Budget 2013/14 Highlights — The People’s Guide

BUILDING RESILIENCE FOR A HIGHER AND BETTER GROWTH FOR EMPLOYMENT

 

INVESTMENT IN INFRASTRUCTURE TO ACCELERATE
GROWTH
Ksh. 288.5 billion has been set aside for the FY 2013/14. For:- improv-
ing infrastructure and management in counties, cities, and urban centers,
attaining efficient and economic road transport, expanding generation
capacity and access to electricity, developing modern national ICT infra-
structure, and development, expansion of the ports and rail facilities.
Road construction and maintenance	–	Ksh. 97.9billion
Geothermal development	–	Ksh. 12.5billion
Power Transmission	–	Ksh. 23.8billion	Proposed Turkana Wind Power Project
LAPSSET	–	Ksh. 3.7billion
Expansion of Kisumu Port	–	Ksh. 299million
Standard Gauge Railway	–	Ksh. 22billion
STRATEGIC INTERVENTIONS			RAISING A HEALTHY GENERATION

Kshs.494.1bn has been proposed for strategic interventions.

In the first year, Kshs.108.6bn has been proposed to start the im-plementation of a program of transforming Kenya into a Middle Income status.

The Government has set aside Ksh. 31.6bn for enhanced quality and access to health care over the Medium Term Framework period (MTEF).

Ksh. 10.6bn has been set aside for this FY 2013/2014, as follows:

• Ksh. 3.8bn for free access to maternal health;

• Ksh. 700m for free access to all health centres and dispensaries by all citizens;

• Ksh. 1.2bn for construction of 1,500 prefabricated housing units for health care officials;

• Ksh. 200m for construction of 200 prefabricated health care facili-ties in slums;
• Ksh. 1bn for lease financing of health care equipment; and

• Ksh. 3.1bn and Ksh. 522m for recruitment of 30cumminity nurses and 10 community health workers, respectively, for each Constitu-ency.OVERVIEW OF THE BUDGET

 

TOTAL REVENUE

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THE NATIONAL TREASURY

BUDGET 2013/14 HIGHLIGHTS

PRIORITY AREAS CONSIDERED FOR ADDITIONAL RESOURCES

 

Priority Areas of Consideration for Additional Resources

Interventions1 identified during the county stakeholder consultations for 2012/13 MTEF Budget, including issues identified by Sector Working Groups.

Implementation of the new Constitution covering pro-posals not accommodated within the baseline ceilings issued to Ministries.

Strategic interventions in the areas of education, health, infrastructure (especially rural/feeder roads), tourism, security and agriculture (especially irrigation programmes and other food security enhancing pro-grammes), as well as policy interventions covering the entire nation to enhance regional integration and social equity.

Specific consideration to job creation for the youth based on sound initiatives identified within and outside the normal budget preparation.

Investing and Efficient and Reliable Transport Systems

Harnessing New and Cheaper Sources of Energy

Geothermal Power Production in Naivasha , clean and affordable energy for growth.

Proposed Two-Track Standard Gauge Railway Line From Mombasa to Kisumu

Investing in irrigated agriculture through modern and efficient farming methods to promote farming as a business and enhance prudent water use

KEY POLICIES & STRUCTURAL REFORMS

Key reforms lined up for the FY 2013/2014   7.      Implementation & Coordination of

 

include:                                           Government’s key Growth Policies;

 

1. 1.Building Resilience to Cushion8. Procurement Reforms   & Review of

Economy against frequent and unwar-         various Legislations;

 

ranted Exogenous Shocks;

 

The Government will embark on the development of a two-track Standard Gauge Railway line from Mombasa to Kisumu.

 

• This will reduce the cost of trans-port (by an estimated 300%) and also the cost of doing business in general;

 

• Improve cargo off take from the port of Mombasa;

 

 

• Save the depletion of our roads and reduce maintenance costs;

 

• Save on time taken to transport goods from the port of Mombasa to the borders; and

 

• Boost trade and investments in the country; among other benefits.

 

 

	9.			Implementation of the PFM Law & its
2.	Positioning Export   as the Growth   &			Regulations;
	Employment Driver in Kenya;
	10.			Civil   Service     Reforms,   aimed   at
3.	Transforming Agriculture   for Food			Improving Efficiency,   Service Deliv-
	Security, Export & Employment;			ery, Creating   a Lean &   Right-sized
				Civil Service, Culture   change & En-
4.	Facilitating Investment & Business to			trenching positive   attitude in Public
		Drive Shared Growth & Employment;	Service Delivery; and

 

1. _{5.Investing in our People for Higher}

	Productivity &   Long-term Develop-	schools,   starting     with   Secondary
		schools throughout the Country.
	ment;
6.	Creating Fiscal space to Implement all
	the above pledges;

 

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THE NATIONAL TREASURY

BUDGET 2013/14 HIGHLIGHTS

 

 

Sector Allocations

 

 

• KSh. 273.7bn for Education including free primary and secondary education and school feeding program.

