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The full Kenya Budget speech 2013

Thursday, June 13, 2013 — updated on December 24, 2020 - 39 min read

FULL SPEECH #Budget2013: STATEMENT DELIVERED TO THE BUDGET AND APPROPRIATION COMMITTEE OF THE NATIONAL ASSEMBLY ON 13THJUNE, 2013, BY MR. HENRY K. ROTICH, CABINET SECRETARY FOR THE NATIONAL TREASURY, REPUBLIC OF KENYA, WHEN HIGHLIGHTING THE BUDGET POLICY AND REVENUE RAISING MEASURES FOR FISCAL YEAR 2013/2014

1ST JULY, 2013 TO 30TH JUNE, 2014
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19. Hon Members, the broad development policies of the new Administration, outlined during the President’s address to Parliament on 16thApril 2013, provides government with clear and progressive approach to reinvigorate inclusive growth and move the country to the next level of prosperity.
20. Therefore, this year’s budget outlines several aspects to achieve this, as follows:
• Accelerating growth through improving productivity and competitiveness, and opening up the economy to investment and trade opportunities to boost exports;
• Support for small and medium enterprises through targeted financial support, skills development, and access to market through a revamped public procurement system so as to expand business and to reduce joblessness among our young people;
• Continuing with public and private investment programmes that have the highest impact to growth, covering roads, railways, pipelines, ports, and energy;
• Creating a business climate that encourages innovation, investment and growth;
• Improving the quality of education and training through leveraging on ICT, starting with the primary level;
• Modernizing our police force to effectively and efficiently respond to crime;
• Boosting food security by investing in agriculture including opening up at least 1 million acres of new land through irrigation in order to end food insecurity;
• Maintaining macroeconomic stability by keeping inflation low, and striving for a stable and competitive exchange rate, while enhancing our capacity to respond to external shocks;
• Sealing leakages in our revenue collection system and extending the tax base, while ensuring efficiency in public expenditure;
• Supporting devolution through capacity building to effectively deliver public services and ensuring county governments receive adequate resources to fund their functions;
• Investing in our greatest capital resource – our people and provision of what our Constitution demands – progressive social protection for every Kenyan.

24. As a government, we want to support these investments in order to grow our economy. But for this to happen, the Government will play its facilitative role more effectively by improving the enabling business environment for private sector to thrive and prosper. In this regard and consistent with the commitment of the new Administration to improve the business environment, we have programmed to spend:
• Ksh 97.9 billion for continued road expansion, upgrading and rehabilitation throughout the country in order to improve the conditions of road network, promote commerce and expand economic opportunities for our people, both in urban and rural areas.
• Ksh 22 billion to commence the construction of a two-track standard gauge railway line from Mombasa to Kisumu to improve turn-round time and reduce significantly the cost of freight from Mombasa to Kisumu, by as much as 79 percent from about Ksh.140,000 to Ksh.30,000;
• Ksh 78.5 billion for scaling up investment in reliable and affordable energy, of which Ksh 12.5 billion will be for geothermal development and Ksh 23.8 billion for enhancing power transmission; and
• Ksh 3.7 billion for construction of the first three berths and associated infrastructure of the Lamu port under the LAPSET project.

36. Hon Members, majority of our people are still food insecure and live in abject poverty, especially in rural and slum areas of urban cities. Further, food takes up about 70 percent of the household budget such that when food prices rise it creates agitation for higher wages, which in turn weakens our competitiveness. The low productivity of agriculture is caused by use of inappropriate technology, inaccessible farm inputs, weak extension support services, and over reliance on rain-fed agriculture. To deal with the perennial challenges of food insecurity and to reduce cost of living associated with high food prices, the Cabinet Secretary for Agriculture will implement a comprehensive agricultural revitalization program aimed at expanding, enhancing productivity and transforming agriculture into a business venture. In this regard:
 Ksh 8 billion has been allocated to implement the on-going irrigation projects spread throughout the country;
 Ksh 2 billion is set aside for Agri-Business Fund to de-risk and leverage commercial bank lending to smallholder and commercial farmers throughout the country. We plan to scale this Fund to Ksh 20 billion by the 4th year to expand its access to as many Kenyans who venture in farming as a business
 Ksh 3.6 billion to implement the first Phase of the 1 million acre irrigation and food security project in Galana covering completing the detailed study, developing an implementation framework and business plan, administrative support, monitoring and reporting; sinking of water points. This project, is expected to, among others:
o Producing adequate food for the country and supplying to the market at affordable price
o Creating at least 3 million jobs along the agriculture value-chain, including multiplier effects;
o Transforming the Galana ranch and, by extension the coastal region, into an economic hub for production, agro-processing, packaging, distribution, exporting and tourism.

