An initiative to establish County Aggregation and Industrial Parks (CAIPs) across the country is faltering amid funding cuts, dealing a blow to one of President William Ruto’s key strategies to transform the agriculture and manufacturing sectors.
The latest details show that while the government had planned to establish a CAIP in every county by the end of June next year, only 18 counties are likely to have the crucial county-based centres for value addition.
The government had touted the CAIPs as the crucial link between agriculture and manufacturing sectors, noting it would address input costs and quality for farmers and provide them with working capital to achieve the much-needed value addition.
The initial plan was to implement them in all counties within two years from July 2023, with the national government funding half of the Sh500 million cost of each CAIP.
While the national government planned to inject Sh9 billion into the project in the 2023/24 and 2024/25 fiscal years, reports from Parliament now show that only a funding of Sh3.25 billion will be funded.
“That the allocation for CAIPs was reduced to Sh2 billion from an initial allocation of Sh4.5 billion for the financial year 2024/25. Further, the allocation for the financial year 2023/24 which amounted to Sh4.5 billion was only disbursed Sh1.25 billion with each project receiving Sh62.5 million,” notes the National Assembly’s budget committee.
In its report on the County Governments’ Additional Allocation (CGAA) Bill, 2024, the committee says Treasury blames funding shortfalls following the rejection of the Finance Bill, 2024, but provides no explanation for the unfunded CAIPs in the last fiscal year.
In the first supplementary budget for the current financial year, Treasury cut the additional allocations to counties from Sh61.9 billion to Sh46.6 billion. The funding for CAIPs was cut by 56 percent.
“As such, there could be a need to revise the implementation framework of the programme and consider focusing on completing the first 18 CAIPs in the financial year 2024/25,” the committee observed.
In a report tabled in Parliament last month, the Ndindi Nyoro-led committee recommended approval of the Treasury’s proposed budget cut for CAIPs in the year to June 2025 from Sh4.5 billion to Sh2 billion and “the revised allocations to CAIPs to prioritise completion of the ongoing projects in the first 18 counties.”
The initiative will be funded by the national government through the CGAA Bill, 2024. The Senate passed the Bill on June 11 with a total of Sh61.9 billion (conditional and unconditional) in additional funding for the counties.
The Senate had considered that after the funding in the 2023/24 fiscal year fell short by 72 percent, 11 counties would have to implement the projects in the year to June 2026, as projected by the Budget Policy Statement (BPS) 2024.
But with the further funding cuts approved by the parliamentary committee in the supplementary budget, at least 29 counties will not have implemented the initiatives by the close of the 2024/25 fiscal year, meaning that President Ruto may not achieve his objective by the end of his first term, should funding shortfalls continue in the coming fiscal years.
The Ministry of Trade and Industry had projected that through the implementation of CAIPs, the government would not only spur productivity in the agriculture and manufacturing sectors but also promote backward and forward linkages with other sectors of the economy.
The project is being implemented by the national and county governments in partnership with the private sector players, development partners, and the United Nations Industrial Development Organisation.
“The main objective of CAIP is to grow manufacturing and investments through agro-industries and enhance productivity of agriculture sector in a sustainable manner hence creating inclusive decent jobs, increase farmers’ income; increase foreign exchange, provide a platform where farmers, processors, exporters, research institutions, industrial bodies, and government can engage for agro-industrial development,” the Ministry says.
