Kenya Budget 2017: Unresolved Issues

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KENYA BUDGET 2017

Dear Fellow Tax Payers,

Kenya’s budget 2017 will be read tomorrow (30th March, 2017) by the Cabinet Secretary for Treasury starting from 3:00 PM.

Venue: At the floor of the Kenya National Assembly.   

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For the first time in a couple of years in Kenya the budget is on steroids. It has been accelerated to avoid a having a Constitutional crisis because national and county assemblies should be dissolved 60 days before the elections day (August 8). 

For the past several weeks, we’ve been combing through the national budget estimates with a tooth pick. We read each and every line to see whether it makes sense for us (we are all tax payers). We noted a number of inconsistencies in Kenya budget 2017/18.

I doubt whether the Cabinet Secretary for Treasury will resolve these issues tomorrow in his budget speech. It’s a wait-and-see situation right now. I’m sure of one thing. The normal pomp and color during budget reading day will be displayed tomorrow. Hon. CS will arrive at the national assembly carrying his black brief case with the court of arms proudly displayed on it! 

I’ve to mention that the Cabinet Secretary’s suit will bear a flower on its breast pocket. I’ve never known the significance of that. Is it just protocol to wear that flower for all finance ministers? One day I will find out!

Being male is a requirement to head the Finance docket, i guess 

It’s so sad that the 2/3 Gender Rule does not apply (literally) on the “ministers” for finance over the years. When did you hear the budget being read by a woman in Kenya? Nope. 

Elsewhere, it is the same case. In the United States the presidency has been in dominated by males since 1776 when they gained their independence from their British masters. The papacy in Rome follows the same tradition. When shall we have a woman pope. Not soon. Maybe in our dreams. The Presidency at the World Bank is not left behind. At least International Monetary Fund (IMF) is showing them the way with Christine being the woman to even be at the helm.  

Kenya Budget 2017
cross section of former World Bank presidents. All of them male. credit: screen grab from world bank website.

Leaving that aside, I want to raise a number of concerns on the Kenya national budget 2017. 

Wage Bill

Depending to whom you talk to, wage bill figures will be different. It’s saddening that even documents produced by the same institution (read: treasury) have different figures for the total wage bill. There is opaqueness on this matter. 

  1. Budget summary = Sh. 365 Billion 
  2. Programme Based Budget (PBB) = 390 Billion 
  3. the figure in (b) above does not include compensation for employees in state corporations, national assembly and judiciary.
  4. Recently, the cabinet approved Sh. 100 billion to be used for increasing civil servants salaries during the financial year 2017/2018. It’s so unfortunate that that amount cannot be found in the available budget estimates. 
  5. We cannot tell how much is public debt from the available documents

Paying debts 

In 2017/2018, we will pay our debts as Kenyans. This is an obligation we can’t avoid. 

I’m told that the government borrows on my behalf. The problem is that they do not consult me when they go out borrowing. I’m only important when they want my counsel on how to pay the piling debts. This must change. 

In FY 2017/2018, we will repay more debts than ever before because a number of loans have reached their maturity. For instance, in October 2015 Kenya received a syndicated loan from Standard Chartered and other lenders and that is maturing in FY 2017/2018. 

On this syndicated loan, all pointers are that our government may roll it over to to Fiscal Year 2018/2019. 

Other loans reaching maturity in 2017/2018:

  1. A Sh. 21 billion loan from Africa Export-Import (Afrexim) bank. This is the money that bailed out Kenya Airways.
  2. International sovereign bond (Sh. 19 billion)
  3. Exim Bank of China (Sh. 16 Billion)
  4. Standard Chartered Syndicated loan (Sh. 11 billion)

[Note: Syndicated loan is a loan provided by several lenders (called a syndicate) to a single borrower. The borrower can be a government or a large corporation]. 

Adverse Opinion on Public Debt 

In FY 2014/2015 (latest complete audit report), the Auditor General gave adverse opinion pointing out that the national treasury is not preparing statements in line with international public sector accounting standards. 

Taxation burden (analogy)

Obviously, tax collectors are salivating at my stunted salary. Salary is now in class 3 for the last several years. This is the only child that is not growing as expected. His siblings are growing fast. Look at rent, he is already sitting for his K.C.P.E exams, foodstuff is in form 3, foodstuff is now graduating from university. My last borne, Water is rarely at home. She dropped out of school and works as a house servant for the rich. They pay her peanuts. 

Equity or equality?

The national budget that will be read tomorrow has 12 funds for alleviating poverty. The biggest challenge is that the funds are opaque and their distribution is done equally and not equitably.  

How much will be spent in 2017/2018?

The judiciary, parliament, Ministries, Departments and Agencies will spend Sh. 2.6 trillion. This figure makes my head go crazy! It is lots of money. If used prudently our country can move to another level.  I think it is time for us to document the huge wastage we experience in Kenya’s public spending.

In the State of Arizona in United States one Senator Jeff Flake compiled a “Waste Book” to expose how the federal government is wasting taxpayers’ money. For instance in 2015, the national Institute of Health funded the Primate Research Center to train monkeys to run on a thread mill. This research cost the tax payers $1 million (approx. Sh. 103 million).

I’m preparing a ‘waste book’ for Kenya, it is going to be shocking. From condom dispensers, multi-million gates, using millions to open accounts on social media, super wheelbarrows among other projects. Waste is real in Kenya. 

ICT budget is shedding weight

Information, Communication and Technology (ICT) has been considered overweight by national treasury. In order to remedy its predicament, the national treasury slashed it’s budget by 28 percent. This is great satire considering that the government rhetoric is to sustain and expand investments in infrastructure.

Debt repayments and Pension 

The interest on debts and pensions are growing faster than revenue growth. This is frightening. Interest on debt and pensions are expected to increase by 15% between the FY 2016/2017 and 2017/2016 compared to a revenue growth of 14 percent. 

Exchange rate: (1USD = Sh. 103)

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Editor-in-Chief

Geoffrey Kerosi is a prolific Kenyan writer based in Nairobi City. Email: info@kerosi.com. Skype: gkerosi Whatsapp: +254713 639 776 YouTube: Kerosi TV

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