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"id": 246286,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/246286/?format=api",
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"type": "speech",
"speaker_name": "Mr. Billow",
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"legal_name": "Billow Adan Kerrow",
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"content": "Mr. Deputy Speaker, Sir, the Budget by the Minister clearly had a few pre- election posturing and populist ideas. In the Budget, the Minister also clearly reflects that there is lack of wisdom. There is also a clear expression of greed which is one of the common characteristics of this Government. When you look at poverty in this country vis-a-viz the growth mentioned by the Minister, he said that the growth of the economy is 5.8 per cent. In 2002, when they took over, the growth was 1.2 per cent. One would expect, therefore, that with the remarkable growth in the economy, the living standards of Kenyans would have changed and that poverty would have been reduced. However, the opposite is what is happening. Poverty levels have increased; from 56 per cent to 57 per cent. Inequality in income distribution among Kenyans is also going up. Our per capita has also stagnated. When you look at the United Nations Global Report on Human Development Index, the situation in Kenya is deteriorating. When you look at the Public Service, efficiency in service delivery has not changed. What is happening? Mr. Deputy Speaker, Sir, this is a Government where expenditure has grown in the last three years from about Kshs250 billion, when they took over, to Kshs550 billion. This is an increase of Kshs300 billion in public expenditure yet we do not see any change in the lives of Kenyans except for the worse. We also do not see any change in service delivery. The reason why this is so, in my view, is because much of this expenditure by the Government is in consumption; Recurrent Expenditure. Even this year, out of the Kshs550 billion, Kshs461 billion goes into Recurrent Expenditure. Clearly, we have seen the degree of extravagance and wastage by this 1478 PARLIAMENTARY DEBATES June 21, 2006 Government. The second reason why there is no change in the lives of Kenyans is because the expansion in Government expenditure has fuelled inflation. If you look at the inflation figures for 2002, when this Government took over, you will see that inflation was 2 per cent. It increased to 9.8 per cent by 2003, and 11.6 per cent by 2004. Last year, the average inflation rate in this country exceeded 13 per cent. I will be looking at the consequences of this inflation rate briefly later. So, we need to change that trend. What this Government needs to do is to allow more disposable income in the pockets of Kenyans. It is not necessary for this Government to continue taxing Kenyans directly, or indirectly, through increases in the fuel prices or VAT. At this rate, Kenyans will be left with no money to save. The best way to develop this country is not to continuously increase public expenditure. The best way is to allow more disposable income in our pockets so that we can save money. Savings can then be used as investment by our business community. It can also become investment in our capital markets. That is the way in which we can go around problems. Mr. Deputy Speaker, Sir, the other issue is that the Government should increase its allocation to areas of priority. Although there is an increase in the Development Vote, it represents only 17 per cent of the total expenditure by the Government. Even of the 17 per cent, only 50 per cent of the total Development Vote will be spent during the year. There is need, therefore, to rationalise expenditure by Ministries in order to enhance efficiency in service delivery. On challenges posed by inflation, I have already mentioned that there is no way we can expect to have significant economic growth. The Minister said that we need to grow at 7 per cent in the medium-term to be able to address poverty in this country. We cannot achieve the 7 per cent growth rate if inflation continues to rise to above 7 per cent, and foreign exchange rate continues to fluctuate. This is hitting hard our productive sectors. For instance, last year sectors that are essential to economic growth like tea, coffee and horticulture were adversely affected by fluctuations in the exchange rate. Thirdly, unless we address the issue of unemployment, we will not get very far. The Government has not been able to establish the correlation between the growth in the economy and job creation. We have seen the economic growth rate going up from 1.2 per cent in 2000 to 5.8 per cent last year. Yet, the number of jobs created in the economy has actually gone down. If you look at the figures in the Economic Surveys for 2000 to 2006, you will see that the number of jobs created in 2000 was 458,000. This was at the time when economic growth was negative. In 2001, about 495,00 jobs were created. In 2002, about 462,000 jobs were created. In 2004, a total of 284,000 jobs were created. Last year we recorded only 459,000 jobs, yet the economy had grown from 0.6 per cent to 5.8 per cent over the last three years. This clearly shows that there is no correlation between the growth in the economy and creation of jobs, because of our policies. The sectors which registered growth are not the sectors which are of help to the common man and help in job creation. Horticulture, tourism, telecommunications and mobile phone service providers are the sectors which recorded growth. We need to review our policies. One of the issues raised by the Minister is public expenditure. As I have already mentioned, our public expenditure has grown drastically. Last year