Uhuru’s pet projects hit in funding virus fight

Key projects under President Uhuru Kenyatta's Big Four Agenda are the most affected in the Sh74.39 billion cut in the budget proposed by the Treasury to fill the cash gaps left by the effects of Covid-19 pandemic.

Treasury secretary Ukur Yatani has slashed development budget for State ministries, departments and agencies (MDAs) by Sh98.73 billion in the mini-budget to be debated by the National Assembly on Wednesday inn movements to curb the spread of the disease.

Project spending at the national level for the year ending June is consequently set to drop to Sh683.96 billion in the second supplementary budget tabled in House on Tuesday from nearly Sh782.69 billion initially.

AGRICULTURE

“Spending cuts have been mainly effected on the broader sector groupings of Public Administration and International Relations (Sh46.6bn), Energy, Infrastructure & ICT (Sh16.8bn), and Health (Sh12.2bn),” Churchill Ogutu, head of research at Genghis Capital, wrote in a note.

"On the other end of the spectrum, funding for Agriculture and Social Services has been increased by Sh10.7 billion and Sh5.1 billion, respectively.”

The expenditure proposals will affect some of the capital projects directly related to the enablers of the ambitious Big Four plan, which covers manufacturing, affordable housing, universal healthcare and food production.

The plan, if approved by the National Assembly, will see allocations to some of the major infrastructure projects slashed.

Hardest hit projects in capital budget cut are railway transport (largely standard gauge railway) whose full-year allocation has been slashed by nearly Sh18.57 billion to Sh71.56 billion followed by electricity transmission whose spend has been shaved by Sh18.57 billion to Sh46.35 billion.

Mr Yatani has instead proposed to increase the budget for road construction and maintenance by Sh44.27 billion to Sh176.75 billion, two and a half months to the end of the financial year, a boost to cash flow in an economy suffering from partial trade and transport lockdown due to Covid-19.

Capital expenditure to health policy, standards and regulation has also been cut by Sh8.14 billion to Sh25.25.33 billion.

PAYMENTS

Allocation to water and sewerage, housing development and human settlement, ICT infrastructure as well as power generation (largely Olkaria geothermal projects) has also been trimmed by Sh6.40 billion, Sh5.61 billion, Sh5.32 billion and Sh2.87 billion, respectively.

Industrial development and distribution (largely industrial parks) is proposed to lose Sh2.91 billion, government e-services (Sh2.58 billion), exploration of oil and gas (Sh2.40 billion) as well as forest and water towers conservation (Sh2.01 billion).

Overall, Mr Yatani is proposing to reduce the 2019-20 budget to Sh3.12 trillion from Sh3.13 trillion, a drop of Sh9.69 billion.

The budget for all government arms and the counties have been cut except for the consolidated fund services, which comprises priority payments like debt obligations, whose allocation has been increased by Sh64.70 billion to Sh870.48 billion.