Jubilee faces Sh100bn bill to deliver election promises

From left: Jubilee Coalition leaders Uhuru Kenyatta and William Ruto show copies of the coalition’s manifesto during its launch in Nairobi. Photo/File 

By Geoffrey Irungu

Posted  Monday, March 11  2013 at  22:13

In Summary

• The new government must find Sh100 billion in the next financial year to pay for the goodies it promised in the heat of the campaigns. inShare

The Jubilee Alliance that won last Monday’s election will face tough choices later this month finding money to finance the generous promises it made to the electorate in a tight budget environment.

Initial estimates indicate that the government of President-elect Uhuru Kenyatta must find an additional Sh100 billion in the next financial year to pay for the goodies it promised in the heat of the campaigns even as official statistics showed that the Treasury was finding it difficult to meet the government’s obligations.

Free secondary education, free maternity services and a laptop for every child entering Class One top the list of promises that must be financed in the new financial year that begins in July.

Other budget bursting plans are the revival of the multi-billion school milk programme, subsidy of fertilizers for farmers and the offer of interest free grants to enterprising youths to start businesses.

Modest estimates indicate that free secondary education would cost up to Sh16 billion annually and the one laptop for every child entering class one plan would cost at least Sh14 billion every year.

The Kenyatta government must also find some Sh16 billion to rollout the free primary school milk programme it promised parents on the campaign trail.

Kenya had close to 10 million primary school children in 2011 – a number that grows at the rate of two percentage points every year.

One litre of milk is currently priced at Sh80 in the wholesale market meaning that with every child consuming a half a litre per week for 40 weeks (12 weeks being holidays), the government must find Sh16 billion annually to deliver the promise.

Jubilee said in its manifesto that it would partner with dairy Saccos to revive the programme. Such a partnership could lower the unit price of milk to Sh60 a litre, cutting the cost to Sh12 billion annually.

The laptop per child entering Class One is another budget bursting promise that would require up to Sh14 billion to deliver in the next financial year.

India is currently producing the lap-tops at $100 or Sh8,600 a unit and official data indicates that there were 1.504 million children in Class One at the close of 2011.

A 2.4 per cent annual growth means that some 1.615 pupils will enter Class One in January 2014 and providing each with a laptop as Jubilee promised in its manifesto gives it a price tag of Sh14 billion.

Together, the new measures in primary education – free milk and lap-tops – could cost an extra Sh26 billion.

Jubilee said it would “Work with international partners” to deliver the promise but this option is complicated by the fact that Mr Kenyatta has been indicted by the International Criminal Court for crimes against humanity committed during the chaotic 2007 election and many western governments have promised only essential contacts with him.

Finding money to finance the programmes is further complicated by the fact that the provisional 2013-14 Budget, which must be tabled in parliament by the end of next month is out and has not provided for these promises.

(Read: Foreign support Uhuru’s biggest hurdle)

This is on top of the Sh25 billion that must be found to pay teachers under a deal reached in the wake of last year’s strike.

Samuel Nyandemo, an economics lecturer at the University of Nairobi, said he expects minimal implementation of the manifesto promises citing the huge amount of resources that must by law be transferred to county governments.

“I don’t expect the Jubilee government to even come close to delivering what its leaders have promised,” said Dr Nyandemo.

But the Treasury on Monday said it can raise the money to finance the promises. Finance minister Njeru Githae said he has Sh6 billion saved from the Budget of a presidential re-run but that was still up in the air because the Coalition for Reforms and Democracy (CORD) is expected to challenge Mr Kenyatta’s first round victory in the Supreme Court.

“I will be talking to the Kenya Revenue Authority to redouble its efforts in collecting taxes. We have the potential to collect enough money to fund these promises,” he said.

Mr Githae also ruled out a possible souring of Kenya’s relations with donors in the wake of Mr Kenyatta’s victory insisting that the Treasury had signed a number of financing contracts with development partners. He said the money was ready for disbursement pending the fulfilment of conditions attached.

“The issue of which government would be in power was not part of the conditions the donors attached to disbursement of the funds,” the minister said.

The reality is however that delivery of Jubilee’s manifesto promises would mean spending 32 per cent (or about a third) of government budget on education alone by 2018 leaving other ministries without resources.

Jubilee also promised to raise health spending to 15 from the current six per cent – funneling part of the money to offer mothers free maternity services in public hospitals and removing all fees charged in public dispensaries and health centres.

Dr Nyandemo said that Kenya’s budget realities mean that the new government would find it impossible to deliver most of the promises unless it reaches out to smaller parties to push the plans through parliament.

There is also a disconnect between the between party manifestos and the existing priorities set in Vision 2030, said the National Taxpayers Association regional officer Irene Otieno.

This is because any use of public funds to finance these programmes must be done through preparation and passing by parliament of need an Appropriation Bill,” said Ms Otieno.

Allocating huge amounts of resources to education and health means the new government must set new priorities and cut some of the funding that has been going into infrastructure, sports and agriculture.

Kenya National Bureau of Statistics (KNBS) data shows that the value of agricultural inputs sold rose by 21 per cent to Sh39.23 billion in 2011 from Sh32.42 billion in 2010.

Assuming that the Jubilee government offered the farmers a 30 per cent subsidy it would have to spend Sh12 billion on the programme annually.

The offer of subsidies is however seen as a dangerous reversal of the free market policies that Kenya developed in the early 1990s because apart from the huge budget burden it opens the possibility of creating a parallel market where beneficiaries, mainly the peasant-farmers, end up selling the inputs to big commercial farmers at higher prices.

Jubilee also promised to reverse the recent wave of upgrading middle-level colleges into universities.

The coalition targets a 7-10 per cent growth rate in the first two years of its Government “in order to create one million new jobs for [the] youth.”

Independent observers such as the World Bank and the International Monetary Fund expect the economy to grow by about six per cent this year in a best-case scenario.

That, however, is unlikely to create the number of jobs promised because the economy created only 420,000 jobs when it grew by 6.4 per cent in 2006.

In 2007, when the economy had the highest GDP growth since the early 1980s at 7.0 per cent, only 486,000 jobs were created. Most of these jobs were in the informal sector.