January 30, 2021 - 5 minutes read

Kenya National Budget Part 1: Building back better: Strategy for resilient and sustainable economic recovery

By Acha Ouma

KENYA NATIONAL BUDGET

The current state of engagement between the state and the public on matters related to budget allocations, expenditures, and actual service delivery outcomes is mostly focused on printed and actual figures and narratives already approved for execution. There is limited engagement at drafting and editing phase which is majorly caused by lack of independent ex-ante analyses of government numbers and narratives to facilitate issue-based discussions to ensure final numbers and narratives are responsive to the needs of the people and the economy.

Some of the existing ex-post analysis are:

  • Macro-Fiscal Snapshot –Scrutinizes and interprets publicly available information on the economy and public finances and produced by IPFK  
  • The Budget Watch – disseminates information on key issues regarding implementation of the budget estimates in a particular financial year and produced by Parliamentary Budget Office  
  • Half Year Economic & Fiscal Update – provides a summary of key recent economic and budget developments produced by the Parliamentary Budget Office  
  • Unpacking of budget estimates – Evaluates the extent to which enacted budgets, including supplementary budgets respond to the prevailing economic needs and their adherence to the tenets outlined in law as well as international best practice and produced by Parliamentary budget office.  
  • Budget Highlights, the Citizen Version – disseminate information on the budget to various segments of the society in a non-technical way and produced by National Treasury  
  • Quarterly economic and budgetary Reviews – provides information on the financial and nonfinancial performance of publicly funded entities including provision of quarterly macroeconomic data and produced by national treasury

Most of these analyses are produced by government institutions which include the Parliamentary Budget Office and the National Treasury; they do not undertake pre-budget assessment but post-budget analysis. Premised on the foregoing, in the forthcoming weeks, Vellum will endeavour to not only breakdown the process but also provide in depth analysis of the Government’s proposals across different sectors; as well as in partnership with the Institute of Public Finance in Kenya (IPFK) develop alternative positions that will influence policy. To participate please get in touch with us at: Magdalene.Kariuki@oxygene.co.ke 

PART 1: BUILDING BACK BETTER: STRATEGY FOR RESILIENT AND SUSTAINABLE ECONOMIC RECOVERY

The world over has seen economies suffer due to Covid 19 pandemic which first hit the world in December 2019.Kenya has also had its fair share as the first Covid case was reported  in the country on 12th March 2020. Many countries have been on the road to heal the strike that the pandemic has had on the economy. Kenya has not been left behind in this plight, the country has been on an agenda to cushion the effects of the pandemic such as severe disruption of the financial markets where equity indices in major economies dropped, a drop in commodity prices and trade, the suffering of tourism and remittances and deteriorated consumer and business sentiment among others.

Kenya’s budget for 2019/20 announced an emphasis on the Big 4 sectors -Agriculture, manufacturing, construction and healthcare. Covid 19 put every single one of those sectors at risk. The 2021 Budget Policy Statement has put forth proposals for measures aimed at stimulating economic recovery, the government is focused on financing the Covid 19 Economic Stimulus Programme in addition to the Big 4 Agenda. It articulates priority economic policies and structural reforms as well as sectoral expenditure programs to be implemented under the Medium Term Expenditure Framework(MTEF) for FY 2021/22-2023/22 in order to achieve the government’s development goal of economic transformation for a shared prosperity. 

Programmes such as “Kazi Mtaani” are evidence of efforts by the government to recover the economy. The post Covid 19 Economic Recovery Strategy which is based on policy, legal and institutional reforms is in its final stages. This will see faster drafting of legislation by institutions such as the State Law Office and the National Law Reform Commission among others as well as faster implementation of proposed reforms and legislations to the effect of economic recovery.

The accelerated execution of enhancement of manufacturing, food security and health, universal health care coverage and affordable housing, what the country calls the “Big 4 Agenda” will go a long way in cushioning the effects of the pandemic. In addition to that, it will steer us closer to the country’s development goals encompassed in Vision 2030 which is the country’s blueprint for development. The Vision 2030 borrows a lot from Sustainable Development Goals, the global goals by the United Nations General Assembly that are also intended to be achieved by 2030.

