BPS and Trade sector – General Economic and Commercial Affairs(GECA)

February 19, 2021 - 5 minutes read

The BPS paper FY 2021/22, that is currently at the implementation stage in the Kenya budget calendar and that was tabled in Parliament in the second week of February seems to be geared toward the realization of the Big 4 agenda. 

The critical pillars that the BPS emphasizes are Agriculture, manufacturing, construction and healthcare. The enablers of the Big 4 Agenda include:

  1. Conducive Business Environment for investment and job creation through macro economic stability, business regulatory reforms and improvement of national security)
  2. Investing in infrastructure development through further expansion of road networks as well as rail, marine and air transport.
  3. Investing in sectoral transformation for broad based sustainable development
  4. Enhancing service delivery through devolution by enforcing compliance of fiscal responsibility as well as having policy frameworks that strengthen the legal underpinning for locally generated revenue collection.
  5. Investing in Kenyans for shared prosperity through investing in quality and relevant education, strengthening social safety nets as well as empowering the youth, women and persons with disabilities.
  6. Entrenching structural reforms to support  the Big 4 Agenda through strengthening governance and the fight against corruption and deepening public finance management.

The achievement of targets such as macro economic stability including in the area of trade are critical to unlocking these enablers. The Big 4 Agenda risks being a pipe dream if the trade sector is not given the attention it deserves. The trade sector-GECA that is a core driver of the Big 4 Agenda, is one of the sectors that is not adequately funded. 

Budgetary Allocation

In FY  2021/22, GECA has been allocated a total of 16.8 Billion Ksh with the development expenditure allocation being 6.6 Billion Ksh. This area deserves more allocation given its potential to improve the country’s economic performance. The allocation should not just be a blind allocation but very specific and should target specific projects and programmes in the sector.

Trade to Save Our Weakened Economy

The global economy has weakened especially due to the Covid 19 pandemic that hit Kenya on 12th March 2020, Kenya needs to put more focus on trade as it may just be the saviour of the economy’s sluggish growth. This is because trade offers a helping hand in pushing the growth of all other sectors including  ICT, health, social protection and public debt.

The government has placed a lot of hope in the trade sector as far as the Big 4 Agenda is concerned. The key roles that the sector will play include the following:

  1. Increasing manufacturing contribution to GDP from 9.2% as it was in 2017 to 15% by the year 2022.
  2. Contributing to the achievement of the targeted 500,000 decent and affordable housing.
  3. Contributions towards food security.
  4. Contributions to the manufacturing and agro processing industry.
  5. Creating an enabling environment for business.
  6. Contributions to investment and natural resources through mobilization of resources.
  7. Promotion of exports.
  8. Promotion of sustainable tourism. 
  9. Deepening the EAC integration.
  10. Promoting equitable regional and socio economic basin based development.

A Look Down History Lane

The government of Kenya should be advised by the trade sector’s FY 2017/18-2019/20 MTEF period when making budgets for the sector. In the MTEF period 2017/18-2019/20, the total approved budget for the sector’s programmes and sub programmes was 78.9 Billion Ksh, while the actual expenditure was 66.47 Billion Ksh. This represented 84.6% absorption level. A lot of the projects were successful to a considerable extent and great achievements were seen in the utilization of the allocated funds. Some of these achievements included:

  1. An increase in the value of wholesale retail trade from 601 Billion Ksh to 740.4 Billion Ksh. This was a 23% increase.
  2. The exportation of goods worth 1.80 Trillion Ksh
  3. The seizure of counterfeit goods worth Ksh. 1.85 Trillion Ksh
  4. Improvement in international tourism from 1.45 Million Ksh in 2017 to 2.04 Million Ksh in 2019
  5. Improvement in earnings from 119.9 Billion Ksh in 2017 to 163.6 Billion Ksh in 2019

Trade And Post COVID 19 Economic Recovery

It is clear that trade is a vital factor when it comes to improved economic performance. The government should make a clear action plan in the area of trade as a means to recover the economy.

Stakeholders in the trade sector should be involved in brainstorming different approaches in which the trade sector  can influence the economy including the Post Covid Economic Strategy that was rolled out by the government last year.

Recommendations For The Government

Civic education on the entire budget process including the budget calendar  should be done in order to promote meaningful contributions as well as encourage participation.

Since Kenya runs under a devolved government, it is expected that counties have a substantial role to play in actualizing plans under the BPS. However, the roles that counties have is not clear from the allocations as well as the policies. There is difficulty in knowing how to engage. 

The risk that this may have includes duplication and overlaps in the trade sector allocations as well as allocations in other sectors. 

There is a need for an inter fiscal framework for implementing the big 4 plan and strategy harmonized to guide the allocation of resources and service delivery. The government would really benefit from collaborations with relevant stakeholders in the creation of such a framework as well as garnering ideas on how to deal with expenditure pressures.

There is also a need to monitor and evaluate projects and programs that have been set for the purpose of realizing the Big 4 Agenda. As of now, there is no clear accountability framework in the trade sector to facilitate the implementation and tracking of the Big 4 Agenda expenditures. The government would do well with a framework that clearly spells out the agenda, policies and strategies complete with a result matrix. These policies also need to be as comprehensive as possible. 

Last but not least, the government should look at setting clear ways in which stalled projects will be dealt with, set clear timelines and completion rates of critical projects and programs including those in the area of trade. Such timelines go to show Kenya’s dedication to sustainable development and steer the country towards achieving the goals set out under Vision 2030.

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