Hon. Speaker, I beg to give the following Petition on the ban of prayer days of candidates of public school by the Cabinet Secretary (CS) for Education, Science and Technology.

I, the undersigned, on behalf of the parents and guardians from Trans Nzoia County draw the attention of the House to the following: THAT, prayer days in schools serve a vital role in promoting not only virtuous living among student but also good living citizenship; THAT, the removal of prayer days from our schools by the CS for Education, Science and Technology is a violation of Article 32(2) of the Constitution of Kenya that guarantees the freedom of worship and religion; THAT, forbidding candidates, teachers and parents to do what their predecessors have been doing would demoralise, discourage and de-motivate the candidate; THAT, the CS in his decision has further violated Article 118 of the Constitution on public participation by failing to involve key stakeholders such as Kenya National Union of Teachers (KNUT), Kenya Union of Post Primary Education Teachers (KUPPET), parents, religious bodies among others; and, THAT, the matter presented in this Petition is not pending before any tribunal or court of law. Therefore, your humble Petitioner prays that the National Assembly, through the Departmental Committee on Education, Research and Technology:- i. Cause the CS to present empirical evidence showing, if any, linkages between examination cheating and prayer days in schools; and, ii. To rescind the decision by the Cabinet Secretary. The Petition is presented by Hon. Chris Wamalwa, the Member for Parliament for Kiminini. Thank you.

Let us have the Member for Chuka/Igambang’ombe.

Hon. Speaker, I want to support this Petition because Kenya is a very prayerful nation. Sometimes when problems are beyond what we can fathom, we normally end up having very unorthodox methods of trying to resolve the problem and in the process you may The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor.

create more problems. There is this thing about the forbidden being very sweet. The idea that we are preventing contacts of students with their parents may cause students to be more innovative. I see no correlation between prayers, presence of parents and examination cheating. I support and thank Hon. Chris Wamalwa for coming up with this Petition. We are looking forward to praying with our sons and daughters so that we can make them not only be submissive to the Lord as we do to the exams but it also gives them confidence in knowing that parents and of course the community and sponsors are with them during the hard times of exams.

I support the Petition. Thank you, Hon. Speaker.

Hon. Kamama, you have the Floor.

Thank you, Hon. Speaker. With all due respect to my good friend, Hon. Dr. Chris Wamalwa, I support the orders given by the CS, Ministry of Education, Research and Technology. These orders were given taking into account that cheating and corruption is very rampant in our examinations to the extent that the integrity of our exams and certificates is at stake.

The CS gave orders that prayers should be done in second term and not in third term. I propose that the prayers be done in the second and last terms so that the board of management and teachers can pray with students to avoid collusion and cheating by outsiders who normally find their way into schools. The statement was in good faith. So I rise to oppose the Petition.

Let us have Hon. Thomas Mwadeghu.

Mheshimiwa Spika, ninasimama kuunga mkono Ombi hili kwani hata mimi sielewi ni kwa sababu gani Waziri alitoa uamuzi kuwa suala la maombi katika shule nchini lipigwe marufuku, hasa katika muhula wa tatu. Sioni uhusiano wowote kati ya sala na udanganyifu wakati wa mtihani. Ndugu yangu, Mhe. Kamama, ninaomba nikujulishe kuwa si vijana ama wanafunzi wanaokaa katika mabweni tu ambao wanaweza kupatikana na hatia kama hiyo. Je, itakuwa namna gani kwa wale ambao wanakuja shuleni asubuhi na kwenda nyumbani jioni ambao hawakai katika mabweni? Ikiwa ni suala la udanganyifu, wao pia wanaweza kupata hayo makaratasi njiani. Kwa hivyo, hiyo si sababu ya kumfanya Waziri kutoa uamuzi bila kuwahusisha wahusika wote. Shida kuu ni kuwa tunatafuta njia ya kusitisha au kuondoa udanganyifu katika masuala ya mitihani kwa kutafuta sababu zingine ambazo hazihusiki na mitihani. Tunamwomba Waziri atafute sababu na njia mwafaka ya kuondoa udanganyifu katika mtihani wetu. Ninakubali kuwa Ombi hili ni la muhimu kwa sababu kuna udanganyifu katika masuala ya mitihani, lakini mbinu ambayo imetumiwa na Waziri ya kusitisha maombi haifai. Kama mnavyofahamu, sala na maombi wakati wa mtihani inatia wanafunzi mori na kuwafanya wamtegemee Mungu katika mitihani yao. Sina habari kama Waziri anajua maombi ni nini wala sijui kama anajihusisha na maombi. Ninaunga mkono Ombi hili na ninamuunga mkono Mhe. Chris kwa kulileta Bungeni.

Hon. Members, let me remind you that comments to a petition are not an occasion for debate so that I allow many Members to contribute. Let us have Hon. Esther Gathogo.

Asante, Mheshimiwa Spika kwa kunipa nafasi hii. Ninataka kupinga Ombi hili kwa sababu Mheshimiwa mwenzangu amesema kwamba Waziri hamjui Mungu. Ninajua kuwa yeye ni kiongozi katika Kanisa la Seventh Day Adventist (SDA). Kwa hivyo, tukiongea kuhusu mambo ya maombi ninajua kuwa anayafahamu. Ni vizuri sana kuelewa kwanza ni kwa nini tulipinga suala la maombi. Tulimwambia Waziri aangalie ni njia gani The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor.

mtihani huu hautaibwa. Waziri akija na njia ambayo ameona inafaa, si vizuri kusema kwamba amekosea. Sisi kama Wabunge tunapaswa tuungane mkono pamoja na Waziri, na tumsaidie kutafuta njia ambayo mtihani utafanywa bila kuibiwa. Lakini ninajua kwamba Waziri anajua mambo ya maombi kwa hivyo, si maombi anayopinga ila anajaribu kutafuta njia ambayo mtihani hautaibiwa.

