Budget: Infrastructure development received billions under Jubilee

The last ten years saw an increase in allocation towards several infrastructural projects year-on-year in a bid to spur economic growth and improve service delivery.

The Jubilee administration has been banking infrastructure projects as a multiplier effect for economic growth.

Latest data indicate that Kenya’s investment in infrastructure stands at 6.5% of the gross domestic product GDP per annum.

Similarly, the country’s infrastructure quality was also at 53.6 with zero being the worst and 100 being the best in the scale.

But where did all this begin? In 2013, The Kenyan Government placed a major bet on Public Private Partnerships for the delivery of strategic infrastructure projects. This was due to a rising debt portfolio and concerns over continued borrowing.

In the 2014/2015 budget, Kshs. 255.9 billion were allocated for energy, infrastructure and ICT; which accounted for 14.5% of the Consolidated National Government Budget in that period.

In the 2015/2016 budget, Kenya apportioned over Kshs. 330 billion to capital projects, infrastructure and energy.

This was a significant increase from the previous financial year by over Kshs. 80 billion.

Funding was geared towards improving the transport network, energy generation, water conservation and irrigation. The budget focused on major large scale plans such as the SGR and the other Transportation and Logistics projects.

However, In order to meet its 2016/17 budget of Kshs. 1.5 trillion with a financing deficit of Kshs. 690 billion, different infrastructure funding options needed to be explored such as through PPPs.

The Government significantly increased its allocation to energy projects from Kshs. 40 billion in 2015/16 to Kshs. 120 billion in 2016/2017 largely applied towards measures aimed at increasing access to electricity and expanding transmission infrastructure in the country.

In the financial year 2017/2018, the infrastructure budgetary allocation of Kshs. 285 billion represented approximately 12% of the government’s total expenditure.

It focused on large scale infrastructure projects in transport, energy, ports and housing. The 2017/18 fiscal budget had also focused on attracting investment to Special Economic Zones (SEZs) by providing tax incentives.

In the financial year 2018/2019, the budgetary allocation for oil and gas was similar to the previous year, focusing on exploration and distribution.

To this extent the government set aside Kshs. 4.8 billion. In a bid to support the generation of affordable energy, the government allocated Kshs. 12.7 billion in 2018/2019 for geothermal, wind and solar energy resources.

The government highlighted that Kenya’s urban centers faced a shortage of 200,000 housing units annually and this was expected to rise to 300,000 units by 2020.

To that end, the government allocated Kshs. 24.5 billion to housing. A total of Kshs. 21.61 billion was allocated for Information, Communication and Technology projects in this budget.

In the financial year 2019/2020, the budget was anchored on the Government’s focus on creating jobs, transforming lives to harness the Big Four plan.

In line with achieving it’s 100% electrification target by 2022, it had allocated Kshs. 61.2 billion for power transmission while continuing to focus on the development of green energy by allocatingKshs. 8.6 billion towards the geothermal development.

In the FY 19/20 budget, Treasury allocated Kshs. 18.8 billion to housing.

The 2020/21 budget statement was presented against a backdrop of an economy battling with the novel coronavirus, food security threats from locust invasions and floods ravaging the country.

In the year, Kshs. 172.4 billion was allocated towards roads and bridges. The budgetary allocation towards this infrastructure was however reduced by 4.7% from Kshs. 180.9 billion in FY 2019/20.

In respect of these and other factors, the National Treasury revised its economic growth estimates from 6.1% to 3%.

The government is still however intent on increasing its revenues to match the expenditures, as the country is already operating in a limited fiscal space.

In the 2021/2022 budget, analysts say fiscal balance is key to maintaining macroeconomic stability, inspiring growth and reducing the pace of growth of public debt.

Experts say, prudent financial management is called for to achieve this objective.

  

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