Treasury unveils Kshs. 2.7 Trillion fiscal budget to revive economy

Kenya on Thursday presented a 2.7 trillion shillings (25 billion U.S. dollars) 2020-2021 fiscal budget that starts on July 1, intended to revive the economy following shocks from COVID-19, locusts invasion and flooding.

Ukur Yatani, Cabinet Secretary for the National Treasury of Kenya said the shocks will reduce economic growth from an earlier projection of 6.1 percent growth in 2020 to 2.5 percent but will recover significantly in 2021.

Kenya, East Africa’s largest economy by size, themed its budget on stimulating the economy to safeguard livelihoods, jobs, businesses and industrial recovery as it plans to reopen its economy later this month, the Cabinet Secretary said during the budget presentation in parliament.

Kenya, Yatani said, is currently developing a post-COVID-19 economic recovery strategy.

To expand opportunities for local enterprises, Yatani said the government will in the coming weeks issue a list of compulsory items for local procurement to promote the “Buy Kenya Build Kenya” initiative.

The government said the stimulus package will focus on keeping the food supply chains functional while promoting the use of locally produced goods and services, thus securing the livelihoods of daily wage earners.

At the core of this package is a plan to create waged employment for young people in urban areas under a project known as the “Kazi Mtaani Programme”.
“At least 200,000 youth will be engaged in fumigation, stormwater drainage works, cleaning of markets and informal settlements, rehabilitation and maintenance of access roads, footbridges and footpaths and other environmental management activities,” said Yatani.

Significant spending was also announced in the recruitment of 10,000 intern teachers, first to provide an opportunity for a large pool of unemployed teachers and to help meet the new policy of 100 percent transition from primary to secondary schools for each Kenyan child.

Yatani also announced the formation of a credit guarantee scheme that will enable small and medium scale businesses to access credit facilities from banks at a subsidized interest rate. The scheme will be financed by the government and willing donors.

This is in addition to tax refunds that are being given to businesses by the government, he said.

Kenya will also recruit additional 5,000 nurses as part of improving health care services. Earlier, President Uhuru Kenyatta announced that Kenya requires at least 33,000 beds to respond effectively to a possible surge in COVID-19 infections.

Additional cash pledge was made for investment in providing cheaper farm inputs and investing in additional irrigation systems at the small scale level.
The government also announced a kitty to support flower and horticultural farmers whose mainstay export market has been disrupted by COVID-19.

To support tourism sector, Yatani announced a temporary lifting of ban to hold meetings in private hotels by government agencies which had been the art of cost-cutting measures and waived landing and parking fees at airports in order to facilitate the movement of cargo in and out of Kenya.

“Going forward, the government will scale up efforts to boost the tourism sector by promoting aggressive post-COVID-19 tourism marketing and providing support for hotel refurbishment through soft loans to be channeled through the Tourism Finance Corporation,” he said.

The government also announced grants to 160 community conservancies, and support to Kenya Wildlife Services to engage 5,500 community for a period of one year, he said.

Yatani said Kenya will adopt an e-government procurement model starting December 2020 where all procurement processes will be undertaken on an online platform to reduce costs, increase efficiency, transparency, accountability and visibility.

Kenya had already taken pre-budget measures to caution its citizens through injection of cash and provision of additional disposable incomes to the people and businesses, reduction of business and personal taxes among others, and emergency borrowing from various lenders to finance emergency response to the pandemic.