Let us have Hon. Richard Onyonka.

Asante sana ndugu Spika kwa kunipa fursa nichangie jambo hili kwa dakika mbili tu.

Anasema “Ndugu”?

Mheshimiwa Wamunyinyi haelewi kuwa “ndugu” ni jina la Kiswahili lenye heshima na hekima. Wakati mwingine nitajaribu kumfunza lugha ya taifa ili aelewe.

Jaribu kumaliza mchango wako kwa sababu saa za jioni zimefika.

Jambo hili ni la muhimu katika elimu yetu hapa nchini Kenya. Lakini ningependa kumsihi yule ambaye ameleta Ombi hili hapa Bungeni, Dkt. Chris Wamalwa kuwa ingekuwa vizuri tuhakikishe kuwa hili jambo lililetwe kwa Kamati ya Bunge inayohusika na mambo ya elimu ili tumwite Waziri wa Elimu aje atuelezee ni sababu gani iliyomfanya aamue hivyo. Jambo la mwisho ni kuhusu vile ambavyo Mhe. Dadangu alisema hapa kuwa Waziri Matiang’i ni mzee wa Kanisa la SDA. Ni mzee ambaye anaheshimika na ni Waziri wakati huu. Si vyema kusema kuwa yeye hajui kumwomba ama kuswali kwa Mwenyezi Mungu. Ingekuwa vizuri tumpe nafasi wakati Kamati itakavyoketi, atueleze ni nini kilichomfanya akaamua hivyo.

Let us have Hon. Joseph M’eruaki.

Thank you, Hon. Speaker. I support this Petition. I do not see the reason why we should ban prayers in schools even if it is in third term. Maybe the timing can be determined and there could be thorough checks. We should not pass the buck just because of the crisis. We should find a lasting solution to this problem. One of the ways is through the Kenya National Examinations Council (KNEC), where the exams originate from. We should not pass the buck. I support this Petition. It will come to the Departmental Committee on Education, Research and Technology.

Let us have Hon. Lati Lelelit.

Thank you, Hon. Speaker. I, the undersigned, on behalf of the local community of Murramur draw the attention of the House to the following:- THAT, two parcels of land measuring 2,345 acres and 1,956 acres respectively in Murramur area were set apart for army use in 1976 by the Commissioner of Lands. THAT, the said parcels were allocated to the Ministry of Defence through Gazette Notice No.3210 of 11th November, 1977. THAT, for over 30 years, more than 100,000 people permanently reside in Murramur community land, even having three secondary schools and several primary schools existing. THAT, on 19th March, 2016 at a meeting between the President and Maa Parliamentary Group, the Cabinet Secretary for Interior and Co-ordination of National Government informed the meeting that he headed the Army Unit that occupied Murramur in the 1980s and that Murramur land was only temporarily for training. The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor.

THAT, the Cabinet Secretary further informed the meeting that sufficient land has since been acquired by the Army in Isiolo for long-term training and, therefore, grounds in Murramur were no longer viable for army training. THAT, out of goodwill, the Samburu County Council allocated 400 hectares in Baragoi for use by the Army, in place of the Murramur land which was already occupied. THAT, Murramur community was never consulted when their land was given to the Ministry of Defence as a training ground for the Army. THAT, despite efforts to resolve the tussle between Murramur community and the Ministry of Defence, no solution has been found. THAT, the issues in respect of which this Petition is made are not pending before any Court of Law or before any constitutional or statutory body. Therefore, your humble Petitioners pray that the National Assembly through the Departmental Committee on Lands and the Departmental Committee on Defence and Foreign Relations respectively:- (1) Investigate the issue and recommend that the Cabinet Secretary for Defence reverts ownership of Murramur land back to the local community; and, (2) Makes any other order and/or direction that it deems fit in the circumstances of the matter for the welfare of the residents of Murramur. And your Petitioners will ever pray.

Let us have Hon. Lentoimaga.

Thank you, Hon. Speaker for giving me this opportunity. This Petition by my colleague from Samburu West is quite in order. Murramur community land has never belonged to the Army physically. The Army went there temporarily and they were training in Kirisia Forest. They have never put up a single structure there. Since they withdrew from there because there were only tents, the community has occupied the land which belongs to them through their ancestral history. More than 2,000 families live on that parcel of land. They even have schools, cemeteries, many structures, a shopping centre and a dam. The whole place is populated. You cannot remove anybody from there. The Government of Kenya provided land in Samburu North in 2012, through the defunct County Council of Samburu. It is ideal to give land to the military in Samburu North because there is a problem of insecurity but there is no insecurity in Murramur. No training should be done there because the land is not even sufficient in the first place. The army have occupied some land in Samburu North and there is a military camp where a company resides. They have put a lot of money and they will be opening the camp any time. I appeal to this House to revoke the allocation of the piece of land in Murramur so that the people or communities that live there can benefit. Land in Samburu North is sufficient for the army to use for training. Thank you, Hon. Speaker.

Hon. Moses ole Sakuda.

