Dwindling revenues cast doubts on Uhuru’s Big Four agenda

President Uhuru Kenyatta will find it extremely difficult to achieve his Big Four agenda if national revenues continue to decline, the Parliamentary Budget Office (PBO) has warned.

The office also noted that there is a lack of institutional reforms in many organisations even as it urged the government to abandon unviable programmes.

After being sworn into office for his second and last term in 2017, President Kenyatta unveiled his Big Four plan.

Its pillars are affordable housing, food security, universal healthcare and manufacturing to spur economic growth.

"AMBITIOUS' TARGETS

In its report on the Budget Policy Statement (BPS) for the 2020/21 financial year tabled in the National Assembly and the Senate, the PBO notes that “very ambitious” targets were set in the 2019/20 fiscal year and the medium term and that they are unlikely to be met.

The budget office said the programmes implemented so far have not spurred the manufacturing sector, whose share of GDP has been declining.

“The realisation of the agenda on food and nutrition security appears to be bleak unless concerted efforts are made to boost diminishing agricultural productivity, declining land sizes, underfunding and prevalence of pest and diseases among others,” PBO says in the report, “Shut Eye Economy.”

The food sector requires at least Sh105.4 billion in the 2020/21 financial year, but only Sh51.2 billion has been set aside in the BPS.

COUNTY INVOLVEMENT

The budget office report also questions the national government’s decision not to involve county governments in achieving food security.

It wants a revival and strengthening of support services such as agricultural extension for improved and sustainable productivity of agriculture.

The State Department for Housing requires at least Sh1 trillion to build 500,000 affordable housing units by 2022.

But when he appeared before a committee of the National Assembly on Thursday last week, Transport, Infrastructure and Housing CS James Macharia said lack of resource allocation is the culprit.

He said only 228 housing units of the 1,370 required to be delivered in the first phase have been completed and handed over to the government.

DECLINING REVENUES

Mr Macharia said this even as his National Treasury colleague Ukur Yatani told the Transport, Public Works and Housing Committee that a dip in projected revenue may see the project get zero allocation in the next financial year.

“We had budgeted for cash for the take-off of the project but we are unable to release it because there is no money. We may not provide anything in the next financial year,” he told the committee chaired by Pokot South MP David Pkosing.

Providing affordable housing for the people is a constitutional obligation bestowed on the State.

To build the first 100,000 units, the government required about Sh45 billion to attract investors to pump more money into the programme.

“This programme seems to be off track, hence the need for a comprehensive status report on the implementation and viability of pursuing the programme,” PBO says.

With finance proving an impediment, Mr Macharia notes that it may be prudent to explore the mortgage option and rope in the low-income bracket.

About Sh5 billion was allocated for the project in the current financial year but only Sh1 billion has been disbursed. If the requested amount had been provided, Mr Macharia said, at least 130,000 housing units would have been built.

To ensure healthcare for all, about Sh11.4 billion (6.2 per cent of the sectoral allocation) has been set aside for the 2020/21 financial year.

The allocation is expected to increase to Sh130.5 billion in the 2022/23 financial year.

NHIF REFORMS

The PBO warns that reforms at the National Hospital Insurance Fund are critical to support the President’s universal healthcare (UHC) goal.

“Reforms at NHIF should support the UHC goal. The government should modernise NHIF systems and improve the governance structure through legal and institutional reforms.”

But, according to the budget office, since 2018 when the UHC agenda was introduced, no tangible reforms have been undertaken “in this critical institution” as envisaged.

The desire to support manufacturing was borne out of the need to create jobs, to be achieved through increased value addition and to raise manufacturing to 15 per cent of GDP.

“We are in the third year of implementing the Big Four agenda. However, minimal progress was made in the first two years (2017/2018 and 2018/2019).”