Hon. Members, pursuant to Standing Order No.225(2)(b), I wish to report to the House that I have received a Petition from Messers D.G. Njau and L.R. Ngure on behalf of several other Ex-Kenya Air Force officers who were dismissed in 1982. Hon. Members, the petitioners claim to have diligently served the nation through the Kenya Air Force until 1st August 1982 attempted coup, following which they were arrested for allegedly participating in the attempted coup. They further claim to have been imprisoned for periods spanning six months to several years and thereafter unlawfully and unconstitutionally dismissed from the Kenya Air Force without compensation, despite not having been involved in the attempted coup. Hon. Members, the petitioners state that they pursued justice through the High Court of Kenya and the courts granted them varying awards on different dates from 2012 onwards. The Petitioners aver that they obtained certificates of decrees, taxation and orders against the Government to be paid in 2017. In spite of the fact that the Principal Secretary for Defence swore an affidavit on oath averring that the Ministry had factored the decretal amounts in the 2017/2018 Budget to settle the compensation, the orders remain unheeded several years later. They are, therefore, worried that since most of their colleagues are senior citizens aged above 65 years and with no capacity to fend for themselves, any further delay in compensating them will worsen their deteriorating conditions of life. Hon. Members, the petitioners are therefore praying that the National Assembly allocates to the Ministry of Defence such funds necessary in the Financial Year 2021/2022for compensation and settlement of decretal debts and the interests accrued thereof to the Ex-Kenya Air Force officers who were dismissed in 1982. Hon. Members, having determined that the matters raised by the petitioners are well within the authority of this House, I order that pursuant to the provisions of Standing Order No.227, the Petition be committed to the Budget and Appropriations Committee. The Committee is required to consider the Petition and report its findings to the House and the petitioners in accordance with 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.

Standing Order No.227 (2). The Committee may also consider proposing necessary adjustments to the 2021/2022 Budget for the relevant Vote or Votes so as to accommodate the prayers of the petitioners should they find them capable of being accommodated. I thank you, Hon. Members. Hon. Members, in view of the business ahead, I will dispense with the requirement to allow Members to comment for 30 minutes on that Petition. So, the Petition will just stand committed to the Budget and Appropriations Committee. Let us proceed.

Leader of the Majority Party.

Hon. Speaker, I beg to lay the following Papers on the Table of the House: Reports of the Auditor-General and Financial Statements for the Kenya Veterinary Vaccines Production Institute for the year ended 30th June 2015, 2017 and 2018 and the certificates therein. Reports of the Auditor-General and Financial Statements in respect of the following institutions for the year ended 30th June 2020 and the certificates therein: (i) The State Department for Youth Affairs; (ii) The Public Service Commission; (iii)The State Department for Development of the Arid and Semi-Arid Lands

(ASALs); (iv) The National Government Constituencies Development Fund Board; (v) Development Revenue Statements from the National Treasury; (vi) Revenue Statements of the Government Investments and Public Enterprises

from the National Treasury; (vii) The East Africa Tourist Visa Fee Collection Account from the National

Treasury; (viii) The Government Clearing Agency Fund; (ix) The National Exchequer Account from the National Treasury; (x) Office of the Controller of Budget Mortgage Fund; (xi) Stores and Services Fund from the State Department for Public Works; (xii) Consolidated Fund Services – Pension and Gratuities from the National

Treasury; (xiii) Mechanical and Transport Fund from the National Youth Service; (xiv) The State Department for Public Works; and (xv) The County Governments Budget Implementation Review Report for the First

Nine Months of 2020/2021 Financial Year. Thank you, Hon. Speaker.

Next Order.

We will start with Questions. The first Question is by the Member for Kajiado North, Hon. Joseph Manje. 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.

Thank you, Hon. Speaker. My Question is to the Cabinet Secretary ICT, Innovation and Youth Affairs: (i) Could the Cabinet Secretary provide an update on the status of implementation of the Kenya National Addressing System under the Communications Authority which involves physical and electronic naming and numbering of buildings and streets? (ii) What urgent measures are the Ministry taking to ensure that institutionalisation of the National Addressing System is expedited? Thank you, Hon. Speaker.

The Question will be replied to before the Departmental Committee on Communication, Information and Innovation. Next Question is by the Member for Starehe, Hon. Charles Njagua.