Thank you very much, Hon. Speaker. I rise to support this Petition. As the Departmental Committee on Lands, we look forward to receiving it and doing the necessary work of investigating and going to the ground. On behalf of the Committee, we have done a lot of work and presented reports to this House. I urge the House Business Committee (HBC) to make sure that those reports see the light of the day, as they plan the work of this House. That is opposed to us doing the work and leaving the reports un-tabled or no decision over them carried forth in this House. The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor.

Secondly, the issue in Samburu is not unique to that area. A lot of Arid and Semi-Arid Land (ASAL) areas in this country and big chunks of land have been set aside in the historical ways but they have never been put to use. The residents are not allowed to own and use those parcels of land. Those parcels just lie idle out there and are in the name of Government institutions. It is time we came up with a policy of taking care of land. We need to do land audit in this country so that the Departmental Committee on Lands can ensure that the ownership of parcels of land which are under the name of Government institutions, and which are not in use, revert to the people who live around there. Communities within that area should use and own the land. That way, they will feel to be part of this Republic. With that, we look forward to receiving the Petition, as a Committee, so that we can do the necessary work. Thank you very much, Hon. Speaker.

Hon. Patrick ole Ntutu.

Thank you, Hon. Speaker. I also rise to support the Petition that has been brought by Hon. Lelelit. It is time we looked at the various parcels of land that have been taken by the army in this country. In the case of the Samburu land, the communities were not consulted. This is the case and yet a lot of land in the North of Samburu has been given to the army for their use. As leaders of those communities, we feel we need that land because many public utility facilities have been built in that area. I urge the Departmental Committee on Lands to look into the situation because it is something which will help the communities. This Petition must be expedited so that most of the schools and trading centres built there can be given back to the communities. The Ministry of Land, Housing and Urban Development should issue title deeds to those living on those parcels of land. With those few remarks, I support the petition and urge the Departmental Committee on Lands to look at the issue very urgently. Thank you, Hon. Speaker.

Let us have the Member for Emurua Dikirr, Hon. Johana Ngeno.

Ninashukuru Mhe. Spika. Ningependa kusema kwamba hii shida si ya Samburu pekee kwa sababu inahusu wananchi wote wa Kenya. Kila sehemu ya Kenya huwa na shida kama hii. Serikali au watumishsi wake wakati mwingine huchukua ardhi ambayo ingetumiwa na wananchi. Wananchi wanaendelea kuumia ilhali Serikali haitumii hiyo ardhi. Tungependa kusema kwamba tunaunga mkono hilo Ombi la Mhe. Lelelit. Tunataka Serikali iamue mara moja ili wananchi wasiendelee kuumia wakati Serikali au jeshi haitumii hiyo ardhi saa hii. Pia, ninasihi Tume ya Kitaifa ya Ardhi---

Ni jopo!

Mhe. Spika, wajua Kiswahili kilikuja na meli na barabara hadi kwetu. Tungependa Tume hiyo ihakikishe kuwa ile shida ya ardhi katika kila sehemu ya nchi hii imeangaliwa. Ni vyema kama kuna sehemu ambayo hatimiliki zake hazijapeanwa, zipeanwe. Kama kuna mahali hakujagawanywa, kugawe. Kupitia “petishoni” ya Mhe. Lelelit, ningependa kuseme kwamba ninaunga mkono. Asante, Mhe. Spika.

The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor.

Well. I think he has made some fair effort.

What are you saying, Hon. Wamunyinyi? Is it on this Petition? Hon. Members, I urge you to merely make comments, observations or clarifications. It is not debate time. Let us have Hon. Athanas Misiko Wafula Wamunyinyi.

Asante kwa kunipa fursa niseme machache kuhusu Ombi la Mhe. Lelelit. Kabla sijasema langu, ningependa kumuambia na kumuhimiza Mhe. Mbunge wa Emurua Dikirr kwamba “petition” ni “ombi” kwa Kiswahili; sio “petishoni”.

Hata sisi tuko na shida ya mashamba kule Bungoma. Tumekuwa tukiomba kuwa hatua ichukuliwe kutatua shida ya mashamba inayotokana na unyakuzi ambao umefanyika katika nchi yetu. Hayo mambo yaangaliwe na shida itatuliwe mara moja. Asante sana, Mhe. Spika.

Let us have Hon. Kathuri Murungi.

Asante sana kwa fursa hii ya kuchangia hili Ombi la Mbunge mwenzetu. Mhe. Spika, yangu ni machache. Inapaswa hali ya mashamba katika taifa letu iangaliwe upya kabisa. Hii ni kwa sababu tumepata maombi mengi kuhusu mashamba. Kamati yetu ya Ardhi ya Bunge hili letu la Kitaifa inapaswa iangalie mambo ya mashamba kabisa. Zaidi iwe ni kuhusu mashamba yanayohusu wananchi. Ninaunga mkono. Katika eneo la Meru, ninakotoka, kuna shamba kubwa linalotumiwa na Wanajeshi wa Uingereza. Tukiwa viongozi wa eneo hilo, tunaomba wasiruhusiwe tena kuingia kwa hili shamba kwa sababu tungependa tuelewane. Tunataka mmea wetu wa miraa uingie huko Uingereza na tutawapatia hiyo ardhi wafanyie mazoezi yao ya kijeshi. Pia, ninaomba Wabunge watuunge mkono wakati hilo swala litafika kwa hili Bunge ndio tuwe na haya mazungumzo na tuelewane.

Asante sana Mhe. Spika.

