Executive Summary
Below is a summary of highlight of Key findings from this analysis:
- In the summary table there is no budget for The Judiciary and Judiciary Service Commission (JSC).
- The budget documents are presented in formats which are unfriendly for the users, for instance, the budget estimates, Budget Policy Statement 2020 and the sector reports are all in PDF formats which make it difficult to conduct a proper analysis. (Civil Society Organizations (CSOs) have always asked for Excel or word formats but in vain);
- The national government revenue projections might be unrealistic in the face of Covid-19 pandemic outbreak considering that the economy has been brought to its knees hence there is need to reconsider the projections;
- The National Security Sector Working Group (SWG) reports are not available on the National Treasury website (this is the only sector report missing from the public domain);
Introduction
Year after year, governments all over the world formulate public development plans and budgets. In Kenya, there are four main stages in the budget making process: formulation, approval, implementation and oversight. In all these stages you are expected to participate.
This article contains findings from our preliminary analysis of the draft national government budget for financial year 2020/2021.
Key budget statistics
In financial year 2020/2021, Kenya’s national government is planning to spend 1,751 billion out of which KES. 1,167 billion will be recurrent expenditure and KES. 584 billion will be development expenditure.
The Teachers Service Commission has been allocated a proposed budget of KES. 264 billion for payment of teachers salaries and running other activities at the commission. Independent Electoral and Boundaries Commission (IEBC) has a proposed budget of KES. 4.1 billion while Office of the Director of Public Prosecutions will has a proposed budget of KES. 3 billion.
According to the draft budget, the National Intelligence Service (NIS) is likely to receive KES. 39 billion which EACC will likely receive KES. 3.1 billion to be used for fighting corruption.
The state Department for Culture and Heritage is likely to be allocated KES. 2.6 billion.
The Ministry of Health has a proposed budget of KES. 114 billion. This is where the resources for purchasing Covid-19 vaccine or drugs is supposed to be found.
The Ministry of Health (MOH) which has been on the media spotlight since the beginning of March 2020 as a result of Covid-19 pandemic has faced interesting changes during the supplementary budgeting process which happened in April.
In FY 2019/2020 the Ministry of Health (MOH) was allocated KES. 115.6 billion. This budget was slashed by a whopping KES. 12 billion and settled on KES. 103 billion.
In financial year 2020/2021, the Ministry of Health has a proposed budget of KES. 114 billion. That is KES. 11 billion more than what was allocated in the supplementary budget of 2019/2020.
According to the Abuja Declaration, at least 15% of the national budget should be allocated towards provision of health in Kenya. Assuming we are spending KES. 1,175 billion in the coming financial year, the amount of resources allocated towards health will amount to 9.8% of the total budget for the year. This falls short of the ideal 15%. In order to fulfill the required target, Kenya national government will have to spend KES. 176 billion or KES. 62 billion more than what is proposed in the draft budget estimates for FY 2020/2021.
As part of the supplementary budget, KES. 3.9 billion was allocated towards Covid-19 response. Out of which KES. 1 billion will be spent on recruitment of health workers, KES. 300 million will be spent on operations and KES. 2.6 billion to be development expenditure. The latter is the budget for capital expenditure such as purchasing Intensive Care Unit (ICU) beds or ventilators among other equipment needed in the fight against Covid-19.
The budget for FY 2020/2021 will also be spent on placement of 2,717 interns, hiring 10,378 Community Health Workers (CHWs), 1,500 data clerks. The Ministry of Health (MOH) aims at immunizing 90% of Kenyan children with HiB3, DPT and hep among others.
In financial year 2020/2021, resources will be allocated towards the construction of a cancer centre at Kisii Level 5 Hospital.
It is surprising to note that the budget for control of communicable diseases was slashed from KES. 5.4 billion to KES. 4.3 billion. This is happening in the face of novel coronavirus officially referred to as Covid-19.
Approximately half a trillion KES is proposed to be spent on education in Kenya in FY 2020/2021. Out of which KES. 264 billion is proposed for Teachers Service Commission (TSC) while KES. 236.5 billion will be spent as follows: post training and skills development (KES. 150 million), Early learning and basic education (KES 98.6 billion), University Education (KES. 113 billion) and vocational and technical education has a proposed budget of KES. 24.8 billion. This is a clear indication that education is expensive but the states are expected by international law to allocate the maximum available resources (MAR) toward provision of basic services such as education, water, sanitation and health.
More importantly, there should be progressive realization of economic, social and cultural rights. What does this mean? It means that more and more resources should be allocated each year towards provision of health, clean piped water, social security and education services.
Revenues
According to the Budget Policy Statement 2020, there has been shortfall in revenue collection. For instance, by December 2019, the national government has collected KES. 920 billion against a target of KES. 1,059 billion. Therefore, they missed the target by KES. 139 billion.
In FY 2020/2021, revenue collection targets are going to be missed by large margins due to Covid-19 virus outbreak which has effectively brought the economy to its knees. This calls for proper planning and putting in place contingency plans.
The Budget Policy Statement lays down the revenue projections which are now under our focus. In 2020/2021, public expenditure is projected to be KES. 2.7 trillion which is a decline from KES. 2.8 trillion in FY 2019/2020. This means that the government needs to raise KES. 2.7 trillion in the coming financial year. In my own opinion this may be a pipeline dream.
The budget deficit is expected to be KES. 571.2 billion which is equivalent to 4.9% of Gross Domestic Product. The deficit for 2020/2021 is expected to be funded by borrowing to a tune of KES. 345 billion which will help balloon public debt.
As usual, the budget for FY 2020/2021 will focus on implementation of the Big Four Agenda and the projected poor performance in revenue collection will affect the Big Four Agenda. This means that the government may not be able to provide 500,000 units of housing, Universal Health Care Coverage, food security and push manufacturing to contribute 15% of Kenya’s Gross Domestic Product (GDP).
This is a reality which our policy makers must take into consideration. Maybe there is need to revise the Budget Policy Statement (BPS) 2020/2021.
Projected Expenditure
It is quite a task to find out whether priorities are realigned from those in the Budget Policy Statement and the draft budget estimates. This is because for example in the BPS’s ceiling the National Treasury provides blanket budgets for sectors while in the budget estimates, they provide a budget for each state department. This means that if you have to add up all the figures of state departments under each specific sector. If you do not know which state department belongs to which sector, you will face an uphill task.
Now we are forced to check on the sector reports to classify all Ministries Departments and Agencies before we re-attempt the exercise.
National Security
The draft budget for national security is KES. 154.5 billion out of which KES. 39 billion is proposed for National Intelligence Service (NIS) and KES. 115.5 billion is proposed for the Ministry of Defence. In my own opinion, this is the most opaque budget of the 10 sectors in Kenya.
According to the National Intelligence Service website, their mission is “to safeguard the Republic of Kenya against any threats emanating from within and without.” NIS is a civilian agency dedicated to protecting the national security interests of Kenya as well as safeguarding its citizens.
Conclusion
This report will be updated regularly to reflect new findings. Therefore, consider this as an ongoing work.
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