Grand manifestos short on clear financing plans, say economic experts

Analysts want the presidential candidates to explain clearly how they will raise the cash to finance the programmes they have outlined in their manifestoes.

Many of the coalitions and parties have similar vote-hunting proposals but they all leave the glaring question of financing and the link with existing development plans.

Among the policies questioned are those on jobs, agriculture, education and provision of laptops.

In terms of job creation, Cord, Jubilee, Amani and Eagle coalitions have made specific proposals. Analysts say many of the promises are utopian but that some aspects of them are attainable.

“Politicians cannot go outside of the budgeted resources or legal framework. Their promissory notes — for that is what these manifestoes are —must be straight-jacketed into the existing framework.

"There are priorities that have been set, such as devolution which are already very heavy in terms of resource requirements,” said Patrick Mtange, the chairman of the Institute of Certified Public Accountants (ICPAK).

The link between the manifestoes and the priorities outlined in Vision 2030 is unclear in many cases, said Irene Otieno, the National Taxpayers Association regional officer.

“Does it mean ongoing projects will be stopped or more resources will be allocated to finish them? They will still need to go through the Budget process and pass an Appropriation Bill to carry out their proposals,” said Ms Otieno.

She said although the manifestoes were out, the politicians needed to tell Kenyans where financing would come from and the details of implementation.

“Every manifesto has been massaged to look good. Clearly, we cannot stimulate the economy through utopian proposals. We require strategic interventions pegged on available resources,” said Samuel Nyandemo, a senior economics lecturer at the University of Nairobi.

Dr Nyandemo said implementation of the programmes cannot be sustained if they stretch the Treasury’s capacity.

“They would look better if they were accompanied by concrete explanations on how resources would be raised.”

Rose Wanjiru, the director of the Centre for Economic Governance, a non-governmental organisation, said parties or coalitions should do a shadow budget as is done in France when formulating manifestoes.

“In some countries such as France, parties are expected to show how they will finance what they have stated in their manifestoes. You don’t just give promises. Here we have parties coming up with ideas out of the blues,” said Ms Wanjiru.

Dr Nyandemo, who said he had recently advised the government on land, says one proposal on raising revenue is to tax idle land not only to raise resources for other projects but to also ensure it is used and not hoarded by the rich.

The heated exchanges between Cord and Jubilee coalitions on land has left the matter still unclear in terms of the specific steps each will take to address the matter.

“We will address historical injustices on land, including, but not limited to, squatter problems, displacement of indigenous communities and involuntary resettlement of populations,” says the Cord manifesto without giving details.

“By adjudicating and issuing titles for community land, we will unlock its potential as a commercial asset in addition to providing communities with a secure place to live,” Jubilee says in its manifesto.

But it does not mention its plans for idle land, which is among the key concerns among those insisting on open discussion on the thorny subject.

“We need to reform the tenure system and tax idle land. We need to discuss the Ndung’u report and also get titles for land so that farmers can use them to secure loans to develop them,” said Dr Nyandemo.

On jobs, Cord has promised to restructure the Youth Empowerment Fund to give young people entrepreneurial skills and provide them with start-up grants. It also promises to give loans at reduced rates for business expansion and set up at least one major industry in each county.

Jubilee and Amani coalitions say almost the same thing on grants and loans.

The question is how big these grants will be and how many people they can reach as well as money for setting up industries. How much is each party proposing to set aside?

To increase employment opportunities, the Kenya Private Sector Alliance (KEPSA), through its recent National Business Agenda (NBA) recommends promoting growth-oriented micro, small and medium-sized enterprises.

To create jobs sustainably, KEPSA’s chief executive Caroline Kariuki said in a statement that the NBI proposes key areas namely ease of doing business and improving security.

They also promise to promote the rule of law; improve infrastructure; promote growth-oriented micro, small and medium-sized enterprises; improve agriculture; institute prudent and transparent management of natural resources; increase trade and investment; wisely re-invest in human capital development and develop a culture of performance.

