Budget Speech is full of promises, but not formulas
Posted Monday, June 18 2012 at 18:30
Like other Kenyans, I had high expectations for last week’s Budget Speech. First, I had hoped for a Budget that is keen on agricultural development to address food security and manage the poor balance of payments as created by excess import of food items.
But shockingly, agriculture got three per cent, instead of the recommended 15 per cent of the Budget.
Secondly, there were rosy statements about helping the poor.
I am a firm believer in teaching a beggar to fish, not giving him fish. Transfer payments in a country where almost everyone is poor are a recipe for disaster. Better policies at enabling the public to fend for itself would prove more fruitful.
The minister thinks the economy will grow at 5.2 per cent, inflation will drop to five per cent and we will have a healthy current account.
Beautiful dream. The 2012/13 Budget is a populist document that has beautiful words with little economic meaning. For starters, having a Budget of Sh1.459 trillion with 81 per cent going into recurrent expenditure and claiming that you intend to lower inflation levels to five per cent is a distant dream.
The Budget seems to encourage imports by concentrating on reducing duty on import of items like food supplements while having no strategic policy on encouraging exports.
That said, however, what does this mean to the small business operator in Kenya? First, if the minister implements single window clearance policy and abolish weighbridges and road blocks that will be good for business.
It would deal a blow to corruption.
Secondly, mitumba traders should be happy. They will pay less tax and the clients who ran away will be back.
But it is not all good news. Real investors’ time is up. It is anticipated that this will contribute to inflation big time as landlords pass on the burden to tenants.
Given that the Companies Act require companies to be registered at the Lands office, the electronic filing system will definitely contribute to lower turnaround times for those freshly incorporating their companies.
In all these, the winner for me is the commitment by the minister to facilitate the implementation of the Growth Enterprise Market Segment (GEMS) at the Nairobi Securities Exchange.
Odhiambo is the managing consultant of Elim Consulting. E-mail: firstname.lastname@example.org.