Tough balancing act in President Uhuru’s last budget

The mini budget presented President Kenyatta with tough choices to make with an eye on the August 9 General Election preparedness, his legacy projects, post-coronavirus pandemic-related government interventions, drought, settling pending bills, salary adjustments, the Competency Based Curriculum (CBC) infrastructure and changes in development partners-funded projects.

This has seen the Head of State make tough decisions of reducing funding for some of his legacy Big Four Agenda development projects in favour of cash injections into arising emergency spending needs that have a direct impact on the cost of living.

Crucial

This is especially crucial to the President who has indicated that he plans to have a direct hand in his succession, which has forced the government to inject additional funds into key programmes that are geared to ease pressure of the cost of living to lighten public sentiment.

“Implementation of the 2021/22 budget continues to face challenges that include drought, Covid-19, security-related issues, among others,” said National Treasury Cabinet Secretary Ukur Yatani.

“There is increased demand for additional priority expenditure, which poses a challenge to the implementation of the budget,” he said.

The push for provision of affordable housing, a key pillar in the agenda, took a hit after its budget was slashed by Sh182 million under the housing development and human settlement docket.

This is a 2.1 per cent drop in allocation from earlier estimates, which has reduced funding to the docket from Sh8.81 billion to Sh8.62 billion.

Another Big Four Agenda loser is manufacturing, which was identified by the Head of State as a key component in his administration’s push to create millions of new jobs.

Treasury has cut Sh67 million that was budgeted for setting of standards and business incubation programmes which are key planks for the creation of new businesses at a time the pandemic has rendered thousands of Kenyans jobless.

Industrial developments

It also maintained the original budget estimates for investments in industrial developments at Sh2.27 billion, dimming hopes for increased allocation for investments that would shore up job creation.

However, the Big Four Agenda pillar that hugely gained is the Universal Health Coverage, underlining President Kenyatta’s resolve to boost healthcare coverage in his last few months in office.

Treasury allocated an additional Sh14.95 billion to the Ministry of Health, of which Sh8.54 billion will go towards the World Bank funded Covid-19 vaccination drive, which has been made priority for economic recovery.

It also injected Sh1.3 billion towards establishment of a Covid-19 vaccines plant, Sh764 million towards salaries of medical staff, Sh2.06 billion for specialised medical services and Sh2.27 billion for boosting health policy and standards.

The budget cuts for some of the Big Four Agenda projects contrast with bumper allocation for social support programmes that have been prioritised in the supplementary budget.

Kazi Mtaani

Treasury has allocated an additional Sh3.45 billion for the Kazi Mtaani programme undertaken by the State Department of Housing and Urban Development, which is a 56.6 per cent increase from the original estimates. 

The increased allocation to the programme that employs hundreds of thousands of young people is a clear shift in priorities for President Kenyatta, who is seeking to boost the job market ahead of the elections.

Another indicator of the Head of State’s priorities in his last budget is the allocation of Sh24.7 billion for stabilisation of fuel prices through the fuel subsidy scheme.

The government has kept fuel prices at the same level for four months, despite rising global crude oil prices, which has helped ease the burden of the cost of living on Kenyans, with fuel being a huge factor in inflation over its use for transport, electricity generation and farming.

The additional allocation will be used to compensate oil marketers who have been forced to sell fuel at zero margins during the period to prevent a record-setting fuel price increase such as that seen last September, leading to public outcry.

Infrastructure

Infrastructure development, which is considered the apple of the President’s eye during his tenure, also reaped big, getting an additional Sh7.3 billion for boosting the country’s road network -- a 3.7 per cent increase from the original estimates -- and Sh1.5 billion for boosting rail transport.

Also a big winner was top state corporations such as struggling national carrier Kenya Airways (KQ), Kenya Airports Authority (KAA) and Kenya Wildlife Service (KWS) who are set for bailouts, an indication of President Kenyatta’s resolve to stabilise government-owned entities in his last few months in office.

Treasury has allocated Sh26.56 billion for these bailouts, a majority of which will be used on KQ.

It told the International Monetary Fund (IMF) it would allocate Sh4.8 billion in the supplementary budget for bailout of KAA and KWS.

“In FY21/22 Kenya Airports Authority and Kenya Wildlife Services will receive a total of Sh4.8 billion temporary support to cover the fallout on revenues due to the pandemic,” said the IMF.

“A supplementary budget for FY21/22 to cover these needs (bailouts) will thus reflect challenging policy trade-offs,” it said.

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