When Henry Rotich, the CS for National Treasury took to the floor of Parliament to read out this year’s budget statement, most households in this country must have been holding their breaths. For many Kenyans, this was a chance to determine the level of government commitment in improving their livelihoods by supporting economic growth, promoting job creation and enhance social security and welfare. Others were keen to determine which way the country would be taking economically because as they say, the best way to know how a government thinks is to look at its budget every year.
One of the most striking realities from the budget statement and the estimates which had been approved by Parliament a day earlier is our national debt level. From the estimates, it was clear that the domestic debt would be growing over the next financial year, since the government anticipates to have continued domestic financing for development expenditure at 59 per cent in 2017/18. This is an increase from 2016/17 which was at 57 per cent. Although this favours the banking sector and other domestic sources of revenue, it defeats the idea behind using tax revenues to finance development. It also indicates a possibility of a further look out for ordinary citizens and SMEs from accessing credit, since lending institutions would prefer to lend to the government, instead of the former, whom they consider as ‘high risk’ borrowers.
The Cabinet Secretary also outlined plans to provide incentives aimed at supporting domestic growth, creating new jobs and enhancing social security and welfare. Although noble, this commitment could open up loopholes for loss of tax revenues which previous research has proven costs Kenya well over 100 billion Kenyan shillings annually. These lost revenues could otherwise be used to finance essential services such as free maternal healthcare, improving the extent and reach of basic education as well as financing other public services. Treasury therefore needs to deliberatively assess the worth of these incentives by carrying out a cost benefit analysis of all incentives issued in the last couple of years and comparing this with what their value proposition has been for Kenya so far. This will inform the extent to which we would be willing as a country to continue losing more revenues all in the name of attracting investment.
One other thing that Kenyans must start questioning is the feasibility of funds such as the National Government Constituency Development Fund (NGCDF) and others which are aimed at reducing poverty and inequality. The disbursements made by these funds to the various units leaves one wondering whether their aim is to really address poverty and inequality or simply achieve equity in disbursements whereby constituencies get similar allocation of resources despite their different poverty levels.
The theme for this year’s budget is “Creating jobs, delivering a better life for all Kenyans”. The government now has the next few months to make this vision a reality for Kenyans. And work begins now.