alone, Government expenditure increased by 16.4 per cent, according to the annual Economic Survey. This was against growth in revenue of only 11 per cent. In other words, the rate at which the expenditure by the Government is going up will lead to this country becoming debt-ridden. What will happen is that, in order to cover that expenditure, Government Budget deficit will continue to grow, and so the Government will continue to borrow. According to the Economic Survey, last year alone, net borrowing increased to Kshs70 billion because of the over-expenditure by this Government. Mr. Deputy Speaker, Sir, the Minister talked about restraining expenditure growth. He said June 21, 2006 PARLIAMENTARY DEBATES 1479 that this Government will try, as much as possible, to make sure that her expenditure does not grow. But the facts that are in the public domain point to the contrary. I want to cite a few examples to show clearly that this Government is not committed at all to reducing its expenditure. Let us look at the size of the Government. In 2003, when it came to power, it pledged that the number of Ministries would be 17, but today it has 34 Ministries. This a 100 per cent increase in the number of Ministries. How do we expect Government expenditure to decrease when the number of Ministries is increased? Early this year, this Government created 27 additional districts in the country. Allocation to these districts will be billions of shillings. Where is the rationalisation of Ministries pledged by this Government? The Government is, indeed, becoming bloated every day. Mr. Deputy Speaker, Sir, waste of public funds has also reached new heights. We have seen shady investors in the name of the Margaryans, and others in this country being given Government vehicles to drive around our country. The Government spent money on people who were not genuine investors. The Minister has also not factored the Anglo Leasing debts into his proposed expenditure. The Public Accounts Committee (PAC) recommendations we adopted here showed that there were contracts worth Kshs55 billion that were signed with Anglo Leasing companies. According to the figures given to the PAC by the Treasury, Kshs15 billion was due for payment by February 2006 to Anglo Leasing-related companies. Yet up to today, of the 18 Anglo Leasing contracts, only five have been cancelled. So, there are principal payments to be made and interest amounts are piling up. But the Minister has conveniently decided not to deal with this matter completely. Last month, one of those companies went to court in the Netherlands and attached properties of the Kenyan Government, including the Kenyan Embassy. How many more companies will go to court to attach the properties of this country? The Minister has made no mention of how he is going to deal with the liabilities arising from the Anglo Leasing contracts! Mr. Deputy Speaker, Sir, the Minister did not also mention the issue of the pending bills. The pending bills by this Government, and the previous one, amounted to Kshs18 billion as at 2004. Last year, the Government set up a committee known us \"Pending Bills Verification Committee\". It should have submitted its report by now, but the Minister did not mention anything to do with that. Contractors continue to charge interest every day and month on the pending bills. The Minister did not mention this, except for a small provision of Kshs200 million to pay the most urgent pending bills. This matter is another time-bomb related to public expenditure, which the Minister did not explain. Mr. Deputy Speaker, Sir, the Public Procurement and Disposal Act is yet to be operationalised. It was assented to by the President in October, 2004, but the Minister has not put in place regulations to operationalise it. To the extent that the Public Procurement and Disposal Act is not operational, we will continue seeing Anglo Leasing kind of scandals going on in this country. With the clock ticking closer to 2007, what we saw during the 2005 referendum will be repeated. The haste with which this Government dished out goodies to people in order to get votes during the referendum will be repeated this year and next year. So, public expenditure will go up. The Minister also talked about reducing the number of Government motor vehicles. It is a positive thing that the Minister wants to reduce the number of vehicles per Minister and Permanent Secretary (PS). This move is welcome. However, what does not make sense is that, before he has effected that policy, he has provided for savings of Kshs1.3 billion. We know that in this country there is no political commitment, particularly by the Ministers and Assistant Ministers, who are the major beneficiaries of these motor vehicles, to adhere to policy. There has been no political commitment in this matter. All the previous Ministers for Finance tried to implement this policy but failed. So, it was wrong for the Minister to quickly provide for savings to the tune of Kshs1.3 billion in this Budget to come from reduction in the number of Government vehicles in use. The same Minister, because he wants to reduce expenditure, is proposing the sale of these 1480 PARLIAMENTARY DEBATES June 21, 2006 motor vehicles. Ironically, he is also providing Kshs4.5 billion for transport allowance. Where is the wisdom in this exercise? You are reducing expenditure of the Government by getting rid of vehicles and at the same time you are providing billions of shillings for transport allowance! That does not really make sense and I think the Minister for Finance should look at some of these things. Mr. Deputy Speaker, Sir, the Minister for Finance mentioned that the Budget deficit is Kshs57 billion and that the Government will borrow Kshs29.5 billion domestically. He