Kenya should start spending within its capacityJune 20, 2019
NAIROBI, Kenya, Jun 20 – Kenya should start living within its means such that when a donor withdraws it can survive and generate revenue from major development projects within the country.
This is according to Program Coordinator Institute of Economic Affairs John Mutua who says the country has increased its dependence on donors to finance major projects in the region that boost the country’s revenue where 42 per cent budget developments are finance by donors.
“In a few ministries like the Ministry of Health, the portion of their development budget that is financed from donors is quite high. There are certain implications that when we rely heavily on donors because when they pull out, it means that will create a hole as much as the money will be useful,” said Mutua while presenting economic analysis on 2019/2020 financial budget.
He added that this has been a trend for the past years where the government should now be keen in looking at how the country’s expenditure is.
“Loans are not necessarily bad but what matters is how you spend the money, and we have to undertake projects that necessarily do not have to be big but those that we have assessed and we have thought to be of high impact to Kenyans,” he said.
The Institute of Economic Affairs has suggested that there should be an increase in job opportunities that will help reduce dependency on multi-lateral partners and bilateral partners.
“Our GDP has grown and its currently at 6.3 per cent however it is hard to explain how that is happening yet the rate at which people are jobless in the country is wanting. However, majority are in the informal sector, but it is a discussion that now needs action,” added program Coordinator IEA.
The Standard Gauge Railway has been one of President Uhuru Kenyatta major project that has seen his government heavily seek donation from Chinese.
The government is now expected to start paying China’s debt close to Sh82.85 billion as from July next year for the SGR project.
Chinese started its donation to Kenya with the construction of the Thika Superhighway back in 2009 and 2012 that saw the government of President Mwai Kibaki borrow Sh32 billion.
Kenya started engaging donors when she became a lower middle-income economy that locked the country out from concessional loans from development lenders such as the World Bank Group.
The Institute of Economic Affairs has also highlighted that increased delay in making revenue from development projects is massively affected by delayed payments from development partners who lead to extra spending than what was budgeted for.