How to tackle Kenya’s economic challenges

The Ksh. 4.1 trillion or $31 billion 2024/2025 financial year budget statement presentation on Thursday 13^th June 2024 is monumental amidst the concerns of Debt to Gross Domestic Product (GDP) ratio expected to hit 67.50 percent at the end of 2024 according to the Trading Economics Global Macro models and analysts’ expectations; and the public sector wage bill to ordinary revenue ratio projected to hit 40.45 percent in the financial year 2023/2024. These challenges should be met head-on through innovative budgeting in nine ways. First, is preparing a well aligned budget through continuous and meaningful public participation and making the necessary adjustments and refocusing.

Secondly, reduction of the public debts by boosting and developing alternatives for borrowing, which could be done through a variety of ways key among them increased tax collection by widening the tax bracket. Kenya Revenue Taxpayers returns shows that only 5.5 million Kenyans filled their returns implying that in a population of almost 55 million, only 11 percent of the people are actively involved in financing the national development. Approximately 85 percent of registered voters in Kenya don’t pay taxes, despite the fact that 19 million are eligible to pay taxes. Thirdly, the Manufacturing sector should be expanded to contribute more to the GDP and more revenues from associated activities. According to the Economic Survey 2024, the total volume of output in the sector expanded by 2.8 percent in 2023, which was lower than the 3.7 percent recorded in 2022. Fourthly, there is need to put in place measures for tax incentives, tax avoidance and evasion. Fifthly, increase the use of Public Private Partnerships (PPPs) that avails innovative financing, technology, expertise, efficiency, effectiveness, and managerial acumen from the private sector in project financing because Kenya has a robust PPP legal and regulatory regime. The budget estimates shows that the country will spend over 3.9 trillion in debt repayments leaving little for developments, hence PPPs can provide necessary development financing.

Sixth, leverage on the reforms in the banking and saccos to increase local domestic resources mobilization to support development and reduce expensive international loans. Seventh, leverage on Science Technology & Innovation and ICT to grow and create jobs as the 4^th industrial revolution comes of age. Eighth, leverage on the mineral potential of Kenya, including geothermal to grow more revenues by exploiting minerals in large scale for economic growth. Ninth, incentive agriculture and livestock sectors, including providing enabling infrastructure like roads, re-introduction of agricultural extension programmes, agri-business opportunities, deepening the cooperatives sector and enhancing climate change mitigation measures. Dr. Mutegi Giti, Urban management, Public Private Partnerships (PPPs) &Environment specialist, mutegigiti@gmail.com, @danielgiti.