Kenya needs extra Sh2.1tn to widen social welfare net - ILO

Notably, the unemployment segment lacks close to Sh75.5 billion (0.5% of GDP)

In Summary
  • Financing gaps in disability, maternity and old age segments stand at Sh181.2 billion, Sh30.2 billion and Sh120.8 billion, respectively.
  • The unemployment bit lacks close to Sh75.5 billion (0.5% of GDP) in funding.
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Kenya, just like other low and middle-income countries needs to up public spending to provide basic social protection for all, according to the International Labour Organisation (ILO).

According to the ILO, Kenya's financing gap for universal social protection as percentage of GDP stands at 13.7 per cent, or just about Sh2.1 trillion as of 2024.

Social protection funding provides coverage of basic benefits for all children, mothers of new-borns, persons with severe disabilities, persons in old age and the unemployed, as well as essential essential health care.

ILO in its latest working paper, estimates the country’s financing gap towards essential healthcare at Sh1.1 trillion (7.6% of GDP), and that of children at Sh513 billion (3.4% of GDP).

On the other hand, financing gaps in disability, maternity and old age segments stand at Sh181.2 billion, Sh30.2 billion and Sh120.8 billion, respectively. The unemployment bit lacks close to Sh75.5 billion (0.5% of GDP).

To achieve the universal coverage, the organisation says the country, just like other low-and-middle income countries, will need additional government spending of about 10.6 per cent of its annual expenditure.

“This can be raised through domestic resources such as taxation and social security contributions, as well through better management of sovereign debt,” the report reads.

However, the call to increase government spending comes at a time the state is planning to slash further its spending by reducing the 2024/25 budget from Sh4.2 trillion to Sh3.9 trillion, a Sh273 billion cut.

The decision to review the initial amount contained in the Budget Policy Statement is informed by the fact that revenue targets for the year 2023-24 were not met.

According to the National Treasury, by the end of March 2024, total revenue was below target by Sh270 billon, with ordinary revenue recording a shortfall of Sh255 billion.

National Treasury Cabinet Secretary Njuguna Ndung'u however expressed optimism that the country is on course towards fiscal consolidation.

“There is a need to contain borrowing, and rationalise expenditure to sustainable levels," Ndung’u said.

In the 2024-24 financial year, the state cut spending by Sh300 billion with the CS confirming early last year that the government’s intent to cut spending had been attained.

Although ILO seems to be discouraging budget cuts, it acknowledges that there is a widespread austerity globally, including cuts to social protection expenditure in many low and middle-income countries.

It however notes that there is a spectrum of strategies for these countries to actively expand the fiscal space for social protection to close the financing gap.

“Domestic resource mobilisation, including progressive taxation and social security contributions, are key sources for social protection, considering that building social protection systems and floors imply long-term commitments,” the ILO report says in part.

Regionally, findings by the organisation shows that Africa faces the most substantial challenges, with a financing gap of 17.6 per cent of the continent’s GDP per year.

Low and middle-income countries in the Arab States follow at (11.4 per cent), Latin America and the Caribbean (2.7 per cent), Asia and the Pacific (2.0 per cent) and Europe and Central Asia (1.9 per cent).



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