Cabinet to approve cash subsidy for poor families

Kenya is rolling out the cash disbursement programme at a time when the global financial crisis has thinned out donor financing leaving it to rely more on the domestic market for funds to meet its obligations.

In recent months as a persistent drought left the country with an acute food shortage, millions of Kenyans have found it difficult to access basic food needs – forcing the government to think of alternative means of protecting the most vulnerable households.

Kenya Food Security Steering Group, an Office of the President based research unit, says about 10 million people are food insecure.

It has estimated that the government needs Sh26 billion to feed about 3.8 million most vulnerable people between September 2009 and February next year.

The Kenya Red Cross says 2.5 million people are most vulnerable to the drought and could starve in the coming months if not supported with daily supplies of water and food.

Despite the rising needs, dwindling stocks at the National Cereals and Produce Board has increasingly made it difficult for the government to offer food subsidies making it necessary to change tack.

The board has only 2.5 million bags of maize in the silos against 32 million bags required every year.

The Cereals Board forecasts that it could buy and store eight million bags before end of the year.

Analysts said offering cash handouts to the poor is likely to run into trouble in the coming months as government revenue streams thin out in a challenging economic environment.

The Kenya Revenue Authority, which collects taxes on behalf of the government, has had mixed performance in the past 12 months.

It opened the July-September quarter— its first quarter for 2009/10 financial year with below par performance having fallen short of its Sh128 billion revenue target by Sh4 billion.

This shortfall, which has been blamed on runaway inflation and difficulties in the business environment, especially in the country’s commercial capital Nairobi where water and power rationing programme lasted five months beginning May, leaves the state in a tighter financing position for this year’s Sh860 billion budget — the largest ever in Kenya.

Inflation stood at 17.9 per cent last month having risen from 17.8 per cent in July to 18.4 per cent in August 2009 and to 17.9 per cent in September.

The average inflation rate for the July-September quarter was 18 per cent.

A new geometric computation however indicates that monthly inflation fell from 17.9 per cent in September to 6.6 per cent in October but consumers are still finding it difficult to buy their food, pay electricity and water bills and meet transport costs.