also mentioned that there will be privatisation proceeds of Kshs18.2 billion. I have a problem with these proceeds from privatisation. In 2003, the same companies that are to be privatised were mentioned in the Budget Speech. They include Telkom Kenya, Kenya Ports Authority, Kenya Reinsurance Corporation and so on. All these companies have been mentioned repeatedly in the Budget Speeches of 2003, 2004, 2005 and now 2006. So, proceeds worth Kshs18.2 billion, in my view, is not money that is likely to be realised. It will only increase the deficit by that amount. Mr. Deputy Speaker, Sir, the Minister needs to tell Kenyans the true reality of the huge public expenditure. We have a total public expenditure of Kshs550 billion. The total revenue is only Kshs375 billion. Therefore, the shortfall between the public expenditure and the revenue is Kshs175 billion. The Minister does not want to bring this larger picture out. We are living beyond our means. In addition to the Kshs57 billion that he is going to borrow domestically, he does not tell Kenyans that there is an additional Kshs2 billion which is going to be a debt. That money will mature this year and it will be rolled over. In other words, loans which were taken in the previous years and which are going to mature this year will be rolled over as new debts again. Domestically, this Government will have borrowed close to Kshs100 billion. Of course, there will be loans obtained externally from donors in excess of Kshs30 billion. I will address that matter shortly. The Minister is very clear in his Statement that there is no donor money factored in the Budget. In fact, some of the Ministers in the Government actually believe that there is no money from donors that is factored in this year's Budget. That is not true at all. In the Printed Estimates, under the Development Vote alone, there is Kshs73 billion in grants and loans from external multilateral and bilateral donors. If you open the first ten pages of the Printed Estimates you will see the list of the projects that the money is going to finance. What we are being told is that donor money is not being factored. However, the money that is not being factored is the little money that normally the International Monetary Fund (IMF) and other multilateral institutions provide to balance the Budget whenever there is a deficit. In fact, it has never been more than Kshs5 billion. It is that amount of money that donors refused to give to the Government when the scandal of Anglo Leasing and Finance Company Limited came up. Thanks to the money. There is a lot of fanfare about that and we are now not factoring any donor money in the Budget. What we are not telling Kenyans is that 80 per cent of the Development Vote, which is Kshs137 billion, actually comes from donors. In fact, to be precise, out of the Kshs137 billion, Kshs73 billion is from donors. Those donors have conditionalities that we hear of every time. So, the money that is being used to construct the Northern Corridor bypass or other roads in your constituency is from donors. The money used in projects being undertaken in the energy sector, and even to supply water, comes from donors. Mr. Deputy Speaker, Sir, my concern in all these issues is that, for this country to achieve the Millennium Development Goals (MDGs) and to exit from the poverty trap, we will continue requiring assistance from our donors or development partners. That is not a fact only for this country, but also for all countries in the Third World. So, I believe that if such aid is directed to productive sectors such as agriculture and infrastructure, it will boost the development of this country. The money should be used effectively. The concerns raised by donors are about the effective and proper use of the money given to us. The decision, therefore, to exclude budgetary support from donors should be based on a June 21, 2006 PARLIAMENTARY DEBATES 1481 genuine desire to move to internal revenue resources. We should not run away from demands by our donors to be accountable. The reason the Government is not factoring donor support in the Budget is that it wants to run away from accountability. You can run away from accountability demanded by donors because they can cut off their money, but Kenyans cannot cut off their money. We pay taxes and if you do not, you will get arrested. This Government owes accountability to us and not donors because 95 per cent of the Budget is funded by us. The Government should not put the premium of accountability on donors, rather it should be on Kenyans. The Minister said that he was going to engage the services of country rating experts called Standard and Poors from New York to come and rate the country. Country rating by international firms like this one is not going to help. If you want to attract investors, you need to deal with the issue of corruption in the country, the general insecurity, the business environment, suppression of the media and other existing problems. Mr. Deputy Speaker, Sir, in spite of all that money being spent by this Government, the cost of living has become unbearable for Kenyans. People are becoming poorer by the day. Poverty levels are going up. The President, when he took over, said that Kenya was going to be a working nation. The truth today is that Kenya is a walking nation. If you look at the people going to work, 90 per cent of them cannot afford matatu fares. We walk to work because we cannot afford fares. I will give you real examples. A packet of two kilogrammes of maize flour used to retail for Kshs28 in 2002. We may not have been very good in running the Government as KANU, but during our time a packet of two kilogrammes of maize flour was going for Kshs28. Today, the same packet of maize flour is Kshs60."
}