Thank you, Hon. Speaker. I rise to ask Question No.182/2021 which is directed to the Cabinet Secretary for Interior and Coordination of National Government: (i) Could the Cabinet Secretary provide a status report on the investigations into an accident that occurred on 5th May 2021 near Pangani Girls High School, along Juja Road involving an ambulance registration number KCY 015S belonging to Mediheal Group of Hospitals which led to the death of Mr. Peter Oduor of National ID No. 21764388? (ii) Could the Cabinet Secretary undertake to ensure that the matter will be fully investigated with a view to ensuring justice for the victim and compensation for the life lost? Thank you, Hon. Speaker.

The Question will be replied to before the Departmental Committee on Administration. The last Question is by the Member for Saboti, Hon. Caleb Amisi. He indicated that he had given authority to Hon. Njagua to ask the Question on his behalf.

Thank you, Hon. Speaker. I rise on behalf of Hon. Caleb Amisi to ask Question No.183/2021 to the Cabinet Secretary for Defence: (i) Could the Cabinet Secretary elaborate the steps, if any, the Ministry is taking to ensure the successful rescue of Mr. Gerishon W. Wasike, a Member of the Kenya 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.

Defence Forces, KDF No. 64809, who was taken hostage in 2016 by the AlShabaab terror group in Somalia? (ii) Could the Cabinet Secretary explain the Government’s policy regarding rescue of Kenyan prisoners of war? Thank you, Hon. Speaker.

The Question will be replied to before the Departmental Committee on Defence and Foreign Relations. I can see the Member for Dagoretti South has an intervention. What is your intervention about?

Hon. Speaker, this is unintended. Thank you very much.

Member for Mwea, what is your intervention about?

Hon. Speaker, there could be a problem with the system because my gadget does not show anything. Thank you.

Any other intervention, whether intended or unintended? Member for Garissa Township, is your intervention intended or unintended?

Hon. Speaker, mine is intended. Two-and-a- half months ago, I sought a Statement from the Chairperson of the Departmental Committee on Energy on the matter of independent power producers and their role in electricity bills. I urge you to direct that on our sitting next Tuesday, the Committee should furnish the House with the information. I asked for a written statement, but the one I got had five fundamental questions. I am sure the Clerk has a copy of the Statement. Two of the questions, questions 4 and 5, the Committee asked that I should go to court and get a court order so that the Cabinet Secretary can furnish me with the names of the specific directors of the 13 companies that provide power to Kenya Power. Secondly, they did not provide the contractual obligations showing how much each company was paid per month. In line with Article 125 of the Constitution, the Powers and Privileges Act and Article 35 of the Constitution on access to information, once a Committee of this House demands for information from the Executive or any arm of Government, that information must be provided. This is a matter of national interest. When I sought that Statement, the same evening the Executive formed a taskforce in a very unusual manner. As a Member of Parliament, I am under obligation to provide to the people of Kenya the cost of power vis-à-vis what the private independent power producers charge Kenya Power. How much do they charge Kenya Power and how does that translate to the price ordinary citizens and investors pay? So, Hon. Speaker, I want you to use your powers to ask the Chair of the Departmental Committee on Energy to supply me with the information so that the House can interrogate the matter. It is now two months.

Where is the Chair of the Departmental Committee on Energy, Hon. Gikaria? Who deputises him? As you can see, both the Chairperson and the Vice-Chairperson are absent, not desiring to be present on this momentous day. How can the Chairperson be absent on a day like today? The House was sitting yesterday, so it cannot be said they are travelling from their villages.

The Member raising his hand up there, do you want to speak on behalf of the Chairperson or the Vice-Chair or on your own behalf? Is that Hon. Osman? 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.

Hon. Duale, your concerns are noted and the Leader of the Majority Party will convey the message. Let them bring the Statement on Tuesday. It has taken too long. I can see an intervention by the Member for Uriri, Hon. Nyamita.

Hon. Speaker, on 13th May 2021, I did ask a Question which was directed to the Departmental Committee on Defence and Foreign Relations. My Question was on compensation of one of the Ex-members of Kenya Defence Forces who had not been compensated for over 25 years. Hon. Speaker, you directed that the Question be addressed by the then Chair, Hon. Katoo ole Metito and he agreed to bring feedback to this House in two weeks’ time. We are heading towards the end of June, and we have not heard from them. They have not come back to this House to even seek additional time. I am seeking your intervention so that they can possibly fast-track this. The people on whose behalf I was petitioning are waiting.

