ODM STAND ON THE 2015/ 2016 BUDGET POLICY
The Jubilee Government has presented to Kenyans a Budget wish in which it plans to spend Ksh. 2.2 trillion. The projected ordinary Revenue is Ksh1.358 trillion, up from Ksh. 1.17 trillion in the 2014/102 budget. This rise in projected ordinary revenue has occasioned a budget deficit of Ksh. 569 billion, to be funded through borrowing from both external and domestic sources.
We have serious misgivings about this budget and doubts about its ability to spur growth and job creation.
First, presenting a budget with a deficit of over half a trillion in a depressed economy like ours is a sign of economic irresponsibility.
Financing this deficit will not be an easy task and may be impossible. This is likely to hurt the economy. Most of what will not be implemented for lack of funds is likely to be development projects.
We doubt the projected Revenue of Ksh 1.358 trillion will be realized. It is based purely on the outcome of Tax Reforms and better Tax collection performance by the KRA. This has failed before and we have no reason to believe it will succeed this time.
The net Result of all these will be MORE DOMESTIC BORROWING.
Increased DOMESTIC BORROWING will squeeze and crowd out the private sector. The consequences will be rise in Inflation, higher cost of living and increase in interest rates.
Higher interest rates will affect investment due to lower returns hence affecting the Government stated intention of more employment creation.
The Cabinet Secretary in his Budget Speech spoke at length on the 6 Pillars or thematic areas critical for driving the economy;
On Agriculture and Industrial Transformation; the Cabinet Secretary, despite observing that Agriculture sustains our economy and Livelihood of our People, fails to come up with sufficient Budgetary allocation to support the sector;-
The Jubilee Government promised to irrigate Kshs. 1m acres of agricultural Land. However, the Cabinet Secretary only spoke about the 10,000 acres of Galana â€“Kulalu Irrigation project which is still a pilot project with only 2,000 acres in 2 years.
At the current speed, Jubilee administration will require 500 years to be able to realize the 1m acres irrigation and Kenyans cannot have the Jubilee administration longer than even 5 years.
The irrigation project is itself turning into a rip off, like all grand Jubilee projects. This project began without feasibility studies. To date, soil tests have failed to show what can be grown here, certainly not maize.
There is no precedence anywhere on earth of maize being grown on commercial scale through irrigation. These concerns have been raised by the government by its own experts.
Small Scale Farmers account to no less than 80 per cent of farming in Kenya, yet the Government has not given much attention to this sector. Clearly this is a demonstration that the Jubilee administration is not concerned with revamping agriculture to reduce inflation and overall cost of living. Jubilee is looking for grand projects that necessitate big kickbacks. It is not about the people of Kenya. It is about individuals seeking to make money.
Strengthening Devolution and Regional Development;
The Cabinet Secretary read the budget speech for close to 2 hours but spent less than 5 minutes in addressing the topic of Devolution. This is a clear indication of a Government that is being forced to implement devolution. The amount allocated to the devolved Governments, 47 of them, is Kshs. 287billion in a 2.2 trillion Budget. The Government should put more resources to the county Governments to provide services in rural areas for sustainable development.
Putting more money into Devolved up will open up rural areas in terms of infrastructure and thus will promote investments resulting into more job creation, addressing marginalization and reduced Rural-Urban Migration. The Budget betrays Jubileeâ€™s lack of respect for the Constitutional requirement for the separation of the 2 levels of Government regarding the functions.
That is why we still see National Government still centralizing certain functions that are already devolved to Counties i.e. provision of health equipment by withholding the budget for same and even using NYS to perform functions already devolved.
Trying to create a state run construction company through NYS will not be of economic benefit to the country since it will affect the growth of private sector, which has more potential of creating Jobs than the Government. The role of the government is not to engage in business but to create an enabling environment for investment and job creation.
KILLING EQUALIZATION FUND:
The budget itself reveals Jubileeâ€™s continuing disregard for the marginalized areas. Article 204 of the Constitution speaks to setting up of Equalization Fund. From 2011/2012 to date, we should be having a total of Ksh. 18.3 billion in the Fund to be used for provision of essential services in the marginalized areas. But the Treasury has not shown interest in operationalizing this fund. There is even a proposal to reallocate Ksh.3b out of the Ksh. 6b provided in 2014/2015 budget through supplementary budget.
The excuse the Jubilee administration is giving for not expending the amount in this Fund is lack of Regulations. We demand immediate operationalization of the Equalization Fund and the entire 18.3 b should be made available for spending in these areas.
The Government talks of strengthening the institutions mandated to fight corruption and improve good governance but fails to match the talk with action through deliberate budgetary allocations.
The EACC is on its Death Bed. The allocation of Ksh2.6b is not sufficient to give EACC the required capacity to fight the monied dealers in corruption. The office of the DPP is under political attack and the budgetary allocation of Ksh2.2b is not enough to carry out the function of effective prosecution. The office of the Auditor General is receiving death threats from sections of Government.
In particular, officers responsible for auditing the security sector are permanently being threatened. No action has been taken against those involved even when it is clear that the people responsible for the threats can easily be apprehended.
The budgetary allocation to the AG office is equally low. There has been an attempt to make the AG weak by reducing his powers in auditing the Security Ministries and departments. The budget continues this trend of crippling the justice and governance sectors.
COST OF LIVING:
From 2013 when the Jubilee Government came to power, there has been a permanent rise in the cost of living. This has been made worse by insensitive and erratic economic policy decisions like the repeal of the VAT Act which resulted in high cost of basic commodities.
In his budget, the Cabinet Secretary increased the fuel levy by additional Ksh. 3 per litre on petroleum products to be used in the road annuity program. While we donâ€™t fault the annuity program, we are opposed to increase in prices of petroleum products because this will increase the cost of production resulting into increased inflation, reduced production and hence high cost of living.
Further, the cost of transport will go up and so will the cost of kerosene used by the poor section of the society. Jubilee policies as explained in the budget therefore sink the poor into more poverty while the rich and corrupt few widen the gap making more wealth.
Life is going to be difficult for the ordinary Kenyans with this budget. It should be noted that VAT on certain petroleum products were suspended to next year September from which time they will be VATable hence increase in cost of living.
Jubilee has presented us with a rich peopleâ€™s budget that seeks to reverse the gains by stifling Devolution, increasing marginalization and frustrating the Justice, Governance and Law sectors. All these will happen while the cost of living rises.
We see this desire to reinvent the old order as the reason why the regime is vehemently opposed to the inclusivity agenda. Jubilee is seeking to run the nation as a private members club. That is why Mr Harun Sirima, a Samburu or Dr Edward Sambili, a Tugen, could not be trusted with the running of the Central Bank despite having emerged tops in the interview.
As a party, we warn Kenyans that unless Jubilee is not forced to accept change, the years ahead are going to remain more difficult. The minorities will continue to be marginalized and national institutions will increasingly look privatized.