Parliament has accused the Treasury of sabotaging key development projects that were earmarked to spur economic growth in the year to June 2024.
The accusations follow revelations by the Treasury that Sh218.5 billion was not released to ministries, departments, and agencies due to a shortfall in revenue collection and financing.
The cash includes Sh10.4 billion in development spending that was to be transferred to five State departments that are key to industrial growth.
The Committee on Trade, Industry, and Cooperatives questioned three top Treasury officials over failure to release money meant for development in the financial year 2023-24.
Benard Ndungu, director-general, accounting services, Francis Anyona, director of the budget and John Anjera, director of planning-macro and fiscal affairs, were hard-pressed to explain why the Treasury did not disburse funds to the State Department for Investment Promotion, the State Department for Industry, the State Department for Trade, State Department for Cooperatives, and the State Department for Micro, Small and Medium Enterprises.
“Our big concern is that the National Treasury has decided to kill industrialisation and manufacturing. You have decided to starve the coffee sector and County Aggregation Industrial Parks,” James Gakuya, who chairs the committee, said.
“You have decided not to care about these sectors. If we do not put money where it is required to generate revenue and jobs, what are we doing as a country?”
The committee accused the Treasury of sabotaging President William Ruto by failing to release Sh3 billion for the construction of six Export Promotion Zones (EPZs) flagship projects, with each having an allocation of Sh500 million in the last financial year’s budget.
The six flagship EPZ projects that President Ruto directed to be constructed have received Sh300 million.
The committee said the Treasury failed to release Sh3.5 billion for the Coffee Cherry Fund despite Parliament having allocated Sh4 billion in the 2023-24 budget.
The committee put Mr Ndungu to task to explain why the Treasury had failed to release Sh350 million to modernise new Kenya Planters Cooperative Union (KPCU) warehouses which is critical in the coffee reforms. The National Assembly allocated the money through the Supplementary Budget II of 2023/24.
Mr Gakuya said the State Department for Cooperatives reallocated Sh600 million from the Coffee Cherry Fund to modernise the New KPCU warehouses following approval by the National Treasury, but the money was not released.
The committee also questioned the decision by the Treasury to deny the State Department for Industry funding for the Numerical Machining Company (NMC) which has a shortfall of Sh148 million for personnel emoluments.
The Anti-Counterfeit Authority (ACA) has a shortfall of Sh56.7 million while Rivatex has a funding shortfall of Sh47.1 million.
The Treasury was also hard-pressed to explain why it failed to release funding to the State Department for Investment Promotion for the Kenya Economic Transformation (KJET), a donor-funded project by the World Bank seeking to fund green MSMEs and to improve investment climate in Kenya.
The committee said the funding for the KJET was not included in the financial year 2023/24 budget estimates.
“This is a deliberate move to deny money to Semi-Autonomous-Government Agencies (SAGAs) to suffocate some of them,” Beatrice Adagala, the Vihiga Women Representative, said.
Committee vice chairperson Maryanne Keitany demanded to know why the SAGAs were denied development funds when the Treasury is aware that the sectors are critical in generating revenue.
She accused the Treasury of allocating a paltry 29 percent of their approved development budget to the five State departments despite Parliament approving their annual allocation.
“You are the ones that generate revenue projections. How come you failed to collect the money and fund the budgeted development projects? Is it that you are misadvising the President with fall revenue projections?” Ms Keitany said.
“You are making the President look like a liar having launched projects that the Treasury knows will not be funded.”
Mr Ndungu told the committee that the Treasury closed the financial year with Sh218.5 billion in outstanding exchequer requests due to a shortfall in revenue collection and financing.
“Due to the shortfall of revenue and scarcity of cash resources, the National Treasury usually applies for administrative criteria by giving priority to public debt, security, salaries, counties, social programs such as education, health, development and flagship projects and others,” Mr Ndungu said.
Mr Anyona, the Director of Budget explained that in the last financial year, the depreciation of the shilling against the US dollar, elevated inflation, tight monetary policy, floods, and tax expenditures affected revenue mobilisation.
“Revenue administration lapses such as tax collection shortfalls by the Kenya Revenue Authority (KRA) also contributed to tax collection shortfalls,” Mr Anjera, the Director of Planning-Macro and Fiscal Affairs, said.