 

• KSh.34.7bn for preventive and curative health services.

 

• KSh. 57.2bn for social protection, culture and recreation.

 

• KSh. 220.8bn for energy, ICT and infrastructure including geothermal development.

 

• KSh. 38.1bn for agriculture and rural development.

 

• KSh. 55.4bn for environment, water and irrigation and housing.

 

• KSh. 16.1bn for judicial reforms.

 

• KSh. 19.0bn for parliamentary reforms.

 

• KSh. 74.4bn for National security.

 

• KSh. 5.0bn for Contingency Fund to cater for unforeseen expenditures.

 

• KSh. 105.1bn for governance, justice, law and order.

 

• KSh. 134.1bn for public administration and international relations.

 

• KSh. 22.7bn for regional integration, creation of an enabling business and investment environment, tourism development, among others.

 

Investing in Key Stakeholders

 

Allocations to various sectors

 

FOOD SECURITY INTERVENTIONS

 

• Construction of irrigation infrastructure – Ksh. 700m

 

• Construction of 2, 10million cubic meter dams – Ksh. 2.4bn

 

• Expansion of on-going irrigation projects – Ksh. 8bn

 

• Agri-business fund – Ksh. 2bn

 

• Purchase of agricultural machines and equipment – Ksh. 300m

 

• Repairs of roads destroyed by rains in rural areas – Ksh. 1.5bn

 

 

CUSHIONING THE POOR AND VULNERABLE-SOCIAL SAFETY NETS

 

Key stakeholders charged with the responsibility of building a resilient and prosperous Kenya have not been left out. In FY 2013/14 Budget, we will:

 

For Business and Investors:

• 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 cost of doing business; and

 

• Implement an efficient port clearance system – The National Single Window System by October 2013.

 

For the Poor, Vulnerable and Rural Population:

• Provide and expand resources for free primary and free day secondary education;

 

• Create a Presidential secondary school bursary scheme for orphans, poor and bright students;

 

• Fund provision of free maternal health care and free access by all patients to dispen-saries and health centers throughout the country;
• Construct health care facilities in the slums; and

 

• Double the social protection safety net in form of cash transfer.

 

For Youth and Women:

 

• Develop a more efficient framework of delivering a revolving fund of Kshs. 6bn to all youth and women; and
• Ensure 30% of government procurement goes to the youth.

 

 

 

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To cushion the poor or those susceptible to shocks

 

and poverty and other vulnerable groups, we have once again allo-cated sufficient resources, dou-bling the social protection safety net in form of cash transfers.

 

Specifically; –

 

Ksh. 7.5bn for doubling the number of or-phans and vulner-able children

 

 

from 155,000 to 310,000;

 

Ksh. 3.0bn for increasing, two -fold, the number of elder persons under cash transfer from 59,000 to 118,000;

 

Ksh. 770m for increasing coverage of those with ex-treme disability from 14,700 to 29,400;

 

Ksh. 462m for doubling the number of other disabled per-sons under coverage of cash transfer; and

 

Ksh. 400m for Presidential Secondary School Bursary Scheme for orphans, poor and bright students.

 

THE NATIONAL TREASURY

BUDGET 2013/14 HIGHLIGHTS

 

PRO-POOR SPENDING	The Digital Generation

 

 

 

• Financing the Small and Medium Enterprise/Joint Loans Board – Ksh. 900m

 

• Development of additional Constituency Industrial Development Centers – Ksh. 540m

 

• Provision of Sanitary Towels – Ksh. 299m

 

• Equalization Fund – Ksh. 3.4b

 

• Provision of land for Resettling IDPs – Ksh. 300m

 

• Slum upgrading programs – Ksh. 200m

 

• Provision of ARVs – Ksh. 903m

 

 

 

PREPAREDNESS FOR DEVOLUTION

 

 

Under the PFM Act, 2012, each level of gov-ernment should be able to plan, formulate, exe-cute and report on their budgets. The national government will build capacity to ensure that proper financial management is in place in all the counties.

 

Supporting devolution is not a choice but rather a duty as demanded by the Constitution. In addition to the minimum requirement by the constitution of 15percent of total revenue, we have costed the devolved functions that the county governments are expected to perform. To this end, we have allocated Kshs. 210bn for FY 2013/14 which is 30.8 percent, well above the 15% Constitutional requirement.

 

The national government will continue to pro-vide support for creation of the necessary insti-tutional structures and capacity building to en-able the county governments to function and deliver on their mandate.

 

Ksh. 53.2bn, of which Ksh. 17.4bn is for FY 2013/2014, has been deployed for 1.35 million laptops for class 1 pupils, development of digi-tal content, building capacities of teachers and rolling out computer laboratories for class 4 to 8 pupils in all schools throughout the country.

 

Ksh. 9.8bn for purchase of laptops

 

Ksh. 800m for capacity building

 

Ksh. 500m for digital content

 

Ksh. 5.8bn to establish computer laboratories in 10 primary schools in each constituency coun-trywide, at Ksh. 2m each.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Equalization Fund is in place at 0.5% of total revenue to address the issue of skewed resources and inequalities in the past.

