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Economy

Promises of economic goodies in second term

Members of the public in Eldoret follow proceedings of President Uhuru Kenyatta's swearing in on a giant screen belonging to the Uasin Gishu County Government on November 28, 2017. PHOTO | JARED NYATAYA | NMG
Members of the public in Eldoret follow proceedings of President Uhuru Kenyatta's swearing in on a giant screen belonging to the Uasin Gishu County Government on November 28, 2017. PHOTO | JARED NYATAYA | NMG 

President Uhuru Kenyatta yesterday made a litany of promises aimed a rebooting Kenya’s limping economy while striking a reconciliatory tone following his swearing-in for a second and final term after a bruising election.

Addressing a jubilant crowd at Nairobi’s Kasarani Stadium, Mr Kenyatta announced a series of interventions aimed at reinvigorating health, education, agriculture, housing and immigration and manufacturing sectors.

While at it, he offered an olive branch to the Opposition and its supporters, stating that his administration would incorporate some of their ideas when formulating policies.

Mr Kenyatta’s bag of promises comes on the backdrop of an economy that has this year recorded its slowest pace of growth since 2012.

It has not helped that public debt has continued to balloon touching a staggering Sh4.5 trillion, or 55 per cent of GDP.

But in keeping with his administration’s optimism, Mr Kenyatta said his administration had in the past four years laid a firm foundation for economic take-off and unveiled some of the interventions his administration has planned for the next five years.

Electricity costs

Top in the list of measures aimed at boosting economic output is the decision to cut by half the cost of power for commercial consumers operating at off-peak hours between 10 p.m and 6 a.m. beginning Friday.

This is lower than the 30 per cent drop outlined by the Energy Regulatory Commission (ERC).

Large power consumers currently pay either Sh7.50 or Sh9.20 per kilowatt hour, depending on the amount of consumption, and it is now expected that they will bump this input cost benefit to consumers in form of cheaper goods and services.

Mr Kenyatta expects that this intervention, which has been on the cards for decades, will see manufactures power their equipment through the night, thereby hiring more workers in a 24 hour economy.

“Over my term, we’ll grow and sustain this manufacturing sector, and raise its share of the national cake from nine per cent to 15 per cent,” he said, further promising to create 1,000 agro-processing SMEs in that period.

Manufacturing jobs, healthcare

The Jubilee administration will also target textiles and apparel, leather processing, construction materials, innovation and IT, mining and extractives as part of the wider plan to “create decent jobs” and grow manufacturing’s share of GDP are.

The healthcare sector, which the President regards as one of his legacy projects, where his inaugural action was the offer of free maternity programme and improvement to hospital infrastructure, is also set for a policy overhaul.

“Within five years, my administration will ensure that 13 million Kenyans and their dependents are beneficiaries of…the National Hospital Insurance Fund (NHIF),” Mr Kenyatta said as he promised 100 per cent universal healthcare coverage.

Such level of enrolment would represent a 91 per cent jump from the 6.8 million currently registered by NHIF.

The President also promised a “complete reconfiguration” of the scheme, but was equally vague on reforming “laws governing private insurance companies.”
Private insurance firms have long been viewed as prohibitively expensive to low-income earners while NHIF is battling with increasing fraud.

Home ownership

Prospective homeowners were also on the President’s radar as he promised to introduce an “affordable” home ownership programme that will ensure every working family can own a decent home.

By 2020, his administration has set a target of creating 500,000 new home owners.

This ambitious task is, however, set to face the test of realities on the ground where the cost of securing land and materials remain extremely high, making homeownership a pipedream for millions.

Monthly mortgage repayments, which are normally in the tens of thousands of shillings, have also kept made homeownership a preserve of the rich.

To cure this problem, Mr Kenyatta sought refuge in the oft referenced intervention of attracting long-term and cheap financing from “both public and private sources.”

Immediate policy and administrative reforms, he added, would be introduced to bring down the cost of construction as well as improve the “accessibility of affordable mortgages.”

Open borders

Mr Kenyatta, borrowing a leaf from Rwanda, announced that all Africa citizens will be receiving visas at the port of entry, and that Kenya expects no reciprocity for the gesture.

In yet another major policy decision aimed at opening up the country for trade and investment, the president said East Africans will henceforth simply require their national identity cards to do business in Kenya.

These interventions standout especially coming in an environment of less than friendly diplomatic relations with South Africa and Tanzania.

But as the President sought to lay out his economic plan for the next five years, and promise to “build bridges to unite and bring prosperity to all Kenyans”, economic analysts contend that he has his work cut out.

“The immediate priority for the Kenyatta presidency will be to boost growth, and avert rising headwinds. This is especially important given the limited room for spending on big, new infrastructure projects going forward,” said Standard Chartered chief economist for Africa Razia Khan.

“An immediate starting point is likely to be unlocking banking sector credit growth, so the private sector can play more of a role in boosting the economy, when government resources are limited.”

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