State cuts five-month projects spend to seven-year low

The share of cash spent by the national government on development activities for the first five months of the current financial year fell to the lowest level in seven years, a pointer to reduced momentum in the economy.

Latest Treasury statistics show State ministries, departments and agencies spent Sh90.81 billion between July and November last year, an equivalent of 10.61 percent of the Sh855.63 billion released from the Exchequer.

The share of development spend in the review period was lower than 12.36 percent (Sh88.35 billion) of the Sh714.61 billion in the first five months of 2018-19 fiscal year, 12.36 percent in a similar period in 2016-17 and 20.48 percent (2015-16).

Expenditure on recurrent expenses such as salaries, allowances and administrative expenses gobbled up Sh389.05 billion, or 45.47 percent, of the total cash, channelled from the public coffers, while debt repayments took up Sh342.64 billion, or 40.04 percent, of the disbursements.

The national government has over the years, just like the 47 counties, struggled to observe section 15 of the Public Finance Management Act of 2012 that requires at least 30 per cent of the total budget in three to five years be invested in capital projects.

Increased spend on development projects such as roads, water, power plants, real estate and electricity transmission lines stimulates economic activities, helping create job opportunities and grow government revenue, largely taxes.

The pinch as a result of a drop in the spend on capital projects, on the other hand, is felt by cement makers, steel manufacturers, contractors and the thousands of workers employed in the infrastructure pipeline benefit from public spending.

Kenya’s growth in the July-September period (third quarter) contracted to 5.1 percent from 6.4 percent a year earlier, the Kenya National Bureau of Statistics has reported, the weakest expansion in two years.

This was a pointer to reduced momentum in the economy, with agriculture as a result of delayed rains and manufacturing some of the hardest-hit sectors.

Department of Infrastructure, largely tasked with roads and bridges projects, spent Sh23.53 billion, or 25.91 percent, of the development cash released in the period.

This is an equivalent of 31.51 percent of the Sh74.66 billion the department has been allocated this financial year.

It was followed by Department of Water and Sanitation, which was issued with nearly Sh7.79 billion of the Sh33.35 billion budget for 12-month, followed by Transport (Sh6.43 billion), Energy (Sh5.59 billion) and Social Protection (Sh3.02 billion).

The Treasury in November successfully lobbied lawmakers to raise expenditure on capital projects and services by Sh73.4 billion, a development likely to spur momentum in the economy because the government remains the biggest buyer of goods and services from the private sector.

The additional funds will go towards President Uhuru Kenyatta’s Big Four agenda — which seek to boost manufacturing, food and nutrition security, affordable housing and universal health coverage — and enablers such as roads and power transmission lines.