Finally, let us have Hon. Raphael Letimalo.

Thank you, Hon. Speaker, for giving me an opportunity. I support the Petition. Being a resident of Samburu County I know where Murramur is located. It is actually in the midst of community habitation. There are very many public utilities that have been developed there. The community has been allocated land there and that makes it difficult for military personnel to carry out any military exercise. So, I think it is just proper for that land to be reversed and returned to the community.

By extension and I wish the relevant Committee hears me out, I come from Samburu East and this is one area that has really been affected by activities carried out by military personnel. The Government allocated over 83,000 acres of land and it was gazetted for use by military forces. I wish the relevant Committee will carry out investigations to establish whether I am misleading the House. One major problem that we have is that they have gone beyond the gazetted area and constructed military camps without the knowledge of the community. Given that land in Samburu County is demarcated and allocated to group ranches, no consultations are made when both British Army and Kenya Defence Forces (KDF) use that land. There is need to investigate this. The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor.

Two, when military personnel carry out their exercises they leave the fields without clearing them to the extent that a lot of unexploded ordinances are left behind. It is a huge tract of land used for grazing and when the herdsmen come into contact with them they get hurt. This is the case and yet those concerned do not take the responsibility of either taking those injured to hospital or compensating them. I think it is important that the relevant Committee investigates to actually establish what is happening there because the community is really affected.

Thank you, Hon. Speaker.

Well spoken. Now that is debate. Hon. Members, the Petition is committed to the Departmental Committee on Lands.

Let us have the Majority Whip.

Hon. Speaker, I beg to lay the following Papers on the Table:- The Report of the Auditor-General on the Financial Statements in respect of the following institutions for the year ended 30th June, 2015 and the certificates therein:- (a) National Intelligence Service; (b) Intelligence Service Development Fund; (c) Constituencies Development Fund, Roysambu Constituency; (d) Public Trustee; (e) The National Police Service Commission; (f) Kenya Leather Development Council; (g) The Kenya National Library Service; and, (h) Office of the Attorney-General and Department of Justice. The Annual Report and Financial Statements for the Commission on Revenue Allocation for the 2014/2015 Financial Year. Thank you, Hon. Speaker.

That is okay. I want to correct what I had said earlier on. The Petition will be heard by the joint Departmental Committees on Lands and Defence and Foreign Relations. Let us have the Chairperson or the Vice-Chair, Hon. Mbiuki, Departmental Committee on Agriculture, Livestock and Cooperatives.

Hon. Speaker, I beg to lay the following Paper on the Table:- Report on the Petition by the Dairy Farmers on the establishment of the strategic reserve of the long life and powered milk by the Strategic Reserve Trust Fund to cushion milk farmers.

Order Members! Those who are standing can take their seats. Hon. Members, debate on this Motion had been concluded. So, what remains is for the Question to be put which I hereby do.

The Chair of the Departmental Committee on Justice and Legal Affairs, Hon. Chepkong’a, we have very many microphones.

Hon. Speaker, at least, I have a kind neighbour here when the systems are not working.

Hon. Speaker, I beg to move:- THAT

Yes, Hon. Kajuju.

Thank you, Hon. Speaker. I rise to second this Motion. I note that this is a matter of national importance. In view of the fact that the issues we are seeking to move amendments concern the electoral process, and especially the matters of the tribunal, because during elections we have had conflicting jurisdiction between the IEBC and the Political Parties Tribunal, these amendments are going to bring a lot of clarity so that at the time of electoral disputes, parties are able to sort them out without necessarily going into a lot of confusion. Also, any other issue for which we are seeking amendment will be subjected to public participation so that members of the public are able to present before the Committee issues that they would like us to take up and be able to resolve. I, therefore, second.

Order Members! Order Members!

Hon. Sumra, just freeze where you are.

Put the Question!

Is it the mood of the House that I put the Question?

Yes!

Let us move on to the next Order.

The Mover is supposed to reply. Yes, Hon. Katoo.

Thank you, Hon. Speaker. I beg to reply. Many colleagues have spoken to this Motion and some very important issues were raised. The merit of having the second container terminal at the Mombasa Port is the issue of decongesting the Port. By decongesting the Port, our regional trade and even far beyond this region of East Africa is going to be fast- tracked. The movement of goods at the Port is going to be faster. It has also been raised by colleagues that the other importance of doing this is that it will increase the handling capacity of goods at the Port of Mombasa. This will put this country in a prime position as much as regional trade is concerned. If we increase the capacity of goods handling at the Port, we are also going to enhance productivity at the Port. Let me say very briefly about some of the issues of concern that were raised by my colleagues. First of all, the duration of this loan is 34 years. Before those 34 years, there are six years which we are given as a grace period. I think the rate is good. The Kenya Ports Authority (KPA) will pay about Kshs1 billion per year. With good management at the KPA and building of capacity and enhancing productivity, KPA will be in a position to raise that money. This will enhance economic growth of this country. Because colleagues have said a lot before, I just want to appeal to my colleagues that since this is Phase II meaning that Phase I has been done, we approve this Special Motion for this work to start. The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor.

I beg to reply, Hon. Speaker.

The Members standing, including the Member for Kiharu, can take their seats.

Division! Division!

Order Members! Those of you who are upstanding, I suppose, are claiming for a Division. You do not have to get agitated. You have the numbers. So, I order that the Division Bell be rung for five minutes.