You have heard the Petition which I have just read out. Perhaps, it could have been addressed in that Petition. It could also be covered because mine was specific and I gave out all the details. If they could address us, probably, they are responding to our Petition.

Hon. Katoo ole Metito, kindly, you have the Floor. The Question was not directed to the Chairman, but to the Cabinet Secretary.

Thank you, Hon. Speaker. Indeed, I was glad when you referred that Petition to the Budget and Appropriations Committee. We have a long list of Ex-Army officers who are having such claims as alluded to by Hon. Nyamita. All these cases end up being in court; from the Court Martial to the High Court. The High Court cleared and awarded damage charges. If you inquire from the Government and especially, the Ministry of Defence and the Attorney-General’s Office, there is a pending appeal. The Government had appealed before the judgement was made. There are many such cases, actually, a colossal sum of money was awarded to those Ex-army officers. The Budget and Appropriations Committee has powers in this House to appropriate. Hon. Nyamita’s case should be covered there. The Budget and Appropriations Committee will look into the judgment of the High Court and whether there is any live appeal in the Court of Appeal on the same matter then, they will make an informed decision. Thank you.

Hon. Nyamita, you can pursue the matter through the Budget and Appropriations Committee. I heard Hon. Nyamita say that since he raised the Question on 13th May 2021, it is now towards the end of June 2021. Certainly, 10th June cannot be towards the end. Nevertheless, your concern is noted. Hon. Nyamita, kindly you have the Floor.

Hon. Speaker, whereas I appreciate the feedback from the Chair of Defence and Foreign Relations, it would be just if the Committee, at least, looked into the matter instead of generalising and saying “I think.” The Chair cannot come and say he “thinks” when they are seized of that very Question that I asked. They need to find out the details, and if it requires the intervention of the Budget and Appropriations Committee where I also sit, he can say so. However, to just dismiss it without having the benefit of looking at it, we might be directing it to the wrong Committee. Mine was not exactly a Petition, as you had earlier said. I urge them to look into it and find out the facts. It is for them to tell us whether the respective department has launched an appeal instead of the Budget and Appropriations Committee doing so. We would not be in a position to go and check, that is the work of the Committee. They can then direct it to… 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.

Irrespective of the Question raised by Hon. Nyamita, can you bring back a specific response as to whether or not the State appealed on Thursday? If they did, then what is the status of appeal for the comfort of the Hon. Member?

Yes. Hon. Nyamita, who is my good friend, knows very well that this is a very serious Committee. We just came back the day before yesterday since 13th May. We resumed on 8th June 2021. We have not failed to bring it on time. However, I will go by your directive which is to bring the response next week on Thursday. I was not “thinking”. I am being told by my good friend here, the Member for Kiambu that I am not allowed to think. I am certain that the end game for all these Petitions on Ex-Army Officers is a consolidated Petition to be decided by the Budget and Appropriations Committee. Nevertheless, I will respond as directed by you, Hon. Speaker.

Hon. Osotsi, the Nominated Member, you have an intervention. What is it about?

On a point of order. Hon. Speaker, just like the case of my good friend Hon. Nyamita, I too asked a Question in April touching on Kenya Revenue Authority and revenue performance. The Question was directed to the Departmental Committee on Finance and National Planning. I am concerned because it has taken long for me to get an answer. I seek your intervention so that the Committee can invite KRA to come and respond to the issues that I had raised.

Chair of the Departmental Committee on Finance and National Planning, Hon. Wanga, kindly have the Floor.

Thank you, Hon. Speaker. I am surprised by Hon. Osotsi’s claim because I have been in constant communication with him. After inviting KRA to come and respond to his Question, he said that he was not going to be available and would not come and listen to the answers. He asked me to postpone it indefinitely until he is available. I am, therefore, surprised for him to come and mention this on the Floor, as if the Committee has not moved on the matter. He who comes into equity must come with clean hands. I invited KRA and they were ready to come. However, Hon. Osotsi approached me and said he was not available on the day and that I should postpone it until the day that he would be available. I am just waiting for him to come back and tell me when he is available. So, to come and raise the matter on the Floor, and make the Committee look incompetent is out of order. I request you, Hon. Speaker, to find him out of order. He had better just be quiet. Thank you, Hon. Speaker.

