Budget sought to give Kenyans hope in times of crises

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Budget sought to give Kenyans hope in times of crises

Monday, June 22, 2020 0:01

By OSBORNE WANYOIKE |

Listening to Treasury Secretary Ukur Yatani deliver the financial year 2020/21 Budget Statement, it was clear that he had prepared well. The statement navigated the political environment whilst giving citizens a sense of hope that the government has a plan to guide us through our current health and economic challenges. Overall, the CS seems to have read his audience well and gave everyone something positive to consider.

Specifically, the budget statement focused on creating employment through intentional efforts such as deliberately coupling infrastructure investment with local labour and materials requirements.

This is particularly evident in infrastructure expenditure on roads; youth could quite easily be employed to construct or repair local roads, keeping them engaged and active and hopefully making them feel more useful in service to their country.

Consequently, one could reasonably expect a larger segment of employed youth to spend some of their gainful earnings in local shops and village markets, a knock-on effect that would stimulate business activities nationwide. With healthy and steady consumption across the country, economic growth of 2.5 percent this year and 5 percent or more in 2021 could be achieved.

Another key area that the Cabinet Secretary highlighted is the micro, small and medium enterprise (MSME) sector. The Cabinet Secretary has clearly analysed the problems facing the sector including a lack of collateral security to borrow from the financial sector and the high cost of credit.

The allocation of funds to the Credit Guarantee Scheme is a step in the right direction. Whether or not the funds allocated to the scheme will have the intended impact is yet to be seen, but we can hope that MSMEs will use the funds to build and promote business activities and then repay what they have borrowed, allowing other MSMEs to borrow against the Scheme in turn.

The beauty of the MSME sector is that their owners tend to be very self-driven with the energy to succeed. We should hope that this scheme is well managed and that it helps to allay the impact of the country’s current health and economic challenges on the MSME sector.

Clearly, the Cabinet Secretary is determined to lower the overall cost of doing business in the country such as by asking Parliament to reconsider a Bill that would dismantle some of the hurdles and bottlenecks that impede cross-county trade.

We know that some of our counties impose fees and other forms of levies on goods crossing their county boundaries. Such fees and levies can be a nuisance to businesses, and they increase the cost of goods sold and – just as importantly – they also increase the burden of compliance with an array of county legislation. Hopefully Parliament will reconsider and amend the relevant legislation

I was happy to see Sh11.8 billion allocated to the Konza Technopolis project. This is a government-sponsored business process outsourcing project. According to the government, the project aims to promote software development while setting up data centres, disaster recovery centres and light assembly manufacturing industries.

This project will foster the next generation of entrepreneurs whilst also creating employment for our youth.

Overall, the brave stance taken by the Government is deliberate and appropriate. Whether tax revenue targets will be met, recurrent expenditure kept in check and Government projects and programmes completed on time and on budget, remains to be seen.

The writer is a tax director at PwC Kenya.