Order, Hon. Members! Take your seats. Hon. Midiwo, please take your seat. Hon. Members making your way in, take seats. Stop the Bell now. Close the doors and draw the Bars. Hon. Members, I know that some of you have this habit of coming without your cards and yet you know that this is a place where most business is won or lost on the strength of those cards. I do not know whether there are any of you who may have forgotten them today as usual. Does everybody have their cards?

No.

Order, Hon. Members. Hon. Wamunyinyi, just stay put. Hon. Osele, you know that with your height you are almost the same size as Hon. Bosire when you are upstanding. So, you confuse me as to whether you are seated or standing.

Order, Hon. Members! Hon. Members, I will put the Question again to remind everybody. Members without cards or malfunctioning cards, proceed to either side of the Speaker. Hon. Sumra, come here if you do not have a card. Hon. Osele, you will shake hands later. Are those who are standing the ones without cards? Hon. Members, those of you who have cards, please log out. I can see quite a number of you. The Chair of the Departmental Committee on Transport, Public Works and Housing does not have a card. Hon. Members, you may now log in. Vote now.

You may open the doors. Member for Taveta, please, take a seat nearest to where you are. Hon. Mwadime is making his way quite comfortably and casually.

Hon. Members, I wish to recognize various persons as listed, various Cabinet Secretaries seated in the Speaker’s Row, various High Commissioners, ambassadors, heads of missions and other diplomatic representatives in the Diplomatic Boxes. In the Speaker’s Gallery, we have various Principal Secretaries, heads of commissions and representatives of independent offices, representatives of State Corporations and Government departments and agencies. Also in the Public Gallery, there are several other esteemed guests invited by various Members. You are all welcome to observe the proceedings of the National Assembly on this occasion.

Hon. Members, pursuant to the provisions of Section 40 of the Public Finance Management (PFM) Act, 2012, and Standing Orders Nos.241and 25(b) of the National Assembly Standing Orders, I will now interrupt the business of the House to allow the Cabinet The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor.

Secretary for the National Treasury to make a public pronouncement on the Budget Highlights and Revenue Raising Measures for the National Government for the Financial Year 2016/2017 and the Medium Term. In accordance with our Standing Orders, I have also designated a suitable place in the Chamber for that purpose. Cabinet Secretary for the National Treasury, Mr. Henry Rotich, you may now proceed.

Hon. Speaker, once again, it is my singular honour to present the Fourth Budget Statement under the Administration of His Excellency the President Uhuru Kenyatta. This Statement is being presented at a time when our economy is growing at a decent pace compared with other countries in the region and globally. In short, our economy is performing quite well and the policy measures I intend to highlight this afternoon are intended to consolidate that momentum and lead to increased prosperity for all Kenyans. Accordingly, the theme of this Budget is: “Consolidating Gains for a Prosperous Kenya.” Hon. Speaker, that optimism is not misplaced. It is, indeed, based on our well demonstrated capacity for resilience and strong and prudent management of our economic affairs, even in the face of a difficult global environment. I will, in a short while, demonstrate the recent economic successes that we have made as a nation under very difficult circumstances. But before I do that, allow me, at the outset, to thank you for allowing us to read the Budget Statement on a Wednesday – a break from the past where we read it on Thursdays. This is because our sisters and brothers in Uganda will be celebrating their National Heroes Day tomorrow. Therefore, in keeping with our tradition of presenting Budget Statements simultaneously in the East African Countries (EAC), this day was agreed upon by all EAC partners. Our economy is growing at a stronger pace than others because under the strong leadership of our President, we are confronting head-on the challenges we face with determination and confidence. Kenyans want their children to go to quality schools and to get jobs; they want to live healthy lives; they want decent transport; they want affordable food and a decent shelter and, above all, they want to see progress in all aspects of our economy. Achieving all this requires bold leadership and all Kenyans working hard and playing their part to deliver a common vision for our country. In sum, we need to remain steadfast in pursuing our long term development agenda and focus less on short term fixes of issues. I believe wholeheartedly that Kenyans are up to the task but it requires concerted efforts from all of us to aim high and remain focused on what needs to be done. With our vibrant democracy and great leadership from the President, I can confirm that the future of our nation is, indeed, bright. Hon. Speaker, our plan for economic transformation, which started in 2013, is working and delivering results. We just need to remain steadfast and continue to:- (i) improve the business environment in order to lower the cost of doing business, improve competitiveness and attract more investment for growth, employment generation and poverty reduction; (ii) safeguard macro-economic stability; (iii) invest in security; The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor.

