Budget experts discredit Uhuru's Sh26.2bn economic stimulus plan

Budget experts have discredited President Uhuru Kenyatta’s proposed Sh26.2 billion Economic Stimulus Programme aimed at alleviating the adverse effects of Covid-19 on the economy.

The Parliamentary Budget Office says the programme has been poorly timed in the wake of the ongoing interventions in the post-Covid Economic Recovery Strategy.

“There is concern that implementing an ESP while a post-Covid Economic Recovery Strategy is already in the process of being implemented is simply a duplication of efforts,” PBO said in its review of the 2022 Budget Policy Statement.

Their take is that the economic recovery strategy is supposed to address the same concerns that Uhuru based the ESP on.

PBO noted that a number of ESP projects have failed in the country as they "typically start with a lot of interest and vigour but quickly loses steam after the initial stage as funds are removed."

"Business as usual kicks in until another challenge comes along. As a result, many ESP projects never live long enough for the target to be achieved and are not followed through with an analysis of the impact to determine their success or lack thereof,” the experts said.

During this year’s Mashujaa Day, the President unveiled the stimulus plan covering agriculture, health, education, drought response, policy, infrastructure, financial inclusion, energy, and environmental conservation effective November 1. 

The president directed that the National Treasury allocates Sh1 billion in fertilizer subsidy for small scale tea farmers, Sh1.5 billion in aid of sugar sector, Sh1 billion for coffee, Sh1.5 billion for livestock off-take, Sh8 billion for school infrastructure expansion, Sh3.2 billion for building Level 3 hospitals, and Sh10 billion for the third phase of Kazi Mtaani.

“These are designed to accelerate the pace of our economic growth and to sustain the gains already made,” he said.

This followed in the wake of an ongoing 8-point stimulus programme of Sh56.8 billion to cushion the economy, more so youth, from Covid- related job losses and other vulnerabilities. 

Some of the interventions include Sh10 billion for Kazi Mtaani, additional classrooms in 300 schools, provision of 250,000 locally fabricated desks, hiring 10,000 more teachers, recruiting 5,000 intern medical personnel, provision of 20,000 beds for public hospitals, Sh3 billion for water projects, Sh1 billion for flower producers, Sh3 billion for hoteliers, Sh5 billion VAT refunds, and recruiting 5,000 KWS scouts every year.

In this regard, PBO argues that it was not clear why a third ESP was being introduced, “given that the economy has been in recovery for some time now and the existing intervention was expected to facilitate long term economic recovery through 2022.”

“Indeed, the implementation of several ESPs and an ERS in quick succession points to a tendency to continue such interventions in perpetuity even when they are no longer necessary or required,” the experts said in the December report to MPs.

The Phyllis Makau-led team further observed that most of the interventions do not have completion dates and that they don’t effectively target the expected sectors.

“This is debatable given that even though addressing existing needs, they do not effectively cover the most in need, notably the Micro-Small and Medium Enterprises,” the PBO said.

Among those questioned by the PBO is the Kazi Mtaani which is reported to have seen over 750,000 youth put in gainful temporary menial jobs.

On this, the experts raised concerns with regard to the sustainability of the employment created through the said channel.

“To create job opportunities, the focus should be on value creation in the economy. As the economy continues to grow and innovate, jobs are automatically created,” PBO advised.

It further questioned the adequacy of the drought mitigation measures saying the “BPS should have included more critical, well thought out and clear drought intervention measures extending to 2022.”

PBO argues that provision of food aid, cash transfer payments, livestock feeds and supplements, provision of water and food redistribution channels could work better.

The government has launched an emergency relief cash transfer programme to households affected by drought through the Public Service, Gender, Senior Citizen Affairs and Special Programmes ministry.

“This has, however, not been highlighted in the BPS,” the budget experts pointed out in the review.

PBO has also cited the lack of clarity in how the national and county governments would collaborate to deliver some of the interconnected interventions.

“Additionally, some critical information is missing, notably a costing and implementation framework for the ESP projects,” the team said.

PBO reasoned that information on the cost of building a Level 3 hospital, equipping and staffing is necessary to ensure equity.

“For the factory maintenance in the sugar belt, all factories to benefit should be clearly mentioned, their location and the specifics of the maintenance to be carried out.”

“With regard to ESP interventions in the coffee subsector, these have just been broadly stated without clear programmes and, or projects. This makes it difficult to track them in the budget,” the experts said.

-Edited by SKanyara