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Kenya bets on new stimulus measures to revive economy

By Steve Umidha

A new set of stimulus measures will help fast-track the country’s economic recovery according to President Uhuru Kenyatta who yesterday said the new move will inject additional Sh25Billion into the economy whose growth was slowed by the pandemic.

In his Mashujaa Day speech, Kenyatta announced a slew of relief measures for several sectors including health infrastructure in what he believes will help achieve the 6 percent growth target set by the National Treasury and global lender, International Monetary Fund (IMF).

The thirteen measures are also expected to complement the ongoing State interventions meant to sustain the momentum of recovery.

“I announce therefore, that effective 1st November, 2021, New Stimulus Programme targeting the key productive and service sectors in THIRTEEN STRATEGIC INTERVENTIONS that cover: agriculture, health, education, drought response, policy, infrastructure, financial inclusion, energy, environmental conservation,” said Kenyatta in his speech.

The measures include a surprise allocation of Sh10Billion towards Kazi Mtaani Programme, expected to benefit over 200,000 youths across all the 47 counties, with priority given to densely populated areas.

It is a welcome move coming at a time his administration continues to face criticism from the worrying unemployment rate and tough living conditions for Kenyans that has been intensified by Covid-19.

The Kenya National Bureau of Statistics estimates that around 1.7 million people were made redundant between March and December last year due to the outbreak, a figure that employers’ lobby FKE has since termed as ‘conservative’ meaning more Kenyans were actually left jobless in 2020.

A total of 604 firms in Kenya are estimated to have sent workers home due to the coronavirus fallout, with Federation of Kenya Employers (FKE) noting at least 33 jobs were lost in every modern sector company between March and August last year.

That number is however, believed to have thinned with most companies taking back their staff with an improving economy owing to relaxed restrictions by the government.

“Noting the success of Kazi Mtaani Programme and its effect in enhancing opportunities for the youth across the country, I direct the National Treasury to allocate Sh10 billion for the third phase of the Kazi Mtaani Programme,” directed Kenyatta.

The allocation discounts the Sh8Billion and Sh3.2 Billion the President directed Ukur Yatani –led team to allocate towards the Ministry of Education for the CBC Infrastructure Expansion Programme and ‘immediate’ construction of 50 new level 3 hospitals respectively.

Further, his directive will see the Treasury Cabinet Secretary Mr Yatani apportion extra Sh 1.5 Billion in support of the communities affected by the ongoing drought in the ASAL counties as part of the country’s National Livestock Offtake Programme (NLOP).

The pandemic has aggravated food insecurity and elevated pain and human suffering with tax revenue dropping below target, due to the marked slowdown in economic activity.

It is an area an economist Peter Biwott also a former Chief executive at Kenya Exports Promotion Council says should be offered tax relief as part of the government’s fiscal response package.

“The agriculture sector is among the few sectors the economy relied on when the pandemic hit, and if we are to empower them, offering tax incentives and other related support would go a long way,” said Mr Biwott in a telephone interview.

The National Treasury in its post COVID-19 economic recovery strategy had also suggested that Kenyans holding jobs to pay a two percent tax from their incomes to cushion the unemployed as part of new government plans in the next two years – a controversial pronouncement that is already evoking a cocktail of retorts.

National Treasury wants proceeds from the tax to be partly contributed by employers at the rate of one percent are expected to go into the soon to be set up unemployment insurance fund (UIF).

Another reprieve to Kenyans from Kenyatta’s speech is the promise to lower costs of petroleum and power tariffs at least before Christmas – in what could see power rates drop by 30 percent before year end.

As a result, Kenyatta directed the Ministry of Petroleum & Mining and the National Treasury to develop by 24th December, 2021, a framework for stabilization of petroleum prices to cushion Kenyans against the turbulence caused by the volatility in fuel prices.

“I therefore, look forward to Kenyans being relieved of the burden of high tariffs by Christmas Day,” noted Kenyatta who also lifted the dusk to dawn curfew that had existed for over a year.




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