39. As committed by the Jubilee Administration, Hon Members, we are addressing these challenges to expand economic opportunities for women, youth and persons with disability as follows:
 First, we are putting on top gear our business regulatory reforms, including making it easy and faster to register a business
 Second, working with the County Governments, we will ensure that obtaining construction and business permit in any part of the country takes a shorter time, digitized and payment made at the comfort of your home through your phones or online banking services
 Third, we are reforming the tax system to make paying taxes and trading across border much easier. All government regulatory agencies are urged to ensure this commitment becomes a reality in the shortest time possible;
 Fourth, through the enactment of Biashara Kenya Bill now under formulation, we shall provide a one-stop shop solution to all small and medium size enterprises covering the entire business chain – such as skill and business development, product standardization and branding, access to credit, business incubation services, and market access

42. Hon Members, the new Administration intends to make the Public procurement process play a leading role in driving growth, creating quality jobs and reducing poverty in our economy. Under the Jubilee Administration, we are reforming the public procurement to reduce the turnaround time to complete a procurement process and make it less cumbersome, more transparent and supportive to our economic transformation agenda. In this regard, I have proposed amendments to the Procurement law:
 First, to enhance the preference and reservation for youth, women and persons with disability, from 10 percent to 30 percent;
 Second, to accord exclusive preferences to local firms that manufacture, assemble, grow, extract or mine goods in priority areas such as construction materials and related supplies, furniture, motor vehicles and foodstuffs – buy Kenya, build Kenya; and
 Third, to reduce the time it takes to initiate and award a tender to no more than 30 days.

48. I have in this regard, Hon Members, allocated an additional Ksh 31.6 billion over the MTEF period. Starting FY2013/14, a total of Ksh 10.6 billion has been proposed, of which Ksh 3.8 billion is for free access to maternal health; and Ksh 700 million for free access to all health centres and dispensaries. I have allocated a further Ksh 3.1 billion and Ksh 522 million for recruitment of 30 community nurses and 10 community health workers, respectively per constituency to provide quality health care services to Kenyans. Access to health care would not be complete without available and accessible personnel. Accordingly, I have allocated another Ksh 1.2 billion for provision of 1,500 affordable housing units to health care workers to enable them respond and attend to patients in a timely manner.

50. Poverty and vulnerability pose significant risk to the wellbeing of some members of our society. With over 50 per cent of Kenyans living below the poverty line, we have prioritized cushioning those less fortunate, poor, elderly and persons with disability in our communities. We have in this regard allocated a total of Ksh 13.4 billion as follows:
 Ksh 8.0 billion is for doubling the number of orphans and vulnerable children under the cash transfer programme from 155,000 households to 310,000 households;
 Ksh 3.2 billion for increasing two-fold number of elder persons under cash transfer from 59,000 to 118,000;
 Ksh 770 million for doubling coverage of those with extreme disability from 14,700 to 29,400 households,
 Ksh 452 million for doubling the number of other disabled persons under coverage of cash transfer; and
 Ksh 400 million for Presidential Secondary School Bursary Scheme for orphans, poor and bright students.
 Ksh. 356 million for urban food subsidy
 KSh. 100 million for Albino

55. Hon Members, the Consolidated Fund Services comprise Ksh 110.2 billion for domestic interest payments; Ksh 11.2 billion for foreign interest payments; Ksh 38.2 billion for pensions; Ksh 3.4 billion for salaries and allowances of constitutional office holders; and Ksh 1.4 billion for guaranteed debt payments and other non-discretionally expenditures. In addition, I expect to finance external redemptions amounting to Ksh 88.6 billion and domestic redemptions amounting to Ksh 127.3 billion. Hon Members, gross development expenditures for 2013/14 is estimated at Ksh 447.9 billion. Out of this amount, Ksh 201.1 billion will be financed through Appropriations–in–Aid, comprising of direct project financing of Ksh 55.9 billion in form of grants, Ksh 140.5 billion in form of loans, and Ksh 4.8 billion in form of Local Appropriations-in-Aid.

