FUNDS ALLOCATION

State urged to invest in agriculture sector to realise growth- report

In Summary

•The agriculture sector currently contributes to more than 70 per cent of the employed population

•Treasury allocated Sh671 billion for the development agenda out of which only a paltry Sh52.1 billion has been reserved for agriculture

An agriculture official during a field trip in Singorwet location
An agriculture official during a field trip in Singorwet location
Image: FILE

Despite accounting for 25 per cent of the country’s GDP, the agriculture sector has been sidelined for grand infrastructure projects, slowing down economic growth.

An economic update by Amana Capital shows the government has continued spending on big grand projects while ignoring sectors such as agriculture, which have a direct multiplier effect in growing the real economy.

The agriculture sector currently contributes to more than 70 per cent of the employed population, direct and indirect national output of 50 per cent, 99 per cent of exports with 64 per cent of all SMEs being engaged in the agricultural sector.

“To then only allocate three per cent of the Sh3 trillion budget is the height of confusion,” the report stated.

Treasury allocated Sh671 billion for the development agenda out of which only a paltry Sh52.1 billion has been reserved for agriculture.

Although this is a Sh6.4 billion growth compared to the Sh45.7 billion allocated in the just-concluded fiscal year, the allocation as a share of GDP is a reduction to 3.2 per cent compared to 3.5 per cent GDP share last year.

"The increase also masks a reduction of Sh950 million to agricultural research. This means, allocation to agriculture and food excluding lands and planning is only 2.9 per cent of the total budget, which is much lower compared to a Maputo declaration of 10 per cent to agriculture,’’ project lead at Route to Food Layla Liebetrau said.

The bulk of agricultural resources have been set aside to support large scale farming and export promotion as opposed to catering to smallholder farmers’ needs who have produced at least 70 per cent of food to the country over the past nine years.

The amount allocated to crop management and development is only Sh17 billion, a reduction from Sh19 billion the previous year while the amount for irrigation is Sh5.7 billion down from Sh6.6 billion.

This allocation is lumped up with land reclamation and the amount to agricultural research has also reduced from Sh5.6 billion to Sh4.6 billion.

“Agriculture is key, as it is the largest foreign currency earner with an external debt of Sh2.5 trillion,” the report stated.

It added Rotich’s concern should now be how to add value, improve efficiency and create markets for the key strength of the country to be able to boost the returns on the country’s exports.