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Six major decision points for Uhuru administration

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President Uhuru Kenyatta with his deputy, William Ruto, during this year’s Labour Day fete. FILE

President Uhuru Kenyatta with his deputy, William Ruto, during this year’s Labour Day fete. FILE 

By Eric Aligula and Anne Kamau

Posted  Sunday, May 12  2013 at  17:38

In Summary

  • Better revenue collection, youth employment and secure country form part of the bouquet the new team must present to expectant Kenyans.
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On March 4, 2013 Kenya successfully concluded elections under the new Constitution, ushering in new leadership in a devolved form of government.

President Uhuru Kenyatta and Deputy President William Ruto are faced with the surmountable but difficult task of revamping economic growth and implementing the new supreme law while seeking to deliver on promises made to Kenyans during their campaign.

The new government is faced with a tight resource environment within which to manoeuvre, hence the need to carefully identify priorities that will facilitate the quantum leap of the economy in the next five years, including measures to achieve an appropriate balance between private and public sector investments in the economy.

Kenya’s economic performance in the last five years has been on the upswing from its low 2008 performance, but still faces some challenges. In 2010, 2011 and 2012, the economy grew at 5.8 per cent, 4.4 per cent and 4.5 per cent per annum, respectively.

It is projected to grow at an annual rate of 5.1 per cent, 6.0 per cent and 7.1 per cent in 2013, 2014 and 2015. However, these growth rates remain below the psychological 10 per cent per annum target which is also under the national development blueprint Vision 2030.

As a matter of fact, this administration has promised a double-digit growth rate. Government resources are stretched with a rising wage bill estimated at Sh458 billion, which is about 12 per cent of gross domestic product (GDP).

While revenue performance at approximately 24.3 per cent of GDP remains strong, the pattern in the growth of taxes has not aligned with overall government policy aimed at encouraging savings and investment.

Income taxes continue to contribute upwards of 35 per cent of the total revenue. These income taxes are growing faster than their respective tax bases. Moreover, Kenya’s population is growing at 2.7 per cent per annum, accompanied by an ongoing demographic shift.

The proportion of the population that is youthful, relatively skilled and urbanising and either underemployed or unemployed is growing quickly. This shift compounds the pressing need for resources to implement devolved governance structures.

Geopolitically, regional and global situations show some signs of stability and emerging threats. Kenya may reap from peace dividend with the renewed efforts to fight the conflict in the Democratic Republic of Congo and Somalia. However, the al-Shabaab threat still remains latent. Globally, the International Monetary Fund has downgraded global growth projections.

According to the April 2013 World Economic Outlook, the United States is experiencing low growth with lack of a credible medium-term fiscal plan to reduce its debt, while the European Union is facing financial strains arising from the sovereign debt crisis.

Prosperity promise

For Kenya, these developments have potentially adverse implications for remittances, demand for exports, as well as development assistance and foreign investment from these countries.

The Jubilee Manifesto, the electoral platform on which the new administration was elected, is themed on securing prosperity for all Kenyans. It aims for a future with the promise of prosperity and opportunity for all, built around the pillars of unity, the economy and openness.

It elaborates 23 programmes covering elimination of ethnic division, keeping Kenya safe and secure, making the country a strong trading partner in Africa, securing Kenya’s legacy as a sporting nation and celebrating its culture, building a healthier Kenya, empowering youth and women, increasing social protections, and building an enterprise economy.

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