EFFECT

How key budget spends will impact Kenyans

Households remain concerned over 'high' taxation.

In Summary

•Key sectors of education and agriculture have had their allocations increased while health has been cut.

•The government expects the economy to remain vibrant in 2024, growing by 5.5 per cent. 

A busy Nairobi street/FILE
A busy Nairobi street/FILE

President William Ruto’s administration has increased education and agriculture allocations amid a slash on the health budget, key areas that will shape Kenyan's lives and the economy in the medium-term.

National Treasury CS Njuguna Ndun’gu outlined the government’s plans for the 2024-25 Sh3.99 trillion budget, amid high expectations from Kenyans, with the cost of living and general well-being among major concerns.

For Maurice Kibati, a Bodaboda operator in Kisumu, he hoped that the government and MPs would consider the common man on taxes.

“I expect the government to lower taxes that have burdened Kenyans. The budget should focus on improving the country's economy,” Kibati told the Star.

Felister Nakah, a resident of Umoja in Nairobi had hoped that the government would invest more in health, especially for women and the vulnerable in society, education and agriculture.

“Health and education have become a burden for poor homes. This is something the government must look into and ease the burden. For agriculture, we must invest to ensure food security,” Nakah said.

The government is seen to be answering some of Kenyans’ wishes despite an uproar on taxation, which is the main source of revenue to fund its budget, coupled with a tough balancing act that has seen some key allocations slashed.

President Ruto has increased the education budget from Sh628.6 billion in the current financial year ending June 30, to Sh656.6bn. 

However, allocations to free primary and day secondary education have been slashed by Sh6.9 billion to Sh71 billion, in what could affect institutions and learners. 

The school feeding programme which has kept learners from poor homes in in school has also had its budget cut to Sh3 billion from Sh4.9 billion. 

Junior Secondary School capitation has however increased from Sh25.5 billion to Sh30.7 billion, in a give and take by Treasury, with teachers in this group being converted to permanent and pensionable. 

“The government has continued to heavily invest in education to facilitate development of the necessary skills and competencies to learners to enable them effectively play their part by contributing to the nation building effort, and partake of the dividends of shared prosperity,” Ndung’u said. 

Treasury has however cut the health budget to by Sh14.2 billion to Sh127 billion, from Sh141.2 billion, in a move that could derail the government’s Universal Health Coverage plans and affect service delivery to the public. 

This comes as counties continue to struggle to offer quality healthcare amid delayed salaries for doctors and back-to-back strikes.

The national government is keen on providing a fully publicly financed primary health care system, an emergency care fund and a health insurance fund that covers all Kenyans, the CS affirmed.

Allocations to the sector include Sh4.2 billion Universal Health Coverage Coordination and Management Unit, Sh4.6 billion specialised medical equipment and stipend for community health promoters, Sh2 billion free maternity health care, Sh3.6 billion managed equipment services and Sh861.5 million medical cover for the elderly and severely disabled in the society.

Kenyans should on the other hand expect a more vibrant agriculture sector that could improve food security, and help lower commodity prices and overall inflations. 

This is after Treasury moves to allocate Sh84.9 billion towards agriculture and food security.

According to the ministry, the government seeks to provide adequate and affordable working capital to all farmers through cooperative societies and deploy modern agricultural risk management instruments, that ensure farming is profitable and income is predictable.

Sh54.6 billion has been allocated specifically towards agriculture up from Sh49.9 billion.

Key allocations in the budget include Sh10.0 billion for the fertiliser subsidy programme, which has been doubled from Sh5 billion, signaling better supplies for farmers.

Sh647 million will go towards small-scale irrigation and value-addition projects, Sh2.5 billion for emergency locusts response and Sh2.4 billion for enabling youth and women in agriculture.

A strong agriculture sector will go a long way in supporting economic growth as it accounts for 33 per cent of Kenya's Gross Domestic Product and 27 per cent indirectly through its linkages with other sectors.

The sector also accounts for over 40 per cent of the total employment and more than 70 per cent of employment for the rural populace.

This is in addition to being a key mover of the manufacturing sector accounting for 40 per cent through agro-processing.

Meanwhile, investments in other key sub-sectors of leather, MSMEs where the government has set a Sh1 billion agricultural credit line and blue economy priority areas (Sh11.3 billion) are also expected to benefit Kenyans.

Sh3.7 billion has been allocated towards settlement of the landless as the government continues to try and address the issue of IDPs.

Treasury has budgeted Sh31.3 billion for social protection and affirmative actions, Sh18.6 billion cash transfers to elderly persons; Sh7.9 billion cash transfers to orphans and vulnerable children, Sh1.5 billion as a hunger safety net and Sh1.2 billion for cash transfer to persons with severe disability.

The Hustler fund has received an allocation of Sh5 billion, in what could see individuals and small businesses continue to benefit from the credit line.

Tax measures proposed in the Finance Bill, set to be debated today, are however likely to erode some of the positive government plans if passed it its original state.

This is as a result of several proposed tax measures that could push up the cost of living with basic commodities such as bread and cooking oil set to be affected.

Costs of alcoholic beverages, cigarettes, batteries, car insurance, fuel among others will also go up if the bill is enacted in its current form.

Meanwhile, the government expects the economy to remain vibrant in 2024, growing by 5.5 per cent supported by a robust services sector, strong performance in agriculture and a decline in global commodity prices that is expected to reduce the cost of production.

“This outlook will be reinforced by the implementation of policies and reforms under the priority sectors of the Bottom-Up Economic Transformation Agenda (BETA) and improvement in aggregate demand,” Ndung’u said.

The macroeconomic environment remains stable, he affirmed, with the inflation rate declining to 5.1 per cent in May 2024 and five per cent in April, from a peak of 9.6 per cent in October 2022.

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