 

We have allocated Ksh.3.4 billion, which is expected to grow with time as the revenue grows. This will enhance allocations to the marginalised areas, and facilitate equitable regional development.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class one pupils with Laptops (Photo from Sparki Primary School, Mvita)

 

 

 

 

Enhanced Security for Investment,

 

 

1. 1.KShs.4bn for modern security equipment;

 

1. 2.KShs.4.5bn for enhanced security operations;

 

1. 3.KShs.1.5bn for crime research and investigation;

 

1. 4.KShs.3.0bn for lease financing of 1,200 new and serviced motor vehicles;

 

1. 5.KShs.2bn for specialized equipment; and

 

1. 6.KShs.1.2bn for a rapid deployment of 2,000 police housing units.

 

 

FINANCING THE BUDGET 2013/2014

 

 

 

Securing Kenya for Growth and Investment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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THE NATIONAL TREASURY

THE PUBLIC EXPENSE TRAIL

 

 

Conditional	Equitable
Allocations	Share KSh.
KSh. 20bn	190bn

 

 

 

County Govern-

 

ments

KSh. 210bn

 

 

 

 

 

Parliamentary		CFS		Judiciary
	KSh 380.3bn			KSh 16.1bn
Service Com-
mission			Contributory
KSh 19bn			Pensions	Contingency
			KSh 6.9bn
				Fund
				KSh 5bn
Social Protec-
tion, Culture &
Recreation KSh
	57.20bn
				Agriculture and
National Secu-				Rural Develop-
			Global Budget	ment
rity
			KSh. 1,640bn	KSh 38.07bn
KSh74.42bn

 

 

 

	Energy, Infra-
Environmental	structure and
	ICT. KSh
Protection,
Water & Hous-	220.80bn
ing KSh 55.41bn

 

 

 

Public Admin &		General Eco-
International		nomic, Comm &
Relations		Labour KSh
KSh 149.12bn		17.5bn
GJLOS KSh		Health
105.10bn
		KSh 34.75bn
	Education KSh
	273.66bn

 

 

 

 

 

 

 

NB. Some Sectors have not been rationalized to conform to proposals from Parliament.

 

 

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THE NATIONAL TREASURY

BUDGET 2013/14 HIGHLIGHTS

 

Summary of Proposed Tax Measures

 

 

• Items used to facilitate railway operations are exempt from import duty – in order to support the expansion and development of the railway network in the region.

 

• Plastic bag bio-gas digesters are proposed to be exempted – to encourage usage of this renewable energy.

 

• Import duty on welding electrodes is increased from 10% to 25%, millstones and grindstones from 0% to 25% and plastic tubes for packing of toothpaste, cosmetics and similar products from 10% to 25%. This is aimed at cushioning the local manufacturers from cheap imports.

 

• The tax exemption status for Persons with Disabilities is extended to five years.

 

• Premiums for Group Life and Group Personal Accident policy covers are proposed for exemption where they do not confer a benefit to the employees.

 

• The Income Tax Act is amended to impose withholding tax on winnings from gaming and betting.

 

• The Customs Law is amended to introduce the Customs warehouse rent for entered goods which remain at the port of discharge for a period exceeding 21 days from the date of commencement of discharge of the carrier. This is aimed at decongesting the Port.

 

• The Commissioner is empowered, through amendments to the Income Tax Act, to access books of accounts and where tax evasion is proved in Court, collect corporate tax from officers of corporate bodies convicted of tax fraud.

 

• To safeguard the original intention of discouraging consumption of illicit and dangerous brews through the excise tax remission on senator keg beer introduced in 2004 – the remission is reduced by 50 percent and will be granted only in respect of beer made of millet, sorghum and cassava. The senator keg will, however, continue to enjoy a remission at this new level, on a transitional basis, for a period of three years.

 

 

 

	ABBREVIATIONS
CFS	Consolidated Fund Services
ECD	Early Childhood Development
FDSE	Free Day Secondary Education
GECLA	General Economic, Commercial & Labour
	Affairs
GJLOS	Governance, Justice, Law and Order Sector
ICT	Information Communication Technology
Ksh.	Kenya Shillings
MTEF	Medium Term Expenditure Framework
OVC	Orphans and Vulnerable Children

 

 

 

 

NOTES

 

• Figures may not necessarily add up to totals due to rounding;

 

• Grey colour: Global Budget. Includes: National Government, Judiciary, Parliament, CFS, County allocation, Civil Service Contributory Pensions, and Contingency Fund;

 

• Different colours represent different Sectors; and

 

• Charts are not drawn to scale.

 

 

 

THE NATIONAL TREASURY

TREASURY BUILDING, HARAMBEE AVENUE

P.O. Box 30007 – 00100, Nairobi – Kenya • Tel: +254 (0)20 2252299, 0733 660606 / 0728 338111