The Kenyan economy just like the global economy has received a beating and it is struggling.
Reports from the Registrar of Companies in Kenya indicated that 388 companies have so far been dissolved.
The Kenya Parliamentary Budget Office has made a number of recommendations.
For instance, they recommend that it should be made mandatory for all Kenyans aged 18 – 65 years to enroll under the National Hospital Insurance Fund (NHIF). Those over the age of 65 years and vulnerable persons should be supported by government to enrolled under NHIF through a government supported programme through capitation grants.
Kenya’s middle class who comprise over 44.9 percent of the population has given rise to a ‘thriving shopping mall lifestyle’ a booming housing market, and a growing automobile industry.
Consumer spending is a great concern because it is driven by household debt.
In Kenya, there is a practice where the middle class to prefer purchasing imported goods as a mark of quality. This leaks a significant amount of resources to another country.
Kenya’s level of savings is lower when compared to its peers. The proportion of Kenya’s savings is 10.9% of Gross Domestic Product (GDP). Action needs to be taken to remedy this situation. Singapore has a compulsory savings programme where citizens are required to contribute 20 percent of their net income in Central Provident Fund.
In some counties there is a lot of opaqueness in terms of access to budget information. The Parliamentary Budget Office (PBO) has recommended that a sanctions and rewards scheme be set up for the benefit of the general public.
In Kenya, the service sector has been the largest contributor to the Gross Domestic Product (GDP) for the past 10 years. That means resources from transport, storage, insurance and real estate among others. Agriculture is number two contributor to GDP.
Debt Repayment
Debt repayment is crowding off other development expenditures in Kenya. In order to sustainably manage public debt, the Parliamentary budget Office calls for the cutting of expenditures on infrastructure and energy.
Public debt amounted to Ksh. 7.12 trillion as at Sep 2020 which forms 65.6 percent of Kenya’s Gross Domestic Product (GDP) or 79 percent of the Public Finance Management debt ceiling.
It is projected that debt servicing (interest + principal) will cross Ksh. 1 trillion mark in FY 2021/2022. The other option is to lengthen the maturity of existing securities though this will shift the debt burden to the future generations.
Secondly, the PBO call for the continuation of work-from-home option for public servants as well as encouraging the holding of meetings online.
Taxation
Income Tax and VAT are the largest contributors (78%) to Kenya’s annual tax revenues.
The problem of pending bills is more serious in roads sub-sector amounting to Ksh. 50 billion as amount payable to road contractors in Kenya.
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