(iii) improve infrastructure like roads, railway, ports, energy and water to encourage growth of competitive industries; (iv) undertake various measures to drive agricultural and industrial transformation so as to ensure food security and lower food prices, increase quality and diversification of exports, accelerate inclusive growth, create jobs and reduce poverty; (v) prioritise investment in quality and accessible health care services as well as quality and relevant education; (vi) ensure adequate support for the most vulnerable in our societies; (vii) support devolution through funding and working closely with the county governments to build appropriate public financial management capacity to help them to better deliver services to w ananchi ; and, (viii) implement economic, financial and other reforms to boost our productivity and competitiveness. In a nutshell, this budget aims to consolidate the significant gains already made in those priority areas that I have just mentioned. We will do this within a sustainable fiscal framework. Working together under this plan, we shall achieve higher and sustainable growth, provide jobs to our youth, reduce poverty and inequality as a nation and position ourselves as an upper middle income country. This is the Kenya we all want. This House approved the 2016 Budget Policy Statement and the Division of Revenue Bill that was submitted to Parliament in February this year, thus paving the way for the preparation of the Budget Estimates for the Financial Year 2016/2017 that were submitted to the National Assembly on 28th April, 2016. The Estimates broadly reflect the priorities that I have just elaborated. In addition, I am now submitting the Finance Bill, 2016, which contains the taxation and financial proposals that will further help achieve our goals. We are now in the final stages of engagement with the Budget and Appropriations Committee on the review process and preparation of the ground for the Appropriation Bill. It is my expectation that the final Budget, which should be approved before the end of this month, will reinforce the basis of achieving our long term development goals and help us move steadily towards meeting the 2030 Development Agenda for Sustainable Development Goals (SDGs). Hon. Speaker, while finalising this Statement, I asked Kenyans to give me their views on how we are faring with our taxation, social service delivery and how best to accelerate inclusive economic growth. Allow me to sample just a few of the responses from well-wishing Kenyans who want to make positive contributions to our development agenda. I have received a very clear message that everybody must pay taxes, including the informal sector. For example, Mr. Kelvin Omweri has written to me and I quote:- “An economy like ours cannot be supported by two million taxpayers in the formal economy. There are persons in the informal economy in this country who make millions that do not get taxed because they are the informal economy and professional tax evaders. Yet, we all want National Hospital Insurance Fund (NHIF) to expand and cover the majority and better education, health care facilities and infrastructure. So, we all must participate in some way in paying taxes and those in the informal economy must also pay tax on income and not just VAT.” I fully agree with Mr. Omweri. We must widen the tax net so that everyone eligible to pay tax, including the informal sector, pays tax. In this respect, I have asked the Kenya Revenue Authority to explore ways of taxing the informal sector and to re-double their efforts in netting The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor.

tax evaders. Indeed, if everybody pays their fair share of taxes, we would be in a better position to lower tax rates. As part of the review of the Income Tax, we are considering to introduce a presumptive tax for the hard-to-tax segment of our people, including those in the informal sector. On social service delivery, one Kenyan in the Diaspora by the name Wanjiku told us: “Invest more in education. Through this, you will instil national pride and in 20 years or less, people will pay their taxes, public servants will serve with integrity and the systems will take care of the less fortunate.” We share the same conviction with Wanjiku. It is for this reason that we are heavily investing in education through the free primary education, the free day secondary education, the Digital Literacy Program popularly known as laptops, as well as expanding our technical training institutes and our universities. Of course, we are well aware that in addition to investing in education, investing in health is equally important and working with counties, we have prioritized this sector in funding, including introducing medical equipment leasing initiatives. On accelerating economic growth rate, a Mr. Gilbert Kiyeng from Elgeyo Marakwet wrote to me and said:- “The Government should focus on improving and creating new factories to process agricultural products.” He wonders: “Why are mangoes left rotting in farms like in Kerio Valley and potatoes getting wasted during the periods of high yields? The Government should create a factory to process and export dried mangoes and chips. It is a multi-billion business in the Philippines. If we can improve processing of agricultural products, we can create more jobs and expand our economy by more than 10 per cent annually”. This proposal is in line with our plan to transform the agricultural sector, improve productivity, efficiency and coordination throughout the entire value chain. Of course

Order, Members! The CS will be heard in silence, even if you are excited. Proceed.

I introduced measures meant to enhance compliance among landlords by enacting a simplified taxation regime based on 10 per cent of the gross rent for taxpayers earning less than Kshs10 million per year. I propose to gazette rules to facilitate in the implementation of this law, introduce a minimum taxable rent income of shs12,000 per month and empower the Commissioner to appoint Withholding Tax The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor.

agents for rental taxation. These measures are meant to encourage landlords to do a full and true declaration of their rental income. The Government is committed to providing an environment that enhances the investment climate and tax compliance. The Government is aware that there are taxpayers who own assets and businesses outside the country and would be willing to reinvest back home provided that there is a conducive environment to facilitate such reinvestments. Consequently, I propose to declare tax amnesty for such taxpayers provided that they submit their returns and accounts for the year of income 2016 between 1st January, 2017 and 31st December, 2017. Taxpayers who take up this amnesty shall have all principal taxes, interests and penalties for the year of income 2016 and the prior year’s automatically remitted in total. In addition, the Government shall not follow up on the sources of such income and assets declared. Hon. Speaker, Kenya Revenue Authority (KRA) has been working towards simplifying and reducing the time taken to file tax returns by taxpayers and also enable the Authority to flag out the non-compliant taxpayers to ensure that every person pays his fair share of taxes. In order to make it easier for taxpayers to submit their tax returns in the i -Tax System, I propose to amend the Tax Procedure Act to grant KRA powers to collect information in advance from identified persons for purposes of pre-populating the information in the i -Tax System. Hon. Speaker, Kenya continues to face increasing threats from terrorism, drug trafficking and related cross-border criminal activities. The country also faces the challenge of increased inflow of contraband goods, a practice which undermines genuine trade besides leading to loss of Government revenue. In order to strengthen controls on the import supply chain, I propose to introduce, later in the year, legislation that will streamline the training, licensing and regulation of Kenyan clearing agents, pending agreement at the East African Community (EAC) level of a harmonized approach on the issue. Hon. Speaker, I now turn to cushioning households’ budget to ease the cost of living. In order to encourage the use of energy efficient stoves that support conservation of our environment, I have reduced the import duty on stoves from 25 per cent to 10 per cent. The duty reduction will also align the energy efficient stoves with similar stoves and cookers that use gas, electricity and other fuels that attract import duty at 10 per cent. The use of wood and charcoal by many Kenyans exposes them to premature deaths as well as denying them access to clean, safe and efficient household energy. I propose to amend the Value Added Tax Act in order to exempt liquefied petroleum gas from payment of VAT. This will give Kenyans access to clean, safe and efficient household energy, protect the forest cover and reduce premature deaths. Hon. Speaker, tea and sugarcane farmers in the agricultural sector have been experiencing declines in income due to many factors, including the ad valorem levy on tea and the Sugar Development Levy. In order to improve the earnings of the farmers, I propose to remove these levies.