Hon. Osotsi, what has been stated by the Chair of the Departmental Committee on Finance and National Planning is stuff that should see you being thrown out of the Chamber. It is not fair that you can approach the Chair of the Committee to postpone your Question, and then come to complain here. Is that so? As she says then, your hands will look extremely dirty.

Hon. Speaker, Indeed, I have been in touch with the Chair of the Departmental Committee on Finance and National Planning. At some point, I said I was not going to be available because I was going to be out of town. However, I never said the Question should not be asked. I am more than willing for the Committee to still invite the respondent to respond to the Question. I never said that since I was not available at that particular time, I was not going to be available any other time. I am available at any other given time and I am keen to get answers to the same Question. 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.

Hon. Osotsi, the same way you approached the Chair to postpone is the same way you should have approached her to ask the Question. However, to come and raise it here is to cast aspersions on the Committee; that they are sitting on your Question. That is the point being made by Hon. Wanga. You approached her to postpone asking Question. In addition, she says she was waiting for you to now go back and tell her when it is you are available. Now you come here and start saying the Committee has not responded. Yes, actually you should apologise to the Committee. Hon. Osotsi, apologise to the Committee.

Hon. Speaker, it is very clear that I have been in touch with the Chair of the Committee on Finance and National Planning, whom I respect a lot. It is only that at one point I was not available and I am sorry for all that confusion. However, through your intervention, Hon. Speaker, I will still request that if the opportunity is available I would be very keen to get the responses to my Question.

In the same way you approached her, go and approach her to set a date for the Question to be answered. Hon. Members, let us proceed with business. You can now see Members think it is an occasion for... I do not know what is causing the excitement. You can see, you may have forgotten because of the long holiday. You see, Hon. Osotsi forgot he is the one who requested for the postponement of response to the Question.

Hon. Jaldesa, what is your intervention about?

Thank you, Hon. Speaker. I had earlier pressed an intervention before he apologised. I appreciate you.

Very well. Leader of Majority Party. Yes, he has apologised.

Hon. Speaker, pursuant to the provisions of Standing Order 44(2) (a) I rise to give Statement on behalf of the House Business Committee which met on Monday 7th June 2021 to prioritise the business for consideration. Hon. Speaker, I wish to officially welcome Members back from their mid-year recess held from 13th May 2021 to 7th June 2021. It allowed departmental committees to consider and discuss Budget Estimates for Financial Year 2021/2022 with relevant government ministries, state departments and other government institutions according to their respective mandates and make their recommendations through the Budget and Appropriations Committee. I am delighted that the Budget and Appropriations Committee has tabled its detailed report for consideration and adoption by this august House in accordance with Standing Orders. I wish to commend the committees for their diligence in finalising their work within the tight periods. I am also happy that committee chairs and members have begun making their contributions on the Floor of the House regarding the Budget Estimates. Hon. Speaker, today we welcome the Cabinet Secretary for the National Treasury and Planning as he makes public pronouncement on budget highlights and revenue raising measures for the Government for the fiscal year 2021/2022 in accordance with Standing Orders 25A(a) and 244C. 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.

Hon. Speaker during the Afternoon Sitting of Tuesday next week, we shall have the following Bills being read the First Time: 1. The Trustees (Perpetual Succession) (Amendment) Bill, National Assembly Bill No. 23 of 2021; 2. The Perpetuities and Accumulations (Amendment) Bill, (National Assembly Bill No. 24 of 2021); and, 3. The Certified Managers Bill, (National Assembly Bill No. 26 of 2021). Hon. Speaker, we shall also continue consideration of Budget Estimates for the Financial Year 2021/2022 for the third and final allotted day. Once this is concluded, the House shall continue to debate the Report of the Auditor-General on the Financial Statements of the National Government for the Financial Year 2017/2018. Hon. Members will recall that we amended the calendar of the House to hold evening sittings on Tuesdays and Wednesdays starting from next week until our next recess in July. As such, during the evening session of Tuesday 15th June, 2021, that is the session beginning from 7.00 p.m. to 9.30 p.m., we have scheduled the following business for consideration: 1. Committee of Supply, in accordance with the procedure provided in Standing Order No. 240(1); 2. The Second Reading of the WAQF Bill (National Assembly Bill No. 73 of 2019); and, 3. Report of the Departmental Committee on Finance and National Planning on Inspection Visits to Ascertain the Impact of Revenue Enhancement Initiatives on Revenue Collection. Hon. Speaker, due to the tightness of the business, I am informed that there are no Questions scheduled for response by Cabinet Secretaries next week. The House Business Committee will reconvene on Tuesday, 15th June, 2021 to schedule business for the rest of the week. I now wish to lay this Statement on the Table of the House. Thank you.

