Kenya allocated $6 million to boost the manufacturing sector. PHOTO | FILE | NMG
With an economy battered by coronavirus, locust invasion and
floods, Kenya’s Finance Cabinet Secretary Ukur Yatani on June 11 tabled a
Ksh2.79 trillion ($27.9 billion) budget for the 2020/2021 fiscal year
that seeks to revive almost every sector of the economy as quickly as
possible and still keep the government running.
This
year’s budget comes against a backdrop of weakening global economy,
shrinking domestic revenue collections and a surge in public
expenditures to address targeted interventions designed to deal with the
Covid-19 pandemic whose level of infections in the country has
surpassed the 3,000 mark.
In his
budget estimates presented to parliament, Mr Yatani said the three
shocks have had a devastating impact on the economy, which now requires a
combination of both monetary and fiscal stimulus in order to recover
over 1.7 million jobs lost in three months. The government has revised
the country’s growth prospects for 2020 to as low as 2.5 per cent from
6.1 per cent compared with last year’s growth of 5.4 per cent.
“The
challenges require bold actions if we are to position our country on a
sustainable economic growth trajectory,” he said. The minister proposed a
Ksh56.6 billion ($566 million) Economic Stimulus Programme to boost
economic activity, provide livelihoods and enable businesses to recover
from the adverse effects of Covid-19.
As
part of the eight-point economic programme, the government has set
aside Ksh3 billion ($30 million) seed capital to operationalise a credit
guarantee scheme for micro-, small- and medium-sized Enterprises
(MSMSEs) and address the issue of youth unemployment through a Ksh10
billion ($100 million) Kazi Mtaani Programme.
In
addition, the government will also focus on building a robust network
of high quality roads, railways and port with an allocation of Ksh172.4
billion ($1.72 billion). About Ksh497.7 billion ($4.97 billion) will be
used to support the education system by building additional classrooms
in secondary schools and recruiting 10,000 intern teachers to support
100 per cent transition in schools.
To improve the cash flow of businesses, Mr
Yatani proposed to fasttrack payment of outstanding verified value added
tax refund claims and pending bills owed to businesses by allocating
Ksh10 billion ($100 million). The health sector, which is currently at
the forefront of fighting the pandemic has also been prioritised by
being allocated Ksh111.7 billion ($1.11 million) to support
overstretched facilities and to equip hospitals and medical staff.
Other
interventions under this programme include Ksh3 billion ($30 million)
to subsidise the supply of farm inputs to boost food security in the
country and promote tourism by waiving landing and parking fees in local
airports.
“Going forward the
government will scale up efforts to boost the tourism sector by
promoting aggressive post Covid-19 tourism marketing and providing
support for hotel refurbishment through soft loans to be channelled
through the Tourism Finance Corporation,” said Mr Yatani.
To
boost the manufacturing sector, the government has set aside Ksh600
million ($6 million) to purchase locally-assembled vehicles. Mr Yatani
said the government is also working on the post-Covid-19 Economic
Recovery Plan, which among other things will focus on adequate local and
foreign resource mobilisation to ensure sustainable funding of
development programmes.
Kenya has so
far executed five taxation measures aimed at cushioning households and
businesses from the negative impact of the Covid-19 pandemic, which have
cost the exchequer an estimated Ksh172 billion ($1.72 billion).
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