Since Kenya’s independence, the budget has consistently increased amid concerns that one day it may be unsustainable, and International Monetary Fund and the World Bank have both warned Kenya’s spending spree.
Even ‘Wanjiku’ is now raising concerns, particularly after the budget hit the historic Sh3.07 trillion mark in the 2018/19 financial year. The good news is that globally, budgets hardly go down and therefore, Kenya being a developing country that requires more cash to spur development, it must use more cash to set up infrastructure.
Michael Mburugu, partner at accounts and business advisor firm PKF, says as a third world country which is in the developing phase, the country is spending a lot of money to put in place the necessary infrastructure such as roads, ports, factories, schools, industrial sheds and hospitals, which most developing countries already have.
John Kirimi, who is an independent financial analyst, concurs, saying it is typical of any growing economy, particularly those with ambitions to grow faster.
“The ambitious infrastructure development initiatives which include construction of Thika Road, target to produce 10,000 mega watts by 2030, Standard Gauge Railway and Lamu Ports among others demand huge financial investments,” says Kirimi.
Before Uhuru Kenyatta’s Big Four Agenda, which is currently being leveraged to spur growth with a Sh3 trillion budget, Kenya had other ambitious plans such as Vision 2030, the country’s long term development agenda that was launched in 2008.
However, with the growing population, which is estimated at 48 million people, the pressure for cash to fund growth is also increasing steadily. Population explosion puts stress on the already inadequate resources, now that a large part of the demographic comprises unemployed youth.
“From 2013, there was a need to finance devolution, which brought in 47 new county governments,” says Mburugu. The national government must fund most of the counties’ needs, on top of revenue that they can generate on their own.
The same government has also been footing bills for pupils in public primary school, and recently part of secondary school fees countrywide, as well as giving the old and needy cash for upkeep. Political promises during elections also account for projects that get introduced, only to be funded through the budget.
Mburugu also points out that close to 50 per cent of Kenya’s budgetary allocations are lost to corruption, which means most of the projects that were planned for in past budgets were not completed, forcing them to be included in subsequent budget allocation.
The country is then forced to borrow even more, increasing debt – which has now hit Sh5 trillion – meaning more pain for the taxpayer, as this must also reflect on the national budget.
The bad news is that with growing corruption scandals that rock the country, budget could rise even faster. “The only upside is where money is being put to the best use. We need to see value for money. We need results,” he says, adding that there is no value for money currently, amid the various scandals, such as the Kenya Pipeline and NYS ones.
He says that even if we started exporting oil today, the budget will still rise, since the country will use the money to take care of the loans, then use the balance to further deepen infrastructure.