Very well, Next Order.

Next Order.

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.

Hon. Members, this is Communication No.27 of 2021 which deals with interruption of business for delivery of the highlights of Budget Estimates for the Financial Year 2021/2022. Hon. Members, as you are aware this week the House has been considering the Report of the Budget and Appropriations Committee on the Budget Estimates for the National Government, Parliament and the Judiciary for the Financial Year 2021/2022. This process will proceed to the Committee of Supply which will allocate funds to various votes and programmes under the three arms of the national Government. Ultimately, the process will come to an end upon the passage and enactment of the annual Appropriations Act which anchors the respective allocations in law and authorises the attendant withdraws from the Consolidated Fund. As part of this process, Section 40(1) of the Public Finance Management Act, 2012 as read together with Standing Order 244C require the Cabinet Secretary for the National Treasury and Planning to make a public pronouncement of the budget highlights and revenue raising measures of the National Government. For this reason, I will shortly be interrupting business of the House to allow the Cabinet Secretary of the National Treasury and Planning to discharge this obligation.

Hon. Members, before I do so, allow me to recognise the following Cabinet Secretaries who are seated on the Speaker's Row for this occasion: Hon. James Macharia EGH, Cabinet Secretary, Transport; Hon. (Prof.) Margaret Kobia EGH, Cabinet Secretary, Public Service Hon. (Ms.) Cecily Kariuki, Cabinet Secretary, Water and several other dignitaries.

They are welcome to the National Assembly. I also wish to recognise the Governor of the Central Bank of Kenya, Dr. Patrick Njoroge as well as representatives from the Judiciary led by Commissioner Evelyne Olwande who is accompanied by the Chief Registrar of the Judiciary, Ms. Anne Amadi and other judicial officers.

At least, they are seated in the Diplomatic boxes. Hon. Members, seated at the public servants’ benches are other distinguished guests from the National Treasury accompanying the Cabinet Secretary this afternoon. They include the Chief Administrative Secretary (National Treasury), Hon. Nelson Gaichuhie, the Chief Administrative Secretary (Planning), Mr. Eric Simiyu Wafukho and the Principal Secretary at the National Treasury, Dr. Julius Muia. 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.

Finally, may I also recognise our very own, Mrs. Phyllis Makau, the Director of the Parliamentary Budget Office, who is also seated at the public servants’ benches. Please join me, Hon. Members in welcoming them to the National Assembly this afternoon in our usual manner.

Hon. Members, paragraph (a) of Standing Order 25(A) provides thus: “The Speaker may designate a suitable place in the Chamber or at the bar of the House for - (a) The Cabinet Secretary responsible for finance to make a public pronouncement of the budget policy highlights and revenue raising measures for the national Government as contemplated under the Public Finance Management Act.” In furtherance of this provision, I have designated a suitable place to the right of the Speaker's seat and adjacent to the public servants’ benches to enable the Cabinet Secretary for the National Treasury and Planning discharge his obligation under Section 40 of the Public Finance Management Act, 2012 and Standing Order No.244C of the National Assembly Standing Orders. In this regard Hon. Members, it is now my pleasure to invite the Cabinet Secretary for the National Treasury and Planning, Hon. (Amb.) Ukur Yatani, to make a public pronouncement of the Budget Highlights and the Revenue Raising Measures for the National Government for the Financial Year 2021/2022 and the Medium Term, not later than 3.15 p.m. Cabinet Secretary, you are welcome. I thank you.

