MWAURA: Public debt: Where are we and how Medium-Term Plan will improve lives

As part of the employment creation strategy, the government aims to: support MSMEs through capacity-building on value addition.

In Summary
  • Nine per cent of our country’s population is 24 years and below. On average, more than 800,000 youth are entering the job market annually.
  • The principal focus will be to increase the ratio of formal sector employment from 19 per cent in 2023 to 40 per cent in 2027.

Dear Reader!

It’s yet another new dawn of happenings all over. I hope you are keeping very well with life, dealing with challenges and focusing on making a difference.

In our last two articles, we have been dealing with the issue of the Fourth Medium-Term Plan (MTP IV), 2023-2027. We are looking at how economic planning is being engineered to not only fulfill THE BETA PLAN, but also to attain Vision 2030.

Public debt has been a great concern to many Kenyans and it is preposterous to imagine we can progress without dealing with this reality.

MTP IV aims to enhance revenue mobilisation and expenditure prioritisation to reduce the fiscal deficit from 6.2 per cent of GDP in 2022-23 to 3 per cent of GDP in 2027-28, consistent with the East Africa monetary convergence criteria. Consequently, the net public debt as a percentage of GDP is projected to decline from 68 per cent in 2022-23 to 53.7 per cent in 2027-28. In particular, revenue mobilisation will be enhanced through: rolling out electronic Tax Invoice Management Systems (e-Tims), tax base expansion in the informal sector, implementing rental income tax measures by mapping rental properties, rolling out of measures at Customs and Border Control, leveraging on technology and enhanced data analytics to increase revenue per unit; and improving the technical capacity of KRA.

To contain expenditure, the government will put in place measures, including but not limited to: restructuring of institutions by merging or abolishing some non-performing Semi-autonomous Government Agencies (SAGA), rationalisation of non-priority expenditure; and digital delivery of public services. These measures are aimed at reducing bureaucracy and the cost of delivering public services.

Climate change adaptation is a big concern for development and sustainable livelihoods. This is because our country has experienced the negative effects of climate change including flooding and the worst drought situation in 40 years. To address these, the Government will: plant 15 billion trees to increase tree cover from 12.13 per cent to 30 per cent, increase forest cover from 8.3 per cent to 17 per cent by 2032, construct water pans, small dams, large multi-purpose dams, 70km of flood-control structures, check dams and maintain 15 flood control infrastructures in flood-prone areas, strengthen early warning systems; and invest in irrigation to move away from rain-fed agriculture.

Several external shocks have also taken a toll on our fiscal status, such as rising inflation and interest rates, geopolitical tensions such as the Russia-Ukraine conflict, tightening of monetary policies in developed countries, the aftermath of the Covid-19 Pandemic, and the high cost of servicing public debt, both internal and external.

MTP IV has been designed to effectively address those challenges through measures such as: strengthening climate change mitigation and adaptation mechanisms, diversification of import sources and export destinations to address shocks from geopolitical tensions relating to economic and financial crisis, undertaking health surveillance, enhancing capacity to respond to global epidemics/pandemics, continuous monitoring of the global economic and financial environment, and implementation of prudent monetary policy to manage emerging shocks.

Nine per cent of our country’s population is 24 years and below. On average, more than 800,000 youth are entering the job market annually, most not being absorbed in gainful employment over time. In view of this, MTP IV seeks to create on average 1.2 million new jobs every year between 2023 and 2027. The principal focus will be to increase the ratio of formal sector employment from 19 per cent in 2023 to 40 per cent in 2027.

As part of the employment creation strategy, the Government aims to: support MSMEs through capacity-building on value addition, credit facilitation, technology access and market linkages, raising agricultural productivity through promotion of crops and livestock product value chains. It aims to leverage the digital superhighway and digital economy to increase employment opportunities, and employment of additional teachers and health practitioners to improve education and health outcomes. Further, the government aims at increasing investment in the construction of affordable housing, which will create employment directly and indirectly, and fast-tracking of SEZs and industrial parks in to promote export-led manufacturing.

An estimated 2 per cent of the Kenyan population are living with disability, while 6 per cent are people aged 60 years and older. The Government is implementing the National Safety Net Programme (Inua Jamii) that aims to revamp the cash transfer programme for the elderly and vulnerable households to improve operational efficiency, prompt payment, accountability and coverage.

This will entail providing 3,103,000 Orphans and Vulnerable Children (OVCs), Older Persons and Persons with Severe Disabilities with cash assistance. It will take place through enactment and implementing of the Social Assistance Fund, linking the Social Protection Management Information Systems (SPMIS), to relevant government information systems, upgrading of the single registry, and enhancement of consolidated Cash Transfer Programme-Management Information System (CCTP-MIS). Graduating the vulnerable groups through economic empowerment, and promotion and protection of the rights and welfare of vulnerable groups is also critical, in addition to up-scaling AGPO (Access to Government Procurement Opportunities) and affirmative action funds to enhance access to affordable credit to women, youth and PWDs.

Despite the ongoing strike in the health sector, the government intends to: increase the number of households with health insurance to 85 per cent (11.2 million households) under the new Social Health Insurance (SHI) Scheme, digitise health services under Integrated Health Management Information System (IHMIS), and expand health infrastructure and recruitment of 20,000 health personnel (11,621 for Primary Health facilities and 8,379 for Hospitals) by 2027.

Housing and Settlement is one of the core pillars of THE BETA PLAN. MTP IV aims at: increasing investment in construction of 200,000 affordable housing units annually, facilitating affordable housing mortgages, strengthening of the jua kali industry’s capacity to produce high-quality building materials, and provide incentives for developers to build affordable housing.

All the above is aimed at raising our country’s GDP from 4.8 per cent in 2022 to 7.2 per cent in 2027.

The MTP IV is the future and we must all work together to make THE BETA PLAN a truly better plan for both the present and future generations.

Government spokesperson 

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