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Why Kenya’s Big 4 program is steadily losing steam despite huge allocation

As Kenya’s Cabinet Secretary for Treasury Ukur Yattani presented the 2021-22 budget Thursday afternoon, a brewing concern quietly began to take shape even before the soft-spoken minister strode to read a 125-page document – a Kes3.6trillion budget expenditure by East Africa’s largest economy.

The belief that the Big Four agenda may not actually be realised before President Uhuru Kenyatta’s tenure comes to a halt in August 2022 appeared more clearer yesterday despite increased allocation to the four sectors.

President Uhuru Kenyatta’s last arsenal to realizing the ambitious Big Four Agenda came down to Yatani’s second budget statement  – the last he will oversee as he prepares to leave the office in 2022.

In that speech, Treasury Cabinet Treasury Ukur Yatani outlined the need to prioritize the agenda which seeks to deliver food security, affordable housing, manufacturing growth and healthcare by the end of President Kenyatta’s term.

“The implementation of the Big Four Agenda remains a high priority and critical to economic recovery. In order to realise the Big Four Agenda and its enablers, I have set aside Sh142.1billion towards the four key priorities by the government,” said Yatani yesterday during his second budget reading.

The new allocation towards the Big 4 Agenda signals the urgency by Mr. Kenyatta whose legacy hinges on the successful implementation of the four thematic sectors that were largely hampered by the Coronavirus pandemic and scarce funding in the previous budget allocations.

At the beginning of his second term in office – 2017, President Kenyatta outlined four pillars of development that would form the basis of his legacy: Food security, affordable housing, universal healthcare and manufacturing.

But with less than 14 months left of his tenure, the Big Four agenda projects seems to be struggling to take shape with less than 1 percent of the collective target having been met thus far.

Housing Agenda

As of January 2020, the government received the first 228 complete housing units out of the 1,370 under construction at the Park Road Project in Nairobi. The national affordable housing project aims to build at least 500,000 new homes by the end of 2022 – a target that looks unsurmountable.

CS Yatani yesterday announced the allocation of Sh 13.9 billion for the Affordable Housing Programme – which includes the Sh 3.5 billion to Kenya Mortgage Refinance Company for enhancement of the company’s capital as well as for on-lending to primary mortgage lenders and Sh 8.2 billion for construction of Affordable Housing Units. Sh500.0 million went to the construction of Social Housing Units.

Universal Medical Cover

The launch of Universal Health Coverage (UHC) in 2018 has also had its share of uncertainties following recent contentious policy changes announced by the NHIF are proving hard for its execution, even though experts have called for the relook into the contentious National Hospital Insurance Fund (Amendment) Bill 2021, arguing that its passage in the current form could expose more working Kenyans to unemployment.

President Kenyatta in his recent speech during the National Prayer Breakfast, however rallied the National Assembly to fast-track its passage.

“There are proposals before you that will ensure that all Kenyans have access to health insurance.

They will allow us to ensure people are properly taken care of, not just during the pandemic but always,” he said – saying that the bill will seek to boost the government’s quest in achieving the Universal Health Care (UHC) which was allocated Sh 47.7 billion to fund activities and programmes for the attainment of its coverage.

Food Security

On food security, recent official estimates show over 10 million Kenyans are food insecure with the majority of them living on food relief while households are incurring huge food bills due to costly food prices brought by the pandemic.

Last week the National Assembly’s Departmental Committee on Agriculture urged the government to increase budget allocation on the agricultural sector. The sector was allocated Sh60billion in the budget yesterday.

Manufacturing

The manufacturing sector – one of the worst hit sectors in the last two years continues to bear the brunt of Covid-19 with high operating costs, high electricity costs and a heavy taxation burden eating into manufactures’ bottom line.

The financial year 2021/22 financial budget was equally blemished by low expectations among Kenyans, which saw a host of react  ions directed to the huge sums of money allocated in various sectors of the economy never – whose benefits majority feel ‘never get’ to the ordinary mwananchi.

The global pandemic has seen many industries suffer the brunt of a forced change in lifestyle as the government imposed measures to cut the spread of the disease.

As a result, many businesses closed down or reduced capacities, leading to income and job losses for many working Kenyans, while others were forced to take pay cuts.

The World Bank, in its biannual economic analysis for Sub-Saharan Africa in March 2021, for instance, projects the region to see a moderate economic growth this year, rebounding from the COVID-19 induced recession of 2020.

However, the resurgence of the pandemic and a looming fourth wave is dampening those projections, and many are at risk of suffering further setbacks to their personal finances and living standards.

Private sector performance 

Kenya’s private sector recorded a marginal growth in May, with output and new orders rising solidly and fastest in seven months amid loosened travel restrictions.

Stanbic Bank Kenya Purchasing Managers Index (PMI) Survey posted 52.5. The index was up 11 points – the highest in four months, albeit signaling only a moderate improvement in operating conditions.

Readings above 50 signal an improvement in business conditions on the previous month, while readings below 50 show a deterioration. PMI reading fell below the 50.0 value in April.

The survey panel attributed the expansion to relaxation of measures on curfews and travel between counties. Firms also reported an increase in client orders. The rate of output growth was the quickest since January, with rebounds seen in the agriculture, services and wholesale and retail sectors.

Among the restrictions that were lifted include free movement into and out of Nairobi, Mombasa, and Kilifi and Mandera counties as well as curfew extensions from 8pm to 10 pm.

The survey indicates that due to easing of travel bans, output and employment both rose to the strongest degrees since January. Equally job creation returned in the latest survey period as a result of a strong increase in workloads.

“This loosening of measures also supported a sharp rise in new orders that was the quickest since October 2020. There was notable strength on the exports side, as orders from foreign clients increased markedly,” noted the report in its findings.

As a result of the growth seen in May, business expansion plans are forecast for growth in the next 12 months owing to a return in confidence which grew to a three-month high, with around 27 per cent of companies expecting an overall upturn.

“As expected, the lifting of public health restrictions at the beginning of May resulted in a significant improvement in business activity in May. Fewer restrictions resulted in higher demand as indicated by the rise in new orders.

Firms appear to be increasingly optimistic about the next 12 months as new COVID-19 case numbers continue to fall and vaccinations continue to rise. The future outlook for firms improved for the first time in 4 months,” commented Stanbic Bank’s Kuria Kamau, Fixed Income and Currency Strategist.

Rising demand in the private sector economy led companies to expand their workforce numbers for the seventh time in eight months in May. Although modest, the pace of job creation was the quickest recorded since January.

Stress in the financial sector has soared since the coronavirus pandemic hit in March with about 70 percent of borrowers seeking a moratorium on loan repayments as their incomes dipped and savings were eroded.

According to the Quarterly Labour Force Report by Kenya National Bureau of Statistics (KNBS), Kenya’s unemployment rate increased to 10.4 per cent in the second quarter of 2020, compared to 5.2 per cent recorded in the first quarter of 2020.

This translated to a more than double increase in the number of unemployed individuals in the country from 878,459 during the second quarter of 2019 to 1,841,918 people as at the close of June 2020.

At the same time, the supply-side pressures experts believe have been behind the inflation increase this year. In 2021 inflation forecast for the Personal Consumption Expenditures Price Index is expected to hit 2.9 per cent from 2.3 percent previously with 2021 core inflation rate expected at 2.5 percent.

Focus Economics Consensus Forecast panelists expect inflation to average 5.9 percent in 2021, which is up 0.1 percentage points from last month’s forecast. For 2022, the panel sees inflation averaging 5.4 percent.

 

 

 

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