Hon. Speaker, it is once again a privilege for me to present to this Hon. House and to the people of Kenya highlights of the budget policy and the revenue raising measures for the Financial Year 2021/22. This Statement is in fulfillment of the requirements of Section 40 of the Public Finance Management Act and the Standing Order Number 241 of the National Assembly. I do this in performing my fiduciary duty to Kenyans. Before I proceed with the rest of the Statement, allow me to state that during the preparation of this Budget, I had very fruitful engagements with diverse stakeholders and received valuable feedback. The breadth of the stakeholders spanned from Government Ministries, departments and agencies, county governments, committees of this House, development partners, private sector and Kenyans from all walks of life. I extend my sincere gratitude to them for their views and useful suggestions which informed the priorities of this Budget. Hon. Speaker, pressing concerns raised by Kenyans during the consultation process revolved around the impact of COVID-19 and its containment measures. Kenyans were concerned about the high cost of COVID-19 treatment and availability of vaccines, in addition to food security, high cost of living and unemployment levels among the youth. In addition, Kenyans 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.

raised concerns about the general levels of poverty and inequality as well as the increased public debt. Hon. Speaker, at the outset, I wish to assure Kenyans that these concerns have been considered and I will be elaborating specific interventions later in this Statement. Hon. Speaker, as you recall, following the outbreak of the COVID-19 Pandemic in March last year, the Government instituted containment measures to curb the spread of the virus and save lives. To cushion Kenyans and businesses, the Government rolled out specific fiscal interventions including reduction of Pay As You Earn (PAYE) and corporate tax rates from 30 to 25 per cent, Value Added Tax (VAT) from 16 to 14 per cent and turnover tax from 3 to 1 per cent. The Government also offered 100 per cent tax relief to Kenyans earning below Kshs 24,000 per month. In addition, the Government enhanced cash transfer allocations to the vulnerable segment of our society including the emerging urban vulnerable. Hon. Speaker, the Government further implemented various monetary policy measures to enhance access to credit by the private sector. This included reduction of the Central Bank Rate from 8.25 to 7.0 per cent and lowering of the Cash Reserve Ratio from 5.25 to 4.25 per cent thereby injecting an additional Kshs 35.0 billion to the money market. Further, during this period, commercial banks were allowed flexibility with regard to the requirements for loan classification and provisioning. Hon. Speaker, to spur economic activities in the country, the Government implemented a comprehensive Economic Stimulus Programme, targeting activities in infrastructure, education, health, business liquidity, agriculture and food security, tourism, manufacturing, environment, water and sanitation. Hon. Speaker, in spite of these interventions, a lot remains to be done in order to deal with the challenges of unemployment among our youth as well as high poverty and income inequality levels that have been aggravated by the COVID-19 Pandemic. Our rallying call in this year’s Budget is therefore, job creation through continued and sustained economic growth. To strengthen this position, we shall implement a comprehensive economic recovery strategy that will expand economic activities and address these challenges. Hon. Speaker, the private sector remains key to employment creation and poverty reduction in the country. In order to expand the scope and pace of policy interventions and enhance access to credit by businesses, the Government established the Credit Guarantee Scheme to de-risk lending to the micro, small and medium enterprises. Hon. Speaker, the plight of the vulnerable in our society, particularly the emerging urban vulnerable, remains a key concern for our Government. In order to cushion this particular group, the Government will enhance cash transfer allocations and institute other targeted interventions in this Budget. Hon. Speaker, the COVID-19 Pandemic has triggered one of the worst health and economic crisis of our time. The pandemic overstretched our health systems, and in line with the advisory of the World Health Organization (WHO), the Government implemented appropriate interventions to save lives. The response has undoubtedly strengthened our health care system through provision of necessary medical supplies, installation of modern equipment, and deployment of more health personnel. In addition, in March 2021, the Government launched the National COVID-19 vaccination programme initially targeting the frontline workers and other highly vulnerable groups. As at end May, 2021, about one million persons had received the first COVID-19 vaccine dose. In order to facilitate further roll-out of vaccines to create herd immunity, we propose to 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.

