Ideas & Debate

Unpacking Uhuru’s new Sh25bn stimulus package

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President Uhuru Kenyatta. FILE PHOTO | NMG

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Summary

  • The 14 strategic interventions that make up the formal third stimulus programme in two years read, as one colleague commented, a little like an election manifesto, except that we all know the President is constitutionally headed into retirement next year.
  • We must one day get to the point when agriculture is seen as primarily a devolved function for counties, with national government left to focus on overall policy as well as stuff like regulations, standards and research.
  • The education intervention focuses on expanding the infrastructure to support the new Competency-Based Curriculum (CBC).

Leaving it to the absolute end of his 6,000-plus word Mashujaa (Heroes) Day address, President Uhuru Kenyatta offered what is likely to be the real stimulus for the Kenyan economy by declaring an end to a dusk-to-dawn Covid-19 inspired curfew that has lasted 20 months.

Before we get to the digital day in the future when robots will do everything for us, we pretty much still earn our living by being physically mobile as we work, trade and play on a 24-7-365 basis.

The 14 strategic interventions that make up the formal third stimulus programme in two years read, as one colleague commented, a little like an election manifesto, except that we all know the President is constitutionally headed into retirement next year.

More broadly, I am not totally convinced about the efficacy of these stimulus programmes as a combination of public money thrown at problems, or time-bound tax and financial breaks.

Two questions for quick Treasury evaluation. What difference did the first Sh50 billion-plus stimulus (excluding the tax and financial reliefs) really make? Two, is this third, apparent Sh25 billion stimulus additional to the second, Sh26 billion economic recovery stimulus?

These are not criticisms, but raise the need for hard questions and answers after each one happens. We seem to have perfected this habit of announcing big things and then assuming that they actually happen.

It also feels less focused than the 2009 stimulus which the President himself put together during his time as Finance Minister.

Here are a few quick thoughts on these interventions. The tea, sugar, coffee and livestock sector interventions are popular at first glance, but seem more about transactions than policy.

We must one day get to the point when agriculture is seen as primarily a devolved function for counties, with national government left to focus on overall policy as well as stuff like regulations, standards and research.

The education intervention focuses on expanding the infrastructure to support the new Competency-Based Curriculum (CBC). Hello, isn’t this already in the budget, and if not, why not?

Wasn’t there a situation analysis, or needs assessment, before CBC was rolled out? What have our public servants in the education sector been doing? Why do we confuse “last mile” investment for “last minute” action?

The same questions could be asked about the command to the Ministry of Health to construct 50 new Level 3 hospitals.

EMERGENCY STUFF

The further difference from education is that health is a devolved function. And for both education and health, even with limited resources, isn’t there any strategic thinking around the overall investment package — beyond buildings to staffing, supplies, materials and other working tools?

You will see where I am going to with this. The President was fully within his rights and powers to offer a stimulus. But the question that keeps coming to me is why it always seems full of emergency stuff.

I do not know enough about the National Sanitation Programme (Kazi Mtaani) in its outcomes and impacts to comment on another Sh10 billion (40 per cent of the stimulus) that targets 200,000 young people.

I will be interested to see how proposed petroleum and energy interventions to stabilise fuel prices while slashing power bills by 30 percent by Christmas will mesh together without more price controls. Ditto how the National Treasury gets to raise the cash reporting limit above Sh1 million when the global norm seems settled at $10,000.

SWIMMING BACKWARDS

When one throws in the idea to ease thresholds for credit reference listing right before the 2022 election, then, to use a term favoured by former US President George W Bush, we might be attempting the equivalent of swimming backwards.

The intervention relating to digital financial services makes sense; done properly, strengthening the digital space can be a useful arrow in our anti-corruption and money laundering quiver. However, see earlier points above.

The idea to get into vaccine production has become a rallying call across Africa, but it is mainly the politicians, not business, who are making this call. It is a worthy aspiration, though it was a little surprising to hear about this new Kenya Biovax Limited that will be in production next Easter.

The one intervention we didn’t hear about related to the Vaccine Deployment Plan, where the new targets are 10 million adults fully vaccinated by June 2022 (revised from December 2021) and 16 million (or is it 26 million?) by June 2023 (revised from the end of December 2022).

It was smart politics for President Kenyatta to lift the curfew while announcing this stimulus.

What concerns me is how all of this fits into Kenya’s macro and micro economic and fiscal policy framework when the 2021/22 budget implementation is already a third of its way through, and the 2022/23 budget preparations are more than half way done.

And that’s before we get to the policy outcome, as in problem-solving, logic underpinning these interventions. But I might be wrong.