58. Hon Members, with total expenditure of Ksh1,640.9 billion (inclusive of domestic and external debt redemption as well as contingency provisions), and total expected receipts of Ksh1,284.0 billion (including loans and grants), the overall deficit amounts to Ksh356.9 billion. However, Hon Members, excluding the domestic debt rollover of Ksh 126.1 billion from expenditures and reflecting external debt redemption of Ksh 88.6 billion as a financing item, while at the same time reflecting loan external financing in a more acceptable international standard practice, total expenditure would amount to Ksh 1,424.8 billion, thus giving rise to an overall fiscal deficit of Ksh 329.7 billion (7.9 percent of GDP). This will be financed by net foreign financing of Ksh.223.0 billion and Ksh106.7 billion net borrowing from domestic market.

78. Hon Members, in 2004 the Government introduced an excise tax remission on senator keg beer to discourage consumption of illicit and dangerous brews. However, it has been difficult administratively to differentiate between various beer products and senator keg, thereby posing a threat to revenue collection. To safeguard the original intention of this policy, I have amended the said regulation to reduce the remission by 50 percent and to grant it only in respect of beer made of millet, sorghum and cassava. The senator keg will, however, continue to enjoy a remission at this new level, on a transitional basis, for a period of three years. I expect this measure to stimulate agricultural activity in these regions where these products are grown. Hon Members, this measure will generate an additional Ksh 6.2 billion to the exchequer.

94. Hon Members, in conclusion, I wish to thank H.E. the President and Deputy President for their guidance and support. I also wish to thank my Cabinet colleagues for their support and understanding. My sincere appreciation goes to:
• Majority Leader of the National Assembly Hon Aden Dually for the excellent working relationship during the legislative approval process of the budget
• Members of the Budget and Appropriation Committee led by Hon Motiva Musyimi and the Parliamentary Budget Office for the constructive engagements and navigating the review process of the budget estimates under tight timelines
• All Hon Members of the various Departmental Committees and, in particular, the Committee on Finance, Planning and Trade chaired by Hon Benjamin Langat, for their commitment and diligent review of the budget under a very limited time period
• Chair of Council of Governor, Hon Isaack Ruto for the constructive engagement on the budget allocations to county governments
• The Board, Management and Staff of Kenya Revenue Authority for their contribution to revenue mobilization – I look forward to better times in the year ahead
• The Board, Management and Staff of Central Bank of Kenya for their management of monetary policy;
• The Commission on Revenue Allocation and its Chairperson, for their contributions;
• The management and staff of the National Treasury, their selfness dedication to duty and for working behind the scenes for a better Kenya. In particular, I must pay special tribute to the Permanent Secretary to the National Treasury, Mr. Joseph Kinyua for his unrivaled dedication to public service, spanning over two decades.

96. In sum, Hon Members, the message in this budget is as follows:
• Global economic recovery is taking shape but the road ahead is still bumpy.
• We must grow our economy faster to draw more youth to employment and meaningfully reduce poverty. To do this, we need to support business to thrive and take up more opportunities.
• The Second Medium Term Plan of Vision 2030 (currently under preparation) and the priorities of the new Administration will be implemented and budgets will be aligned to it.
• We will continue to invest in infrastructure (particularly rail and ports) and in our great resource–the people of Kenya—while taking bold steps to create opportunities for young people.
• We will modernize agriculture including opening up at least 1 million acres of new land through irrigation in order to end food insecurity.
• We will invest in security and modernize our police force to eliminate crime.
• We will seal leakages in our revenue collection system by leveraging on ICT while extending the tax base.
• We will engage more youth in business through our revised public procurement regulations and a new framework of delivering financial support.
• We will deepen regional integration for our businesses to seize trade opportunities in the region.
• Following up on our VAT reform, we are committed to reviewing and assessing our tax policy framework and its role in supporting the objectives of inclusive growth, employment, development and fiscal sustainability.
• Facilitate devolution as the new formula for equitable distribution of resources among the 47 counties takes effect.

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The full Kenya Budget speech 2013

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