The institutions that were hitherto funded from these levies will now be funded from the Exchequer. In addition, I also intend to remove all other levies including levies charged by the National Environment Management Authority (NEMA) and the National Construction Authority (NCA) in order to reduce the cost of doing business.

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Hon. Speaker, our economy grew by 5.6 per cent in 2015 and is expected to rise to about 6 per cent this year. On the other hand, the world economy grew by 3.1 per cent while the sub Saharan economies grew by about 3.4 per cent. This good news allows us to share the good performance of the economy as widely as possible. Consequently, I propose to exempt from tax; bonuses, overtime and retirement benefits paid to workers who fall under the lowest income tax band. In addition, I propose to expand the tax bands and increase personal relief by 10 per cent. These measures are meant to cushion workers from the high cost of living and demonstrate our commitments to sharing the growth of our economy. The Government appreciates that it has received numerous income tax proposals from various stakeholders which are meant to facilitate the taxation reform agenda. In connection with this, some of these proposals will be considered when reviewing the Income Tax Act, Cap 470, which is currently ongoing. I intend to table the Bill in this House in the next financial year. Hon. Speaker, as I did mention earlier, we shall be introducing three landmark financial sector legislations, namely; the Financial Services Authority Bill, the Nairobi International Financial Centre Bill, and the Moveable Property Security Rights Bill. In addition to these major reforms, I am proposing a number of other changes in order to facilitate growth and stability of the sector. Hon. Speaker, on banking, last year, I did table in this House specific measures to increase the capitalization of banks in order to ensure we have a strong and stable banking system but our efforts were not successful. I am seeking to reintroduce the proposals and I am hopeful that hon. Members will look at them more favourably in light of the recent developments in our banking sector. In addition, the current monetary penalty for violation of the Banking Act or the prudential guidelines is capped at Kshs5 million. This amount has proved to be too little compared to the seriousness of some of the violations institutions have committed. I am therefore proposing to increase the maximum penalty to Kshs20 million and to allow for additional penalties for each day that the violation continues. The Credit Information Sharing (CIS) framework in Kenya has continued to develop and increase its coverage as a result of facilitative reforms that we have put in place over the years. Indeed, the expansion of the CIS framework was one of the key factors behind the improvement in Kenya’s ranking in the World Bank Ease of Doing Business indicators this year. Apart from the obvious benefits to the borrowers who maintain good credit history and to lenders who are able to get information on potential borrowers, the CIS regime is important to the economy as a whole in terms of increasing access to credit, reducing transaction costs, enhancing efficiency in financial intermediation and fostering financial sector stability through reduction in non- performing loans. To maximise on these benefits, I am today proposing additional amendments to the Banking Act as well as the Sacco Societies Act to facilitate cross border information sharing and to allow Saccos and utility companies to more effectively participate in the CIS framework. Hon. Speaker, with the increasing numbers of SACCOs invariably using the name “SACCO” or “SACCO Society”, it has become difficult to know the differences between a cooperative society, a SACCO society, a deposit taking SACCO society (DTS) and a non- depositing taking SACCO society (non-DTS). The emergence and exponential growth of “Matatu or PSV SACCOs” have further fuelled the confusion. Therefore, I propose to amend the SACCO Society Act to provide that only SACCOs that are licensed for deposit taking can use The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor.

the acronyms “Deposit taking SACCO Society (DTS)” or “DT-SACCO” to differentiate them from the other SACCOs and also to provide legal restrictions for the usage of these acronyms by other non-deposit taking SACCOs. Kenya has witnessed growing interest in online trading of foreign currency particularly among the youth. There is currently no regulatory framework to guide online forex trading in Kenya where it is estimated that over 50,000 investors are participating through foreign registered brokers who link through the internet to access the highly liquid currency clearing centres in the USA, Europe, Japan and other countries. Providing a legal framework for the online trading of foreign currency goes hand in hand with making Nairobi an international financial hub. In this regard, I am proposing facilitative amendments to the Capital Markets Authority Act following which I will be gazetting relevant regulations for effective and secure online forex trading by Kenyans. Last year I removed the requirement for annual licensing of banks and instead empowered the Central Bank of Kenya to issue non-renewable perpetual licences. This year, I propose to extend a similar perpetual licences framework to institutions licensed by the Retirement Benefits Authority. In addition, I propose to further review the investment guidelines for retirement benefits schemes to facilitate their investment in new products approved by the Capital Markets Authority including exchange-traded derivatives and listed Real Estate Investment Trusts. Medical expenses constitute one of the biggest categories of expenditure for our senior citizens. Many workers who have employer-provided medical schemes during their working life find themselves without any cover the day they retire. An innovative solution to this challenge is for retirement schemes to establish separate medical funds into which members can contribute during their working life and the same be used to purchase medical cover at retirement. I am, therefore, proposing facilitative amendments to the Retirement Benefits Occupational and Individual Regulations to allow schemes to put in place such arrangements. Last year I amended the Insurance Act to facilitate the industry to move to risk-based solvency framework and a more principle-based investment framework. To further anchor this risk based approach, I am proposing additional amendments in particular expanding the allowable forms of capital and reflecting the new gross premium valuation methodology across different classes of business. In addition, to protect insurance policy holders from long delays in settlement of their claims, I am proposing to reduce the maximum time in which a claim should be settled from 90 days to 30 days.

