Uhuru pumps billions into Jubilee flagship projects

President Uhuru Kenyatta has used his inaugural Sh1.7 trillion budget to frame his economic legacy by pumping billions of shillings into flagship projects meant to deliver his pre-election promises and put Kenya on the path to realising the desired double-digit growth.

Mr Kenyatta’s pet laptops for Standard One pupils plan tops the list of big spenders, which also includes large-scale irrigation schemes, free maternal health services and geothermal power generation, according to the budget estimates tabled in Parliament on Wednesday night.

Treasury secretary Henry Rotich said spending big on the Jubilee government’s mega programmes should give the economy the impetus that is needed to realise the target 6.1 per cent growth next year.

“We have identified factors that are holding our growth, and that is why we are determined to bring down the cost of power, contain high food prices, reduce cost of moving goods, revamp security and take care of the vulnerable to realise our targets,” Mr Rotich said in an interview.

Mr Rotich said the Jubilee government would stay focused on energy, food security, railway and national security to boost Kenya’s competitiveness, attract investors and achieve double-digit growth.

“This level of growth will be supported by increased production in agriculture, continued investment in infrastructure projects and expansion of activities in other sectors of the economy,” the budget summary paper says.

This is the first spending plan to be fully prepared by the Kenyatta administration, and the president appears to have seized the opportunity to put his mark on Kenya’s development path with signature projects.

The list of priority programmes that have been earmarked for big spending includes three new airports in Mandera, Malindi and Suneka (in Kisii), the leasing of medical equipment, building of commuter railway to Nairobi’s main airport, a national digital register and social safety nets dubbed ‘Inua Jamii.’

Mr Kenyatta is banking on these signature projects to achieve a 5.8 per cent economic growth this year up from last year’s 4.7 per cent and 4.6 per cent in 2012.

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The 2014/15 budget includes Sh1.1 trillion set aside for the national government, consolidated fund services (Sh362.5 billion), county governments allocation (Sh226.7 billion), Parliament (Sh19.5 billion) and the Judiciary Sh18.5 billion.

Jubilee’s signature projects will take in more than half of the Sh479.7 billion development expenditure, which also includes continuation of Kibaki-era initiatives such as the economic stimulus programme.

Execution of Jubilee government’s manifesto has marginally pushed Kenya’s development expenditure up to 27 per cent of the budget from this year’s 26 per cent, marking the beginning of the planned shift from heavy spending on salaries and wages.

At 27 per cent of the budget, Mr Kenyatta’s development spending plan is still in breach of the Public Finance Management Act that requires at least a third or 30 per cent of the national budget to be spent on development.

Mr Kenyatta’s pet laptop project has been allocated Sh17.4 billion to be used in buying some 1.2 million devices for Standard One pupils in public schools.

Part of the funds has been earmarked for development of digital content, building capacity of teachers and setting up of computer laboratories for upper primary pupils.

This is the second allocation to the laptops project that has in recent months been dogged by procurement scandals and entangled in a mesh of legal suits.

The Public Procurement Administrative Review Board (PPARB) in March nullified the award of the tender to supply the laptops to the Indian marketing firm Olive Telecommunications.

The procurement watchdog said Olive did not meet the financial threshold to participate in the tender, was not an original equipment manufacturer (OEM) and had illegally inflated its final bid by Sh1.4 billion to Sh24.69 billion.

Olive has appealed the decision in court and the matter is yet to be determined.

Mr Rotich said the Sh17.4 billion set aside this year will lapse if the court battle is not resolved by end of the June, making it prudent to allocate new funds.

Another Sh19.4 billion is earmarked for the construction of a standard gauge railway line from Mombasa to Nairobi, expected to be completed by end of 2016.

The high-speed railway will run diesel and electric locomotives and is expected to significantly reduce the cost of freight along the Northern transport corridor that serves Kenya, Uganda and Rwanda, saving businesses huge amounts of resources.

Mr Rotich has set aside Sh3.5 billion for the construction of a 4.4 kilometre rail line connecting the Jomo Kenyatta International Airport (JKIA) to the Syokimau station off Nairobi’s Mombasa Road.

The new commuter rail system is expected to cement Nairobi’s position as East Africa’s commercial hub besides helping decongest the capital.

The line is expected to cut the journey to the airport to less than 20 minutes from the current 90 minutes and reduce congestion at the airport by providing checking in, luggage dropping and collection facilities at the Central Nairobi Railway Station.

The Treasury has also allocated Sh3.5 billion to fund the ambitious one-million-acre Galana-Kulalu Irrigation Scheme that aims to end Kenya’s reliance on rain-fed agriculture in favour of modern and large-scale farming methods.

The Kenyatta government plans to spend a further Sh3 billion in farm input subsidies, hoping to reduce the cost of food and slow down inflation. 
On energy, Sh10 billion will be used to develop geothermal power sources.

Mr Kenyatta is banking on steam power to lower the cost of electricity to Sh9.10 (¢10.45) per kilowatt hour from the current average of Sh17.20 (¢19.78) per unit for domestic households.

The shift to geothermal will help cut over-reliance on hydropower, which is susceptible to the vagaries of weather.