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January 21, 2019

Kenya misses revenue target by Sh40 billion in four months

The National Treasury Cabinet Secretary Henry Rotich at the Treasury Building before the budget statement for the year 2017/2018 on March 30, 2017 /FILE
The National Treasury Cabinet Secretary Henry Rotich at the Treasury Building before the budget statement for the year 2017/2018 on March 30, 2017 /FILE

Kenya's revenue collection slowed by Sh40 billion between July and October due to poor business activities resulting from a prolonged election cycle.

Treasury Cabinet Secretary Henry Rotich said the country has experienced long and tense political activities in the past four months that saw businesses adapt a wait-and-see attitude, hurting the country's revenue collection targets.

This is expected to pose a huge fiscal challenge considering that the country is targeting total revenue collections of Sh1.634 trillion including Appropriation in Aid ( AiA) this year against an overall expenditure and net lending of Sh2.384 trillion.

Data from the Central Bank of Kenya (CBK) shows that actual receipts for the period between July 1 and 31st August 2017 hit Sh251 billion, down from Sh291.8 billion recorded over a similar period last year.

In order to achieve its revenue target, the government needs to collect at least Sh136 billion per month.

At the same time, Rotich projected the country's economy to grow between five to 5.1 per cent this year but rebound next year to six per cent and seven per cent in medium term.

The CS told Reuters that Kenya is expecting better rainfall this year than last year, fostering growth in the agricultural sector that accounts for over 35 per cent of the country's GDP.

He explained expected gained in the agricultural sector will remedy the country's current challenges on the investment side that saw the purchasing manager’s index (PMI) drop to 34.4 basis points, it lowest ever recorded level.

Even so, Rotich said that the growth depends mostly on stable political environment in the country.

Kenya was forced to conduct fresh presidential elections on October 26 after the Supreme Court nullified President Uhuru Kenyatta's victory for general elections conducted on August 8.

Although the election body declared Uhuru the winner in the repeat presidential election that was boycotted by the main opposition coalition NASA, at least two petitions have been filed in the apex court to challenge results.

Prolonged drought in the first quarter and heightened political activities in the second quarter saw the country record 4.7 and five per cent GDP respectively. Kenya has since revised its growth forecast from 5.5 per cent to five per cent. Last year, Kenya recorded a GDP growth of 5.9 per cent

Rotich said the revised growth means that total GDP is likely to be Sh80 billion less compared to the current estimate of Sh7.33 trillion.

Inflation eased in the country last month, dropping to a 15 months low of 5.72 per cent in October compared to 7.06 per cent recorded the previous month. 

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