The Treasury Cabinet Secretary Ukur Yatani walked a tight rope while making public pronouncements on the Kenya Budget including his revenue-raising measures and the highlights of the KSh 3.2 Trillion 2020/21 document, his first such appearance before parliament.
It was also the first time that the budget speech was made after the presentation of the Finance Bill 2020/21, a document that has previously been tabled after the budget is read.
This Finance Bill will be assented by the President as per provisions of the Public Finance Management(PFM) Act on 30th June, 2020.
Here is how the KSh 2.79 Trillion Total Expenditure envelope will be spent through allocations made to various sectors, ministries, state corporations and Government agencies by the National Treasury.
On the list of beneficiaries is the Education sector, which has been allocated KSh 497.7 Billion or 26.7% of the National Budget. Out of this, KSh 59.4 Billion is for free secondary education and KSh 12.4 Billion for free primary school education.
Treasury has further allocated KSh 2 Billion for the recruitment of 5,000 teachers, KSh 1.8 Billion for the School feeding program, KSh 6.3 Billion to TVET institutions, KSh 4 Billion to cater for exam registration fees waivers for class 8 and fourth form students and KSh 800 Million for Digital learning program as well as for implementing the Competence-Based Curriculum(CBC). The Higher Education Loans Board has been allocated KSh 16.8 Billion.
The transport sector is second with an allocation of KSh 172 Billion for construction and rehabilitation of road networks, KSh 18.1 Billion for the second phase of the Standard Gauge Railway(SGR) project, KSh 6 Billion for the LAPSSET project, KSh 5 Billion for the Mombasa Port and KSh 328 Million for insurance services to the ferry services on the Likoni Channel.
The Energy sector is also on the list of winners, at KSh 63.3 Billion out of which KSh 50.8 Billion will be used for transmission and distribution of electricity, KSh 6.8 Billion for connecting electricity to public institutions, KSh 6.8 Billion for exploration and generation of geothermal power.
Treasury has allocated KSh 167.9 Billion to the security agencies which includes the army, prisons and the National police force as well as national intelligence. These funds will be used for procuring medical insurance for police and prison staff, setting up of forensic laboratories and leasing of vehicles for the police.
The sector has been given a total allocation of KSh 52.8 Billion that will be used to ensure food security including setting up irrigation projects and construction of dams.
The health sector has been allocated KSh 111.7 Billion, made up of KSh 50.3 Billion to enhance Universal Health Coverage, KSh 19.2 Billion to deal with Malaria, HIV and Tuberculosis and KSh 6.2 Billion for providing specialized equipment to public hospitals. There is a further KSh 4.1 Billion for Free Maternity services, KSh 15 Billion to Kenyatta National Hospital, KSh 7.2 Billion to Kenya Medical Training Centres, KSh 2.5 Billion to Kenya Medical Research Centres and KSh 4.3 Billion to level 5 hospital facilities across the country. KSh 1.5 Billion has been allocated to Mathare Mental Hospital.
The Housing, Urban Development and Public Works has been allocated KSh 15.5 Billion in the Kenya Budget 2020/21, out of which KSh 6.9 Billion is for affordable housing projects and a KSh 3.2 Billion loan from African Development Bank is soon to be concluded.
The Manufacturing sector has been allocated KSh 18.3 Billion to support local industries and is made up of KSh 1.4 Billion to Kenya Industrial Estates, KSh 3.5 Billion for Special industrial parks in Naivasha and Athi River as well as KSh 843 Million to rehabilitate Rivatex Textile Mills in Eldoret, KSh 500 Million for the dairy processing sector and KSh 3 Billion for Donyo Kindu special economic zone.
The ICT Sector
Treasury, through the Kenya Budget, has allocated KSh 14.9 Billion to the ICT sector, out of which KSh 700 Million will support Government shared services platform, KSh 800 Million for Digital Learning Program, KSh 1.2 Billion for extension and repair of the national fibre optic cable, KSh 6.3 Billion for infrastructure development at Konza tech city, KSh 400 Million for setting up a data centre at this facility and KSh 400 Million for completing Phase B of the Konza City project.
Parliament & County Governments
Parliament has been allocated KSh 37.3 Billion while the Judiciary will receive KSh 18.1 Billion from the exchequer.
County Governments will receive KSh 369.9 Billion while Nairobi Metropolitan Services will receive KSh 26.4 Billion, made up of contributions from the county and national government. This is to enable the unit discharge its duties, those that were hived from the Nairobi County Government.
The Water sector will receive KSh 82.7 Billion for rain water harvesting, conserving the water towers and the environment.
To fight corruption, Treasury has allocated KSh 3.1 Billion to Ethics and Anti-Corruption Commission and a similar amount to the Office of Director for Public Prosecutions.
Firms in the digital market place top the list of losers in the Kenya Budget 2020/21. This follows the introduction of 1.5% tax on firms in this industry. Publication of rules on how to tax the digital economy remains a controversial topic among tax experts and policymakers.
“We expected the CS to announce further fiscal measures to boost revenue collection e.g. Minimum tax is likely to sail through because this will deal with loss-making taxpayers once and for all,” said Patrick Ngotho Chege, a tax expert at Deloitte Kenya.
While he agrees that taxation of the digital economy is the new frontier for all governments, there is a need to strengthen administrative measures by KRA when dealing with taxpayers especially on tax base expansion.
“We expected the high cost of living to be addressed by lowering costs of production and particularly a better stimulus package in government that would create agro-based, hospitality and other jobs,” said Stephen Mutoro. Secretary-General, Consumers Federation of Kenya (Cofek). He told this publication that what the budget should have done is focus on recovering the millions of formal and informal lost jobs.
“We must get the economy back. We need a re-invigorated consumer power index. We also expected a budget that shall fight pilferage by enhancing the judicial justice system and help save nearly a trillion lost to corruption every year. We must hold brakes on borrowing for mega and long-term projects.