but also try to cover as many goods products as products," he said but did not elaborate on the taxes to be reviewed downwards.

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