The year 2022/2023 is an elections year in Kenya and hence the budgeting process will be quickened. The national assembly and the Senate will be dissolved some months before the August 2022 elections, so you understand why the planning and budgeting process will be interrupted and not business as usual.
Currently, politicians and many other actors are interested in monitoring the electoral activities re campaigns and striving to retain or capture various electoral positions such as MCA, MP, Governor and Senator among others. There is a likelihood that less attention will be available towards other processes including planning and budgeting.
According to Parliamentary Budget Office, there are other factors which have an impact of Kenya’s budget. First, the high political tensions which are always experienced in Kenya every five years which has an effect of dampening economic activities across the nation and of course Covid-19 which has be-deviled mankind since the beginning of 2020. It is now two years the world has been living under a pandemic which threatens to wipe humanity from the surface of the earth.
Covid still remains a threat to life and the world economy. Millions of people around the world have lost their jobs, Kenya is not an exception. The political campaigns in Kenya are putting the lives of people in danger because these activities are competitions to see who fills the largest stadia in a show of mighty. During the campaign rallies Covid-19 protocols such as social distancing and wearing of face masks is not strictly adhered to. Hence putting millions of people’s lives in danger.
Drought is another problem facing Kenya. This has largely affected agricultural productivity and more especially pastoralism.
The Kenya Budget Policy Statement for 2022 was generated under a revised budget calendar that takes into account the preparations for 2020 General Elections. The budget for fiscal year 2022/2023 is expected to be finalized by March 2022.
Current state of the economy
Kenyan economy is reported to have contracted by 0.3% in 2020 compared to a growth of 5% in 2019. This contraction is attributed to the Covid-19 Pandemic that gripped the world from the beginning of 2020.
We are yet to see whether the economy bounced back to 6 percent in 2021 as predicted in the Budget Policy Statement 2022. Kenyan economy is stabilizing and the National Treasury hopes that this trend will continue into 2022.
Kenya’s current account deficit is estimated to be 5.5 percent of Gross Domestic Product (GDP) in the last 12 months to Sep 2021. This is a sign that there are higher imports of goods and services when compared to 2020.
In 2020, the global economy contracted by 3.1 percent. Experts predict that the economies of developing countries will recover at an even rate. This is due to the uneven access to Covid-19 vaccines which has a direct impact especially at the resumption of economic activities in those countries.
The economies of Sub-Saharan Africa contracted by 1.7 percent in 2020 and was projected to grow by 3.7 percent in 2021 as a result of improved exports as well as commodity prices and increased rollout of vaccination programmes.
Kenya’s Year-on-Year Inflation rate was 6.9 percent by September 2021. This is within the expected range of 5+-2.5 and it ranks favorably compared to other SSA countries. Elsewhere, inflation in Zambia is 22.1 percent and 16.6 percent in Nigeria.
Data provided by the National Treasury indicate that Kenya imports more goods (nearly 3 times) the value of goods that she exports. We are heavy importers in relations to exportation. It is a general trend where developing countries export raw materials and imports finished goods. This is our main weakness.
Kenya’s official foreign exchange reserves held by the Central Bank is reported to have increased to USD $9.6 billion in Sep 2021 compared to USD $8.7 billion in September 2020. If you are a keen reader of this blog you are already aware that our South African brother Elon Musk (currently CEO of Tesla) has revealed that he will pay an excess of $11 billion in taxes this year. The U.S. government much be the luckiest to be the recipient of those taxes. It is a clear indication that Kenya as country needs to pull up her socks. The revenues of some corporations are bigger than our entire economy!
Financial outlook
The National government plans to widen the tax base by tracing the digital economy and through ensuring that High Net worth Individuals comply with their tax obligations. They also seem to know the importance of enhancing tax compliance, curbing corruption and fraud as well as tax evasion.
Economic Stimulus Programmes in 2022
According to the Budget Policy Statement 2022, Kenya national government plans to set aside Ksh. 1 billion towards small scale tea farmers with fertilizer subsidy. Sugar cane farmers will not be left behind too, a total of Ksh. 1.5 million may be set aside to be used on payment of farmers’ arrears and factory maintenance.
An additional Ksh. 1 billion will be set aside for targeted interventions in the coffee sub-sector. Communities affected by the ongoing drought will benefit from Ksh. 1.5 billion which may be set aside in Kenya’s 2022 national budget.
The national government is looking into plans to invest Ksh. 8 billion on CBC infrastructure in preparation for the transition of 1 million students into junior secondary by January 2023. These funds will be used among others in the construction of 10,000 classrooms.
Kenyan government is planning to set aside Ksh. 10 billion for another round of “Kazi Mtaani” programme to create jobs for another 200,000 Kenyans.
Kenyan government plans to operationalize the Kenya Biovax Limited to form and fill and eventually manufacture Covid-19 vaccines by Easter of 2022. These are great plans if they are implemented and indicated on paper.
In the tea sector, the restructure of Kenya Tea Development Agency (KTDA) has streamlined and improved operations in the sector. This has set the price of tea on an upward trajectory. We are yet to see the fruits from the reforms in the tea sector. We have our fingers crossed and hope for the best in the nearby future.
In order to achieve food security, it is reported in the Budget Policy Statement 2022 that “the government has increased land under irrigation through expansion of Galana Kulalu farm acreage from 52,000 to 100,000. There are other irrigation projects being implemented such as those at Bura and Lower Nzoia.
Transfers to county governments
The Budget Policy Statement 2022 projects that the 47 counties will benefit from Ksh. 370 billion of equitable share in 2022/2023.
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in-depth analysis.