Treasury admits to intangible economic growth returns to Kenyans

The National Treasury has admitted to lack-lustre economic growth by conceding to Kenyans’ feelings of intangible growth in recent years.

According to Treasury, reported economic growth has failed to yield dividends for the majority of Kenyans as the better out-turn in progress is recorded in the pockets of a few.

“Impressive growth notwithstanding, there are widespread perceptions that the impact of growth may not have trickled down to the poor. There are also indications that the growth could be slowing down,” said Treasury Cabinet Secretary Ukur Yatani on Wednesday.

The self-admittance on Treasury’s part follows last year’s public uproar on the reported 6.3 percent growth in Gross Domestic Product (GDP) against the continued stay of a tough macro-economic environment.

Coining the phrase ‘kwa ground vitu ni different’, Kenyans expressed their disgruntlement with the country’s economy in spite of Treasury backing up reported growth with raw data.

Cognizant of the bias to economic returns, the Treasury is now seeking to overhaul budgetary allocations towards greater-pro poor spending.

Among the measures taunted include the decentralization of centres of expenditure with a bias towards the grassroots.

CS Yatani identifies broad-based economic segments such as agriculture to have the potential of having multiplier effect on economic growth for the greater benefit of the masses.

“Sectors such as tea, milk sugar and livestock represent the lifeline of the economy of Kenya for it is where Wanjiku is,” he added.

Economic growth in the last year is expected to close out at a lesser 5.6 percent from 6.3 percent in 2019 in line with the world economic outlook report of October by the International Monetary Fund (IMF).

Unfavourable weather conditions are cited for the general slide in growth with the weighted contribution of agriculture to the overall economic out turn falling to 0.9 percent.

Growth in 2020 is meanwhile expected to come in at 6.1 percent with the recovery in private sector credit tipped to guide resurgence.

Poor domestic revenue mobilization has however been presented as the potential downside to expected recovery in growth as revenues remain behind exchequer targets.

In six months to December 2019, total revenues including appropriation in aid (A-i-A) rounded off to Ksh.920.6 billion or an equivalent 8.9 percent of GDP against a mid-year target of Ksh.1.1 trillion in collections.

Nevertheless, the fiscal deficit has eased to Ksh.214 billion from Ksh.272 billion to mirror the ongoing squeeze for fiscal consolidation space.

Fiscal consolidation has however been achieved through the counter-productive containment of development expenditure which came in at Ksh.250.2 billion against targets of Ksh.348.2 billion.

Recurrent expenditure has meanwhile ticked up to Ksh.772.5 billion representing an equivalent 20 percent growth but has held within the targeted ceiling of Ksh.797.4 billion in the first half of the 2019/20 fiscal year.