Uhuru sets the tone for public wage bill cut

 

The public outside Parliament buildings on Tuesday. President Kenyatta told Parliament that the State would give locally manufactured goods a priority in public procurement. Photo/Denish Ochieng 

 

By Edwin Mutai

In Summary

• President Kenyatta used his maiden speech to the 11th Parliament to signal his discomfort with the shape of the national budget pointing to the ballooning public sector wage bill.
• At Sh458 billion, Kenya’s public sector wage bill stands at a high of 12 per cent of the gross domestic product (GDP).

President Kenyatta Tuesday put before parliament a heavy a heavy legislative agenda that is backed by a raft of measures aimed at keeping public expenditure in check and laying a strong foundation for sustained economic growth.

The President spent a large part of his 40 minute speech to parliament defining the path he wants Kenya to take under his stewardship – making reduction of government waste and putting state finances in shape top of his list of priorities.

Mr Kenyatta used his maiden speech to the 11th Parliament to signal his discomfort with the shape of the national budget pointing to the ballooning public sector wage bill he said is unsustainable.

At Sh458 billion, Kenya’s public sector wage bill stands at a high of 12 per cent of the gross domestic product (GDP) compared to the globally recommended average of seven per cent of GDP.

The President therefore positioned wage bill reduction as a centrepiece of his economic agenda telling Members of Parliament and employees of the state to work towards its reduction and offer the fiscal space that is needed to put the economy on a steady growth path.

“As a priority we must exercise prudent management of the public finances, especially the overall wage bill,” he said in his maiden speech to parliament.

“Today recurrent expenditure is reaching unsustainable levels, squeezing out resources meant for development. We must keep the public wage bill in check.”

Though Mr Kenyatta did not directly refer to the bourgeoning public debt burden that rose to a high of Sh1.8 trillion early this month, his speech was laden with measures aimed at dealing with the matter which economists say could weaken the growth prospects if allowed to continue growing at the current rate.

The President signalled that his government would tackle the budget imbalance through a combination of measures aimed at sealing avenues of waste and fighting corruption that is estimated to consume up to 30 per cent of the Sh1.5 trillion national budget.

“I will act swiftly to end the scourge of corruption that makes our country less attractive as an investment destination, limits access to the much needed services, stifles efficiency and eats away at public values,” he said.

Mr Kenyatta stayed on his message of promoting home-grown industries promising to roll out policies that encourage value addition to Kenya’s primary produce as a way of increasing the value of exports and creating jobs for millions of unemployed youths he said are wasting away in crime and drug abuse.

“We need to spark an industrial revolution in our country. Within the next few years, we must add value to our produce, and manufacture here in Kenya the finished goods that we increasingly use in our homes and businesses,” he said.

Kenya’s official unemployment rate stands at 40 per cent but the President said the rate of joblessness could be as high as 70 per cent among the youth.

The President said the Jubilee government’s economic agenda would be underpinned by modernisation of agriculture whose centre-piece he said would the opening up of one million acres of fresh land for farming through irrigation and use of modern technology.

(Read: President Uhuru faces a crowded business agenda)

Mr Kenyatta yet again showed the clearest sign that he remains focused on improving the livelihoods of the millions of young Kenyans whose support was critical to his winning the March election, promising to set up a new youth enterprise fund that would disburse interest-free loans to those with commercially viable ideas.

The President said the Jubilee government plans to consolidate and harmonize the youth and women’s funds to make them easily accessible to citizens at the constituency level through system modelled on the CDF framework.

Mr Kenyatta reaffirmed his resolve to make Kenya a double digit growth economy saying it was the only means to lift millions of Kenyans from poverty. Reducing the cost of living for the millions of Kenyans in the bottom income bracket would be part of the agenda for poverty reduction, the President said.

“Our focus both as executive and the legislature must be on reducing the cost of living and making Kenya much more competitive thereby increasing opportunities while improving the standard of living,” he said.

Mr Kenyatta promised Kenyans a lean and effective government saying the task will begin with the streamlining state agencies to end the confusing and wasteful overlap of responsibilities.

The President identified nine key pillars including transparency, ending the scourge of corruption and protecting the gains of individual rights and freedoms that will drive his government towards the achievement of set goals.

Mr Kenyatta’s speech was, however, seen as expressing his resolve to stay in an expansionary fiscal path reaffirming most of the budget busting promises he made on the campaign trail without giving a clear direction as where the government will get the billions of shillings needed to fund them.

The President told parliament to move with speed in enacting legislation that is needed to remove maternity fees from all public hospitals and eradicate access fees paid in government dispensaries and health centres.

Parliament is also expected to pass, as part of the budget work later this month, legislation that will set aside money to finance the promise of laptop to all children entering class one next year.

(Read: Treasury reviews budget to include Jubilee promises)

To promote external trade, Mr Kenyatta said all agencies charged with marketing Kenya abroad would be combined to create a single body with reach, expertise and profile to represent and promote the country abroad, while attracting trade, investment and tourism from across the world.

“Our embassies and missions will be remodelled to market Kenya in their respective countries and link directly to this new trade promotion service,” he said.

The Jubilee government also plans to create a national sports lottery scheme that will foster sports and entertainment sectors in addition to building five sports stadia in major towns in Kenya.

The President said the government will legislate to increase the quatent of local content in TV and radio stations to 60 per cent from 40 per cent to promote the growth of arts and entertainment as a viable industry that offers employment to the youth.

He pledged to continue building on the nation’s infrastructure, railway, housing, ports, and hospitals through projects such as Lapsset aiming to create new mass transport and commuter networks in the cities and long distance connections to neighbouring countries.

 Other areas of focus will be health, extension of basic services such as water and electricity to every household, combating perennial droughts and floods, investment in alternative sources of energy and partnering with regional and African states to increase Kenya’s trade volumes.