Comparing President Uhuru’s First (2013) and Last (2022) Budgets

President Uhuru Kenyatta has overseen large-scale changes in Kenya’s national budget over his two terms. Some ministries have seen their allocation more than triple during this period

On March 9, 2013, Uhuru Kenyatta was declared the winner of Kenya’s presidential election,  ushering in new leadership in a devolved form of government.

As such, the President’s first budget was highly anticipated as it was the first time the country would see funds allocated to the newly formed counties. 

Kenyans remained optimistic that the new administration would take up the ‘economic development baton’ handed over by the then-incumbent president, Mwai Kibaki.

President Uhuru and his deputy William Ruto were tasked with revamping economic growth and delivering on the promises made to Kenyans during the campaign trails such as job creation, improved health care, and the creation of a vibrant environment for businesses (small and large) to thrive.

Just a year prior to President Uhuru’s reign, the economy grew by 4.5%. This was a common trend during the previous regime, having grown by 4.4% in 2011 and 5.8% in 2010.

However, these growth rates were still well below the growth rate of 10% per annum envisaged in the Kenya Vision 2030 national development blueprint.

With this in mind, the Jubilee government identified six priorities that it would focus on, with these priority areas also reflected in President Uhuru’s first budget.

The 6 Areas of Priority Were:

    1. Creation of a lean government.

    2. Boosting national security.

    3. Creation of meaningful jobs across the country.

    4. Pursuing food and nutrition security.

    5. Rebuilding Kenya’s image both regionally and globally.

    6. Reinvigoration of the private sector.

The Minister of Finance at the time, Henry Rotich then went ahead and factored in all the above when he tabled President Uhuru’s first budget which totaled to Ksh1.64 Trillion.

2013/2014 Kenya Budget Breakdown

The total spend for this period was spread out as detailed below:

Ksh 380.4bn for Consolidated Fund Services (CFS). 

CFS is a mandatory spending by the National Government. It includes repayment of public debt, payment of pensions and gratuities as well as payment of salaries and allowances for constitutional officeholders.

• Ksh 273.7bn for Education. 
• Ksh 34.7bn for Health.
• Ksh 57.2bn for Social protection, culture, and recreation.
• Ksh 220.8bn for Energy, ICT, and infrastructure.
• Ksh 38.1bn for Agriculture and Rural Development.
• Ksh 55.41bn for Environment, water and irrigation, and housing.
• Ksh 16.1bn for Judiciary.
• Ksh 19.0bn for Parliamentary Service Commission.
• Ksh 74.42bn for National Security.
• Ksh 5.0bn for Contingency Fund.
• Ksh 105.1bn for Governance, Justice, Law and Order Sector (GJLOS)
• Ksh 134.1bn for Public administration and international relations.
• Ksh 22.7bn for Regional Integration.
• Ksh 6.9bn for Contributory Pensions.
• Ksh 210bn for County Governments.

As seen above, the Jubilee administration dished out the biggest pieces of the national cake to Education (27%) and the Energy sector (22%).

For business and investors, the national government promised to: Expand access to energy, water, and development of other infrastructure; Invest in a first-class road network, railways, ports, and harbours, dry and wet cargo storage, fish landing, processing, and storage, waterways and ICT in order to reduce the cost of doing business; and implement an efficient port clearance system – The National Single Window System by October 2013.

Tax Reforms 2013

When it came to tax reforms during President Uhuru’s first year, the following proposal’s stood out;

• Items used to facilitate railway operations were to be exempt from import duty - in order to support the expansion and development of the railway network in the region.
• Plastic bag biogas digesters were proposed to be exempted - to encourage usage of this renewable energy.
• Import duty on welding electrodes was increased from 10% to 25%, millstones, and grindstones from 0% to 25%, and plastic tubes for packing toothpaste, cosmetics, and similar products from 10% to 25%. This was aimed at cushioning the local manufacturers from cheap imports.
• The tax exemption status for Persons with Disabilities was extended to five years.
• Premiums for Group Life and Group Personal Accident policy covers were proposed for exemption where they did not confer a benefit to the employees.
• The Income Tax Act was amended to impose withholding tax on winnings from gaming and betting.

Kenya Budget 2022/23

Flash forward to April 2022 and CS Finance Ukur Yattani’s latest budget offers a chance to make direct comparisons, and assess the areas that have seen the greatest changes in terms of budget allocation.

