East African Business Week (Kampala)
Cedric Lumiti
15 June 2009
Nairobi — Kenya's 2009/10 budget is more of geared towards stimulating development in the rural areas and neglected sectors of the ailing Kenyan economy.
Finance Minister Uhuru Kenyatta last Thursday allocated a whopping US$150 million (KShs12 billion) towards the award-winning Constituency Development Fund (CDF), in what analysts say is what the country needs to ensure even development across the country.
Roads in the rural areas particularly will benefits from a 22% Roads Levy. This will cater for maintenance and opening of more feeder roads to ensure easy access to farms and markets to boost development in these areas.
Analysts , however, skeptical that despite the budget being largely balanced to ensure development, there were no checks to ensure that funds, especially devolved ones, were spent on intended projects. Members of Parliament have in the past abused the CDF funds often bending their disposal to suit their personal whims.
"We've seen cases where money has gone into the wrong pockets and at this point and time the minister does not have measures to mitigate illegal spending. It looks like the budget was geared towards development from the local level but that can only be achieved if the funds allocated are used in the right way," said Mr. Ayub Murunga, a tax and finance expert from Accountability Now, a local NGO.
Questions also linger as to where the finance minister expects to raise the US$10.8 billion (KShs867 billion) needed to accomplish the goals of the budget given that there was no increase whatsoever in tax from working Kenyans.
Agriculture took its biggest knock in 2008 following the post-election violence and it was on the receiving end of a further beating from erratic rainfall and drought in large parts of the country. Against this backdrop more funding was expected. This was however not the case as the sector will make do with a paltry $96.2 million (KShs7.7 billion). But it is not all gloom for the sector as measures have been put in place to ensure an increase in land under irrigation.
"Though he should have done much more, his focus on water and irrigation will deal with over-dependence on rain-fed agriculture," said Murunga.
Kenyans are growing impatient with the tax harmonization taskforce whose mandate is to come up with recommendations to reform the tax system. Industry players have forwarded proposals to the Treasury every year but only about 10% of these recommendations find their way into the budget, a situation that has seen many people doubt the government's commitment to accountability.
Experts expressed impatience with Treasury's implementation of new tax laws saying the country's income tax is badly in need of an overhaul because it has been overtaken by events and there are too many loopholes.
The initial fears on the $1.36 billion (KShs109 billion) to be borrowed locally pushing up interest rates and fueling inflation have been allayed by the minister's pronouncement that the pension schemes will only invest in government securities.
Be the first to Write a Comment!
Copyright © 2009 East African Business Week. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