The government has put forth pro-growth policy measures that they consider of prime concern as follows;

▪ Roll out the Post-Covid-19 Economic Recovery Strategy 

▪ Harnessing the implementation of the “Big Four” Agenda for job creation; 

▪ Foster a secure and conducive business environment by maintaining macroeconomic stability, enhancing security; improving business regulations; 

▪ Fast track development of critical infrastructure in the country such as roads, rail, energy and water, among others, so as to reduce the cost of doing business as well as promote competitiveness; 

▪ Transform economic sectors for broad based sustainable economic growth; 

▪ Improve access to education, strengthen health care systems and enhance cash transfers to support the vulnerable members of our society; 

▪ Support youth, women and persons with disability to enable them actively contribute to the economic recovery agenda; 

▪ Facilitate the County Governments in strengthening their systems to enhance service delivery; and 

▪ Implement various structural reforms to enhance the efficiency of public service delivery while at the same time ensuring accountability for better macroeconomic and fiscal stability, sustained credit ratings, improved fiscal discipline and minimized corruption.

The BPS paper clearly highlights the plans that the government has in place for carrying through with the post Post-Covid 19 Economic Recovery Strategy all of which is pegged on a prospect macro-economic framework.

The government intends to strengthen health care systems by enhancing budgetary allocations as well as providing universal health coverage to all Kenyans. Close to the health agenda, the government is keen on ensuring adequate food and nutrition to all Kenyans.

There are plans to upscale investment in ICT and digital infrastructure through prioritizing critical connectivity infrastructure, bridging digital gaps, development of appropriate content, skills development as well as enhancing affordability, accessibility and reliability of digital infrastructure.

The government is currently implementing and will continue to implement plans and programmes under the “Big 4 Agenda”. The pandemic seems to be a wakeup call for Kenya to run the race they intended to run in the first place all while accelerating action in areas of newly discovered priorities such as job creation for the youth.

Further than that, the government of Kenya is keen on accelerating growth in the private sector investment through utilizing actions in the ICT sector, trade services which are made easier thanks to the East Africa Community Common Market Protocol, African Continental Free Trade Area(AfCFTA) and other bilateral trading arrangements.

Plans to manage the economy also include facilitated clean, green and resilient growth, disaster management, economic governance, issues of inequality, regional and international integration and cooperation among other generalships.

Land is an important aspect of socio-economic development. To achieve the goals set out under Kenya’s Vision 2030, keen interest in the aspect of land is key. The BPS paper places the country in a hopeful position of realizing better infrastructure, more lands offices, digitized records, development of policy frameworks for public land management strategies and tracking among other efforts towards growth in the area of land as an important turn down the road to development.

Reforms in the education sector will be key in achieving the Vision 2030 goals and implementing some of the strategies in the Big 4 Agenda. One of the recognizable ways in  which the government is taking this action is through the change of education system to a new one and the successful transition to the new syllabus. The government of Kenya also hired 10,000 teacher interns under the Economic Stimulus Programme. Continued sustained investment in the education sector will bring Kenya closer to achieving their sustainable development goals.

The government is fast tracking full operationalization of the Nairobi international Financial Centre(NIFC) in an effort to boost measures taken in fostering financial sector development and reforms. Regulations to implement the NIFC are currently underway. NIFC is important to Kenya therefore specific and deliberate budget allocation should be placed for its implementation as it is a key flagship project under Kenya’s Vision 2030, Kenya’s goals for sustainable development.

After all is “said and done” or in this case, after “all is said and planned”, Kenya must remain focused in its efforts towards sustainable development. Focused means action in addition to a very elaborate budget structure so that goals under the “Big 4 Agenda” and “Vision 2030” are achieved placing Kenya feet ahead. With this, the dream towards significantly improving all basic development indicators will be far from a pipe dream. 

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