Various parties have proposed that the largest sector of the economy— agriculture—be given subsidies for inputs. But they have not shown how much they will put into this. Neither have they indicated exactly which inputs will be subsidised.

An extensive subsidy programme could cost tens of billions of shillings given that 24 per cent of the gross domestic product comes from the agricultural sector.

World Bank officials in Nairobi have recently said the sector, alongside manufacturing, would create the largest number of jobs in the quickest possible time.

Economists, however, say that the subsidies plan is a viable one on a limited basis but that it needs to be specific on what particular areas or crops are going to benefit from it.

Dr Nyandemo said the subsidies proposal may encounter problems because of the World Trade Organisation rules. He however said the rules can be ignored because other countries such as the US are subsidising their farmers.

“Subsidies for agriculture are implementable but they need to be targeted. The parties, especially Jubilee which has been heavy on the matter, need to come up with specifics,” said Dr Nyandemo.

The most ambitious proposal on education has been made by Jubilee. It wants to increase education funding by one per cent each year so that by 2018 it reaches 32 per cent of Government spending. But what happens to other government programmes if 32 per cent of the available resources go to one ministry?

The Jubilee manifesto also says its government will provide solar lap-tops for schools which would cost Sh200 billion because each costs about Sh20,000.

But it seems that the reality about this proposal has hit home and a campaign advert the coalition put out last week said the solar lap-tops would be for each pupil joining school. That clearly leaves out those already in school and should therefore cost much less.

It shows that coalitions are beginning to grasp the implications of the proposals they are making and consequently the need to tweak them to suit reality.

Cord says in its plan that, in partnership with major global IT firms, it will launch e-learning and ICT education programmes to counteract a shortage of printed learning materials; set up computer laboratories and Internet services in all public schools to ease access to e-libraries and e-laboratories.

Since the facilities are shared in schools, the cost will be lower but still prohibitive to accomplish within the first Budget year.

The proposal to provide free milk for every primary school going child which will be sourced from county-based dairy farmer saccos, put out by the Jubilee Alliance, might excite people especially those living in areas where children suffer from malnutrition. But financing details are glaringly missing.

The top coalitions have promised to provide monthly stipends to the old people, orphaned and vulnerable children. Amani Coalition has specifically said it would dole out Sh5,000 per person for those aged above 70. Others have not specified the amount.

The Kenya government and a number of donors have been running a cash transfer programme that was started by the United Nations Children’s Fund (Unicef) in 2004.

It started with extremely poor households with orphaned and vulnerable children before it was extended to the elderly and people with disabilities. Each household receives Sh2,000 a month.

Raising the number of beneficiary households to one million, for example, would require the Exchequer to raise Sh24 billion a year. Currently there are 151,243 households in the programme in 69 districts and the annual spending is Sh4.38 billion.

(Read: Cash transfers to all unworkable, say experts)

Outgoing World Bank country director for Kenya Johannes Zutt said recently that the stipend had transformed the lives of the poor.

An assessment of its impact by the bank showed that beneficiaries were able to improve their health , increase consumption of locally produced goods and access education by buying school uniforms and other learning materials.

Cord has promised to increase the use of ICT to boost productivity and efficiency and to turn Kenya into an information society as one way to create jobs.

The assumption is that this would build on the Konza ICT Park, which looks implementable. President Kibaki recently said it has capacity to create 200,000 jobs.

The coalition also proposes to invest at least 2.5 per cent of annual GDP in research and development, a hefty Sh80 billion given that the Treasury estimates, GDP (based on market prices) grew by 4.7 per cent last year to hit about Sh3.2 billion. Details of this remain to be seen.

Another job creation method, which has been proposed by the Jubilee Alliance, is to allocate 2.5 per cent of national revenue annually towards establishing a Youth Enterprise Capital/Fund designed along the CDF model to enable youth access interest-free business financing without the traditional collateral.

By June 2012, the total revenue (excluding grants and loans) was estimated to be Sh805 billion and a 2.5 per cent of this would amount to Sh20 billion.

Even though the amount appears manageable, the question then becomes whether people will be incentivised enough to commit themselves to the business for which they do not have to repay.

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