Treasury banks on stimulus package to speed up growth
Finance minister Uhuru Kenyatta (second left) launches the Economic Stimulus Programme website at KICC in Nairobi on January 19, 2011. Photo/TOM MARUKO
Treasury is banking on the completion of projects under the multi-billion shilling stimulus fund to help consolidate the country’s economic growth in 2011.
Finance minister Uhuru Kenyatta said the Sh22 billion fiscal stimulus launched under the 2009/10 budget had helped boost growth despite hitches in its implementation.
The launch of the programme coincided with a difficult time for the country when economic growth had slowed to a paltry 1.7 per cent from a high of 7.1 per cent in 2007 on the effects of the global economic downturn and poor weather.
“ESP (Economic Stimulus Programme) has not disappointed us; it has played its part in stimulating economic growth, creating employment and spurring entrepreneurship and innovation,” he said yesterday in Nairobi when he launched a website (http://www.economicstimulus.go.ke/) on the programme.
“The results of the ESP have been impressive….ESP target sectors have strong multiplier effects on economic growth.”
The minister said the completion of projects rolled out under the programme could help consolidate economic growth witnessed since the third quarter of 2010.
“We believe that the ESP is a good vehicle in stimulating growth and we would like it continue,” Mr Kenyatta told journalists without specifying the programme’s contribution so far to the growth.
Statistics released in December by the Kenya National Bureau of Statistics showed that the economy grew 6.1 per cent in the third quarter of 2010, up from 0.5 per cent in the same period of 2009, buoyed mainly by agriculture and nearing levels reached before deadly post-election violence in 2008.
Treasury projects that based on the momentum, economic growth in 2011 could touch the 5.7 per cent rate in the long term and 6.1 per cent in the short term despite threats of inflation owing to looming drought and rising global prices of crude.
The government in its 2009/10 budget moved to boost the CDF kitty to bridge the country’s growing regional economic disparity through the stimulus package.
Statistics showed that of the Sh50 billion earmarked for development spending at the constituency level, about Sh18 billion was to be managed by the constituency offices.
The remaining fraction that included a Sh22 billion —or Sh105 million per constituency —would be disbursed as a “conditional” economic stimulus or resilience package.
The money was to finance the construction of new schools, health centres as well as repair and maintain roads at the constituency level.
A blueprint of the Sh22 billion conditional stimulus plan showed that at least two primary schools in every constituency were to benefit from the procurement of water harvesting facilities at a total cost of Sh1.47 billion while some 200 constituencies would also have one secondary school upgraded into a “centre for excellence” at a cost of Sh1.26 billion.
One mobile digital laboratory would also be purchased for secondary schools in each constituency and 50 teachers hired for primary and 10 for secondary schools in these areas on contract basis.
The stimulus plan also factored in a tree fund for 20 primary schools in all the constituencies while farmers in 180 similar regions are set to benefit from newly-built wholesale and fresh produce markets.
The giant jua kali (informal) sector is earmarked for the construction of sheds and equipment supply.
About 200 fish ponds are to be built at a cost of Sh1 billion in 140 constituencies.
Ms Anne Waiguru, the outgoing coordinator of the ESP, said about Sh16 billion had been spent in the first phase of the programme while another Sh5 billion had been disbursed for use in various projects.