Yattani tabled a Ksh3.3 trillion spending plan for the 2022/2023 fiscal year with a focus on accelerating economic growth. This is Ksh1.7 trillion more than the budget his predecessor tabled during President Uhuru’s first year - a 103% increase. 

The 2022/23 budget came at a time when Kenyans were grappling with a skyrocketing cost of living, characterised by a fuel crisis and the highest cost of basic foodstuff such as maize flour ever witnessed in the country.

The Finance CS was also tasked with finding a remedy for a country that lost 1.7 million jobs in 2020 due to the Covid-19 pandemic.

2022/2023 Kenya Budget Breakdown

The total spend for this period was spread out as detailed below:

• Ksh 20.6bn for Economic Stimulus Programme
• Ksh 319.7bn for National Security (Ksh 245.28 billion more than the amount allocated in 2013)
• Ksh 38.5bn for Infrastructural Development
• Ksh 513.8bn for Education (Ksh 240.1 billion more than the amount allocated in 2013)
• Ksh 407bn for County Governments (Ksh 197 billion more than the amount allocated in 2013)
• Ksh 15.6bn for ICT
• Ksh 69bn for Equity, Poverty reduction, Women & Youth Empowerment
• Ksh 110.9bn for Environment Water and Natural Resources

Notably, Kenya’s latest budget (2022) also hinged on six key areas of priority. These six were:

1. Enhancement of National Security.
2. Scale-up development of critical infrastructure.
3. Enhance transformation of key economic sectors i.e Agriculture, Manufacturing, as well as environmental conservation, water supply, and tourism.
4. Expand access to quality social services in health, education, and appropriate social safety nets for the vulnerable population.
5. Support the youth, women, and persons living with disabilities.
6. Continued supporting the devolved system of Government. 

Tax Reforms 2022

When it came to tax reforms during President Uhuru’s last year, the following proposals stood out.

Proposed expansion of the nature of assets that may be used as security to include ships, aircraft, motor vehicles, and any other properties. Under the current law, KRA can only use land or buildings owned by a taxpayer as security for unpaid taxes.

Income Tax Act – CS Yattani proposed to expand the scope of allowable deductions to include cash donations made to charitable organisations that are not registered under the Societies Act or the Non-Governmental Organisations Co-ordination Act.

This has been lauded by taxpayers who make donations to non-registered charitable organisations and who do not currently benefit from having these donations treated as tax-deductible.

New proposal to tax the gains accruing to non-residents from transactions involving financial derivatives in Kenya including hedging, contract futures, and contract options.

As for exemptions, CS Yattani raised the following points during his presentation in the National Assembly.

There was a proposal to expand the scope of products that are exempt from excise duty to include:

• Eggs for hatching imported by licensed hatcheries, upon recommendation by the Cabinet Secretary responsible for Agriculture, Livestock, Fisheries and Co-operatives.
• Neutral spirit, used by registered pharmaceutical manufacturers, upon approval by the KRA.
• Locally manufactured passenger motor vehicles. 

VAT Exemptions

The CS proposed to expand the list of VAT exempt supplies to include:

• Plant and machinery for use by manufacturers of pharmaceutical products.
• Medical oxygen supplied to registered hospitals, urine bags, adult diapers, artificial breasts, and colostomy or ileostomy bags for medical use.
• Inputs and raw materials used in the manufacture of passenger motor vehicles and locally manufactured passenger motor vehicles.

On the other hand, the CS proposed a 15% excise duty on fees charged by television stations, print media, billboards, and radio stations for advertisements related to alcohol consumption, gambling, and gaming.

During the presentation, the country’s finance Head stated that Kenya graduated from a low-income to a lower-middle-income country with an estimated per capita income of Ksh244,099 in 2021.

This was a significant leap of 92.1% from a per capita income level of Ksh127,065 in 2013. He further added that the goal was to achieve the upper-middle-income status by 2030 with a minimum per capita income of at least Ksh453,150.

It was a tough balancing act for CS Yattani as he presented the last budget under the watch of President Uhuru.

The Finance CS proposed an amendment to the Public Finance Management Act to allow for increased borrowing to ease the growing expenditure pressures.

While ensuring that the limited funds are available to finance the 2022 General Election, and complete the implementation of the Jubilee government’s legacy projects in agriculture, manufacturing, housing, and health sectors.