Keeping Your Business in Mind

Treasury Tables Ambitious 3.6 Trillion Budget In Economic Recovery Push

Themed “Building back better: Strategy for resilient and sustainable economic recovery and inclusive growth, the 2021/2022 budget presented to the parliament of Kenya by Cabinet Secretary National Treasury Ambassador Ukur Yatani promises to turnaround Kenya’s economy. The Covid-19 pandemic has over the last two years wreaked havoc rendering thousands of Kenyans jobless as businesses shut down. With this ambitious budget, Kenyans are looking forward to a better year as the Corporate Watch Team reports.

The Treasury has presented the 2021/2022 budget totaling to a whooping Sh3.64 trillion up from the Sh2.84 trillion budget tabled in the year 2020/2021 budget. The 2021/2022 budget focuses on measures towards economic recovery.

Even though Kenyans in general are concerned about the current high cost of living, Treasury Cabinet Secretary Amb. Ukur Yatani while presenting the 2021/2022 financial year budget at Parliament guaranteed Kenyans that their fears had been taken into consideration. The CS went ahead to reassure that Kenya’s public debt, currently sitting at over Sh7 trillion is sustainable.

The country is banking on increased allocation and tax incentives to key job-creating sectors such as agriculture, manufacturing, and tourism to lift the economy that has dwindled immensely in the last two years. Themed “Building back better”: Strategy for resilient and sustainable economic recovery and inclusive growth, the government of Kenya through the Treasury is targeting a 6.6 percent economic growth this year.

“In light of revenue challenges and significant expenditure demands, spending in the financial year 2021/22 will focus on critical areas with the highest impact on the well-being of Kenyans and support of economic recovery,” said CS Ukur Yatani in his presentation speech at Parliament of Kenya.

With the health of the nation and creation of jobs at the fore front, CS Yatani proposed the allocation of Sh14.3 billion to facilitate the roll-out of Covid-19 vaccines, in addition to the Sh7.6 billion appropriated in the 2020/21financial year budget. This is aimed at making it possible for as many people as possible to return to work and earn a living after the interference caused by Covid-19.

The State targets to expand economic activities in crucial growth sectors and address joblessness, poverty, and income inequalities, all of which have deteriorated in the current Covid-19 ecosystem.

Kenya’s economic growth last year fell from 5.4 percent to 0.6 percent, the lowest since 2012 as Covid-19, locusts invasion, and floods combined to deal a heavy blow on multiple job-rich sectors including tourism, manufacturing, and agriculture.

Treasury has allocated Sh121.1 billion to the Health sector in support of its various projects. Sh47.7 billion will cater for the Universal Health Coverage, Sh8.7 billion goes into the Covid-19 Emergency Response Fund and Sh4.1 billion to maternity healthcare.

A further Sh1.8 billion has been allocated to elderly and vulnerable persons, Sh3.9b slated for vaccination and immunization programmes and Sh14.3 billion will be used in the purchase of Covid-19 vaccines. Treasury also allocated a further Sh15.2 billion to Kenyatta National Hospital and Sh11.5b to the Moi Teaching and Referral Hospital, to improve health service delivery.

In the 2021/22 budget, Sh294.5 billion has been allocated to the Defense, National Police and National Intelligence. Treasury has set aside some Sh1.5 billion for the National Communication and Surveillance System, to step up the war against crime in Kenya.

The Transport sector has been allocated a total of Sh182.5 billion. Sh700 million will go into supporting the Nairobi Bus Rapid Transport System. Sh7.2 billion will go into the construction of the second phase of the Standard Gauge Railway (Nairobi Naivasha), and Sh7.5b into Lapsset project. The ministry of transport will also get Sh100 million to support infrastructure projects by the Nairobi Metropolitan Services and an extra Sh111.2 million for the construction of footbridges.

The Education Ministry has been awarded Sh2.2 billion. Sh62.2b has been set aside for the free day and secondary education programme, Sh4 billion for examination waiver for Class 8 and Form 4 students, and Sh4.2 billion for primary and secondary infrastructure.

Teachers Service Commission (TSC) has been allocated Sh281.7 billion while Sh15.8b will go to the Higher Education Loans Board (HELB). Sh2.5 billion will go into the recruitment of teachers. A further Sh5.2b has been set aside for TVET students, Sh76.3 billion for universities and Sh323 million for National Research Fund.

The Agriculture sector, has been allocated Sh60b to cover food security and its development projects. Sh1.5b has been set aside for the agricultural sector development programme and Sh1 billion for the construction of a fish processing plant in Lamu, to boost exports.

The government will put more resources into livestock production and will set up a meat processing plant in Lamu to provide a ready market for livestock and increase farmers’ income.

Tax Safeguards…
Manufacturing, which accounts for thousands of formal and informal jobs, gets an allocation rise by Sh2.2 billion to Sh20.5 billion while that on housing programme more than doubled to Sh13.9 billion from Sh6.9 billion.

Government also maintained a protectionist stance on local manufactures to shield them from cheap imports while at the same time giving them access to cheap imported raw materials.

The treasury CS also revealed that the East African Community (EAC) States had agreed to retain 25% duty on all imported iron and steel products for a further one year in a bid to stimulate local manufacturing.

Manufacturers of baby diapers have been handed another year to access inputs for the manufacture of the products duty-free to improve local production and create jobs.

Vegetable products, including potatoes, peas, and tomatoes coming out of the EAC region will be charged a duty rate of 30 percent for one year, protecting local farmers from stiff competition.

The Treasury has also awarded Sh2.3 billion to the tourism sector to help it recover from an economic fallout caused by the coronavirus. It allocated Sh1.7 billion to the Tourism Fund and Sh643 million to the Tourism Promotion Fund to help lift the sector battered by the effects of the pandemic that restricted travel.

Kenya’s tourism sector was hit hard after the government banned all local and international flights in March, resulting in low tourist traffic at hotels and animal parks.

CS Yatani also announced that tax rebates enjoyed by employers who offer one-year internships to at least 10 university graduates have been extended to include graduates from technical and vocational education and training (TVET) institutions.

“It is my hope that employers will take advantage of this incentive and give our young graduates from the TVET institutions opportunities to gain practical experience to expand their employability,” said Mr. Yatani.
The Treasury has also allocated Sh3 billion towards the Kazi Mtaani programme that was unveiled last year to offer casual jobs to the youth —handing a lifeline to thousands of young people. The Sh3 billion will support youth empowerment and employment creation for another year.

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