Kenya’s economy is projected to grow at 5.5% in 2023 and maintain this growth momentum for the next three years. This is according to Kenya’s National Treasury Draft Budget Review & Outlook Paper (BROP) 2023. The document pegs this rosy projection to the strong growth of the private sector as well as recovery of the mainstay agricultural sector and consolidation of Kenya’s public sector.
The growth outlook will be reinforced by the implementation of policies and reforms under the priority sectors of the Bottom – Up Economic Transformation Agenda.
This is the first BROP to be prepared by the current Administration and the public has until September 22nd to provide their comments to the National Treasury and Economic Planning Ministry.
The current Administration took office at a time when Kenya’s economy was grappling with the effects of the Russia- Ukraine war which led to global increases in fuel, fertiliser and food prices; the lingering effects of the COVID-19 pandemic; and a severe drought witnessed in the region and most parts of Kenya.
In order to ease the burden on Kenyans, the Government embarked on immediate interventions that included: rolling out fertiliser and seeds subsidies to farmers across the country in order to bridge the food stocks deficit as well as lower and stabilize food prices.
The Government also rolled out the Financial Inclusion Fund, or the Hustlers Fund in November 2022 which supports individuals and Micro, Small and Medium Enterprises (MSMEs) excluded at the bottom of the pyramid and encourages savings.
Kenya Government interventions
Following the various Government interventions and improvement in weather conditions during the March-May planting season, the economy registered a growth of 5.3 per cent in quarter 1 (Q1) of 2023. This was mainly due to a strong recovery in agricultural activities to 5.8 per cent from a contraction of 1.7 per cent in a similar quarter in 2022.
The first half of the FY 2022/23 was marked by slow implementation of programmes and projects due to inadequate revenue resources as the new Government settled in office. Additionally, fiscal performance was affected by the general slowdown of economic activities occasioned by the adverse impact of shocks that hit the country.
Given the realities, the Government embarked on reprioritization and cost-cutting measures to ensure the smooth implementation of priority programmes for the remainder of the financial year.
Consequently, the fiscal deficit, including grants for the FY 2022/23 was revised downwards from the planned 6.2 per cent under the previous Administration to a revised target of 5.8 per cent of GDP through the Supplementary II Budget.
The Government was able to meet most of its obligations including debt repayments and releasing funds due to Government Ministries, Departments and Agencies (MDAs) and other Semi-Autonomous Governments. Additionally, for the first time in seven years, the Government disbursed 100 per cent of Equitable Share to the 47 County Governments amounting to KSh 399.6 billion by 30th June 2023.
This included KSh 370.0 billion equitable share and the arrears of KSh 29.6 billion inherited from the previous regime.
Further, in support of development activities at the Constituency level especially in support of education, health and in some cases for infrastructure, the Government also disbursed fully by 30th June, 2023, the entire allocation for National Government Constituency Development Fund (NGCDF) amounting to KSh 47.2 billion.
According to Prof Njuguna Ndung’u, CS National Treasury and Economic Planning, the implementation of the 2023/24 budget has started in earnest.
“As we prepare for the 2024/25 budget, all the spending units are therefore, expected to lay emphasis on the priority programmes under the BETA by increasing investments in Agricultural Transformation and Inclusive Growth; Micro, Small and Medium Enterprise (MSME); Housing and Settlement; Healthcare; and Digital Superhighway and Creative Industry, “said Prof Ndung’u.