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Contradictions in Kenya's new spending plan

FINANCIAL STANDARD
By Paul Wafula | June 2nd 2015

The hiring of new employees in the public service, except for critical sectors, such as security, health and education.

Nearly every Government department, agency and commission has been allocated a significantly higher amount for salaries than what the normal annual increments would be once adjusted for inflation and increases in the minimum wage.

For instance, the Public Service Commission will receive Sh105 million more to pay salaries, while the Teachers Service Commission (TSC) has been allocated an extra Sh10 billion to fund new rates for housing and hardship allowances.

The increases in the wage bill have pushed up the total recurrent expenditure by Sh13.7 billion to Sh681.4 billion in the next financial year, an 11 per cent rise. The Government’s total spending plan for 2015-16 is Sh2.17 trillion.

But even as the Government increases pay for its employees, several key sectors that require more allocation to stimulate the economy and create new jobs to widen the tax bracket have received budget cuts.

The Ministry of Industrialisation and Enterprise Development is among the biggest casualties after its allocation was reduced by 27 per cent, from Sh10.7 billion to Sh7.7 billion. It is the only Government ministry that has been handed a budget cut.

Competitive rates

The reduction is expected to strain the ministry, which is yet to fix the challenges in the manufacturing sector that have seen several companies close shop or shift their bases outside the country.

The spending cut also appears to be out of touch with the Government’s ‘Buy Kenya Build Kenya’ policy, given that a weak Industrialisation ministry will struggle to stimulate local production at competitive rates.

The Adan Mohamed-led docket is tasked with implementing key initiatives, including creating 675,000 jobs in the textile sector within the next three years, as well as 400,000 jobs in five years in the leather sub-sector. It is also expected to co-ordinate ease of doing business activities aimed at improving the country’s global ranking as investment hub.

The Independent Electoral and Boundaries Commission (IEBC), which received the biggest budget cut after its spending was slashed by 39 per cent to Sh3.7 billion, is also set to struggle in the coming years as the country prepares for the 2017 General Election.

The IEBC has already cried foul, saying the cuts will hurt an elections body that is already faced with huge unpaid bills from the 2013 elections, and lacks the funds required to start a voter registration exercise.

And despite land issues remaining one of the biggest threats to the country’s cohesion, the Jubilee administration has cut the National Land Commission’s (NLC) budget. The NLC will receive Sh1.5 billion, down from Sh1.7 billion this fiscal year.

The reduced allocation is expected to slow down NLC operations in some parts of the country. This is despite various public pronouncements by key State actors that the Government is committed to resolving the land headache, which includes delayed issuance of title deeds, corruption and the prevalence of land-grabbing gangs.

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