Treasury secretary Henry Rotich has written to all ministries and departments to align their short and medium term recurrent and development expenditure to four key areas that President Uhuru Kenyatta’s government has identified as priority targets during his second term in office.
The list of priority areas includes universal healthcare, food security, affordable housing and manufacturing that is meant to create more jobs.
Mr Rotich says that all government departments must now scrap unnecessary spending to free up more resources to be invested in the priority areas.
“All sector budget proposals, both recurrent and development, will therefore be reviewed afresh in the context of zero-based budgeting to create fiscal space for these priorities,” Mr Rotich wrote in the November 29 memo.
“Each sector is therefore required to recast the resource allocation criteria and justification for bidding for the required resources.”
Starting Monday, cabinet secretaries and accounting officers of commissions and independent offices were to meet Treasury officials to align their spending in the next financial year with the identified goals.
Economic adviser at the Executive Office of the President Mbui Wagacha told the Business Daily that the four priority areas are part of the government’s overarching plan to drive economic growth through public spending.
They were also chosen to simultaneously address social needs of the majority of the population, Dr Wagacha said.
“It is about investment-led growth that pays demographic dividends,” he said. Dr Wagacha said elimination of waste in recurrent expenditure could help finance the identified programmes sustainabley to achieve the stated objectives.
Analysts say that the priorities reflect the quest to deliver social promises that have become the staple of political campaigns, adding that how the government goes about implementing them will determine their success or failure.
Robert Bunyi of Mavuno Capital said implementing a universal healthcare system, in particular, is likely to saddle taxpayers with a huge bill.
“The big issue with universal healthcare is its cost. It would be better to create more employment opportunities and have people pay for themselves,” Mr Bunyi said. If implemented to mirror similar programmes elsewhere, patients will access healthcare for free, save for prescriptions and special services such as dental procedures.
The UK’s National Health Service (NHS), for instance, pays the cost of most medical treatment for residents.
UK’s total spending on healthcare is estimated at 9.1 per cent of GDP or nearly double Kenya’s 5.7 per cent, according to the World Bank.
Access to quality healthcare in Kenya has been skewed in favour of rich and middle class households whose incomes and insurance policies allow them to afford relatively higher charges at private hospitals. The rest of the population rely on crowded public hospitals, which suffer from frequent strikes and inadequate equipment.
Mr Bunyi said expanding local manufacturing is a logical next step after the heavy investment in infrastructure including roads and railway, adding that this should create more jobs. He added that the national government should work with counties to deliver cheaper housing by expanding infrastructure such as electricity and access roads.
Mr Bunyi said fixing the problem of food security is a matter of offering incentives for investors to go big on agriculture, adding that the current rudimentary and small-scale operations reflect the low returns farmers are getting on their produce.