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JAMES MURAGURI: Government underspending increases poverty

A photo of Kenyan currency /
A photo of Kenyan currency /

A good friend, colleague and comrade lost his father recently. At the time of his death, he had exhausted his medical cover, family savings and support from family and friends. Boniface Mwangi recently tweeted, “Kenyans, we need to have a discussion how the cost of health care is bankrupting families.”

But what type of discussion should we have with our government? When a government collects taxes, it creates a contract between itself and the taxpayer to improve living conditions for the taxpayer.

Further, when it fails to implement the budget as promised based on the taxes collected, more questions are raised on how taxpayers would have spent that money if government had not collected them.. However, the government may have good reasons on why it is not spending that money as promised and these reasons should be made available to the taxpayer.

Over the last few years, the government has committed to improve the quality of life for its citizens. Through the Health ministry it has a detailed mission that seeks to build a progressive, responsive and sustainable healthcare system. However, a look at the budget implementation reports generated by the National Treasury seems to suggest otherwise.

The Budget Review and Outlook Paper (Brop) for 2017-18, which is the government’s report card on how it spent taxes that year, indicates that the Health ministry spent 63 per cent of its annual budget. The ministry’s budget was Sh78.2 billion and it spent Sh50 billion. What does that mean for the country as a whole?

This effectively means that services worth Sh28 billion were not delivered. The most unfortunate thing is that in that report, the government does not provide reasons why the ministry did spend that money. This raises fundamental questions such as, did the ministry actually receive Sh78 billion from the National Treasury and spend just Sh50 billion?

What services did the Sh28 billion not deliver? How many lives were lost as a result of health services worth Sh28 billion not being delivered? How many people took loans for health costs instead of investing to better their lives? How many families like Mwangi’s friend have been left bankrupt as a result of medical bills? These and many questions remain unresolved.

After spending 63 per cent of its annual target, the 2018-19 budget allocation for the ministry increased to Sh90 billion and it has further proposed to increase the funds to Sh93 billion in 2019-20.

What will have changed in these two years to allow for 90 per cent or 100 per cent spending of the health budget? Are the challenges that resulted in underspending already addressed and can we find these reasons in publicly available budget implementation reports?

Taxes collected are supposed to improve lives. Thus if health services worth Sh28 billion were not delivered in 2017-18, it points to the fact that most people who depend on these government services had to find alternative means to pay for them. The resources that could have been used to improve their lives were diverted to pay for healthcare.

When people pay taxes and still pay for services that are supposed to be provided by government, then moving out of poverty remains a pipe dream and growing poorer becomes a reality.

Atlantic Fellow for Social and Economic Equity and CEO, Institute of Public Finance Kenya