Investment and Industry Principal Secretary Betty Maina wants a National Advisory Board on impact investments be created due to a fast falling fiscal space.
Addressing investors and social entrepreneurs during the Kenya Impact dialogue, the PS said the board will resolve challenges faced by impact investors and entrepreneurs by engaging policymakers and informing the development of national impact investment strategies.
“With the ever-diminishing fiscal space, it is evidently clear to many governments around the world that we can no longer rely on the public sector resources,” Maina said.
She pointed out that private equity and venture capital, beside philanthropy, is increasingly becoming a complement to scale up impact investments through collaborative action by making the needed policy changes,” she said.
In the last three years, the government has struggled to meet its revenue collection targets hence creating huge financing gaps that has seen Kenya swim in debts.
Data from the Kenya Revenue Authority shows that in 2015-16, it collected Sh1.210 trillion against the target of Sh1.217 trillion. The government collected Sh1.40 trillion the following year, missing set target by Sh54.8 billion. Last year, the taxman missed revenue target by Sh172.4 billion, due to shortfalls in income tax and appropriation in aid (A-I-A) collection.
This has seen the National Treasury introduce new taxes to meet debt obligations, with the latest being a presumptive tax for Small scale traders set to take effect in January 1.
While the idea was embraced by the investors and entrepreneurs present, United Nations Residents coordinator Siddharth Chatterjee challenged the private sector to take advantage of impact investments.
He, however called upon the government to make itself credit worthy and investor-friendly if the advisory board is to be effective.
According to the 2018 IMF’s sub-Saharan Africa Outlook report more progress on domestic revenue mobilisation is needed to ensure debt sustainability and create fiscal space for much needed investment and development spending.
East Africa regional chapter manager at Aspen Network of Development Entrepreneurs Maryanne Ochola said NAB would close the SDG gap.
“We have a financing gap of $2.5 trillion towards the development of the UN SDGs We need to acknowledge that governments can’t do this alone and we need private capital to meet societal needs. Impact Investment affords us the opportunity to unlock financial and social good,” she said.