With the rapid growth of interest we have experienced in Sharia compliant or Takaful insurance products, I am proposing amendments to anchor this form of insurance in the Insurance Act and also facilitate the issuance of regulations to govern Takaful Insurance. Hon. Speaker, let me now turn to the promotion of Private Sector Growth. The enactment of the new Constitution has seen the Government devolve various functions to the county governments. In view of this, the county governments are expected to contract for the provision of services. Like the national Government, the county governments are faced with financial constraints to undertake projects within their jurisdiction. The national Government enacted the Public Private Partnership Act to allow participation of private sector in the implementation of projects and especially that require huge funds. However, the provisions in the Act do not The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor.

recognise the county government as a procuring entity for the public private partnership projects. In order to affirm the Government’s commitment and support for devolution, I propose to amend the Public Private Partnership Act to recognize the county government as an independent procuring entity for the public private partnership projects.

The mandate of the Competition Authority is to conduct market enquiries. The Authority experiences challenges when seeking information from stakeholders who sometimes withhold vital information on grounds that it is not mandatory for them to provide the information. In order to enable the Authority to realise its mandate as envisaged by the law, I propose to amend the Competition Act to make it obligatory for stakeholders to provide information to the Authority when requested to do so. The Competition Authority further experiences challenges in imposing financial penalties after a company engages in restrictive trade practices. The Authority uses a 10 per cent maximum of the gross annual turnover based on international best practices in calculation of penalties. In order to create certainty in determination of penalty, I propose to amend the Competition Act to specify the financial penalty to be a maximum of 10 per cent of the gross annual turnover which is in line with the international best practices and also with regional competition agencies. In addition, the Authority receives various applications for mergers which have no effect on competition on restrictive trade practices. I propose to amend the Competition Act to set a threshold in order to exclude mergers whose effect has no great impact on competition on restrictive trade practices from the provisions of the Act. This will also reduce the administrative burden on the Authority and facilitate investment. Three years ago, we set ourselves a goal of implementing an Economic Transformation Agenda, one that was to strengthen our economy, deliver prosperity to Kenyans and propel Kenya to the middle income status level in line with the aspirations of the Vision 2030. This dream was realised when Kenya was classified as a lower-middle income country with a Gross National Income (GNI) per capita of US$1,245. Despite this notable progress, we are still not satisfied because we believe we can do more to uplift the livelihoods of all Kenyans and bring the country to upper middle income status. As I conclude, allow me to express my gratitude to my fellow Cabinet Secretaries and their Principal Secretaries for their support and contributions throughout this budget process. I am sincerely grateful to His Excellency the President and His Excellency the Deputy President for their unwavering leadership, guidance and support during the budget process and in particular during the budget retreat held in Naivasha in April 2016 which involved all Cabinet Secretaries and Principal Secretaries.

I am also grateful to the Speakers of the National Assembly and Senate and their respective Clerks for overseeing the approvals of submissions on the budget estimates for the Fiscal Year 2016/17, Members of the Liaison Committee, the Budget and Appropriations Committee of this House and the other Departmental Committees of Parliament for the comprehensive and constructive engagement in reviewing the budget estimates for the Fiscal Year 2016/17. I am sincerely grateful to the Leader of the Majority Party of the National Assembly, Hon Aden Duale, for his relentless support to get most of the legislative proposals on finance matters pass through the House. I also want to thank all Members of the National Assembly and Senate for their cooperation and support, management and staff of the National Treasury under the able The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor.

leadership of the Principal Secretary, Dr. Kamau Thugge, who have tirelessly worked long hours, including most weekends to ensure that this budget and supporting documents meet the legal deadlines.

I also want to thank the management and staff of the KRA and the CBK for their contributions, staff from the Attorney General’s Office, staff of the Parliamentary Budget Office for providing support on the budget process and our bilateral and multilateral development partners, as well as private foundations for their contribution to our development agenda through their technical and financial support. Finally, I thank all Kenyans from all walks of life for their contributions, proposals and suggestions received during the finalization of this budget. I thank you. God bless you; God bless Kenya .

Hon. (Ms.) Kajuju, you cannot be excited because of Kshs1 billion. Hon. Members, I wish to thank the Cabinet Secretary (CS) for making public pronouncement of the Budget highlights and revenue raising measures for the national Government for the 2016/2017 Financial Year. I also wish to confirm that in conformity with the provisions of Standing Order No. 24(2), the Cabinet Secretary (CS) has since submitted to my office the proposed Finance Bill 2016 and other legislative proposals necessary to actualise the revenue raising measures he has pronounced for the national Government for the financial year in question. Hon. Members, it is now my pleasure to invite all the Hon. Members, the CS for National Treasury, other CSs and all the other guests to a reception at the Parliament forecourt hereafter.

Hon. Members, the time being 5.52 p.m., and there being no other business, the House stands adjourned until Thursday, 9th June 2016, at 2.30 p.m.

The House rose at 5.52 p.m.

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