allocate Kshs14.3billion in the FY 2021/22. This is in addition to the Ksh7.6 billion appropriated in the current Budget. Hon. Speaker, to enhance access to affordable medicine nd equipment for management of COVID-19 and other chronic diseases, I will later in this Statement be proposing tax relief measures on various pharmaceutical products and medical equipment. Hon. Speaker, the containment measures instituted by the Government to stem the spread of the virus and save lives, adversely affected economic activities and revenue performance. To stimulate economic activities and enhance Government’s ability to respond, we prioritised health and social expenditures and formulated an economic recovery strategy programme that targeted: First, enhancing our ability to respond to the COVID-19 Pandemic; second, reducing debt vulnerabilities through a revenue-driven fiscal consolidation with a view to stabilising the debt to GDP ratio over the medium term; third, implementing targeted policy, legal and institutional reforms while at the same time addressing vulnerabilities in the State-owned enterprises worsened by the COVID-19 Pandemic; and, fourth, strengthening the monetary policy framework and financial stability. Under this Programme, we plan to reduce the level of fiscal deficit from 8.7 per cent of GDP in the current Budget to 7.5 per cent of GDP in the Financial Year 2021/2022 and further to 3.6 per cent of GDP in the Financial Year 2024/2025. This will be a 5.1 per cent reduction in 10 fiscal deficits over the next four years, thereby slowing the annual growth of debt. Upon our request, this economic recovery programme is supported by multi-lateral and bilateral development partners with the International Monetary Fund providing financial resources amounting to US$2.34 billion over the next three years. Further, in response to the COVID-19 Pandemic, the G-20 countries extended support to developing countries by offering debt service suspension under the G-20 Debt Service Suspension Initiative Framework. The fiscal space created under this initiative is to increase social, health and economic spending in response to the COVID-19 crisis. Kenya has benefited from this initiative through expansion of health and social services. Additionally, Kenya welcomes the initiatives under the recent French-African Summit that agreed to, among others, increase funding through the IMF’s Special Drawing Rights to African States to support economic recovery, extension of the G-20 debt service suspension and facilitate manufacture of vaccines in Africa. Hon. Speaker, I will now highlight the economic policy context in which this Budget has been prepared. This year’s Budget has been prepared against a backdrop of projected global economic recovery. This is despite the emergence of COVID-19 variants occasioning re- introduction of containment measures to further stem the spread of the virus. The projected recovery reflects additional fiscal support in a few large economies and monetary easing that further uplifts the economic outlook. This outlook is further supported by the on-going vaccination, which is expected to pick up in the second half of 2021. In this regard, the global economy is projected to grow by 6.0 per cent in 2021, from a contraction of 3.3 per cent in 2020. Closer home, due to improved exports and commodity prices, economic growth in the Sub-Saharan Africa region is projected to expand by 3.4 per cent in 2021 from a contraction of 1.9 per cent in 2020. This growth will also be supported by a recovery in both private consumption and investment as economies re-open. Like the rest of the world, our economy was not spared from the adverse impact of the Pandemic. In addition, the Kenyan economy experienced two other shocks: The invasion of desert locusts that damaged crops; and the floods that caused loss of lives and livelihoods, displacement of people and destruction of infrastructure. Given the impact of these shocks, economic growth for 2020 declined to 0.6 per 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.

cent from 5.4 per cent in 2019. Economic growth is expected to rebound to 6.6 per cent in 2021. This recovery reflects the lower base of 2020 when most service sectors were adversely affected by the closure of the economy thus recording negative growths. The outlook in 2021 will be reinforced by the prevailing stable macro-economic environment and the ongoing implementation of the strategic priorities of the Government under the “Big Four” Agenda and Economic Recovery Strategy. Weather conditions are expected to be favourable thus supporting agricultural output. As a result, export of goods and services will expand as global demand normalises. Over the medium term, the economy is expected to remain resilient and grow at a rate above 6.1 per cent. This growth outlook is affirmed by recent surveys by the Monetary Policy Committee revealing a general optimism about economic growth prospects. In addition, the recent IMF Mission to Kenya noted that economic recovery is underway and estimates economic growth consistent with our projections. To support this growth outlook, we shall continue to maintain macro-economic stability. Inflation, which stood at 5.9 per cent in May 2021, is expected to remain within a target range of 5 per cent with a margin of 2.5 on either side, supported by prudent fiscal and monetary policies. Interest rates will be expected to remain low and stable thus supporting the growth of private sector credit. The balance of payments is also expected to be strong with the current account balance projected to remain at 5.2 per cent of GDP. Further, the rebound in horticulture and tea exports as well as increased inflows of remittances will support the build-up of adequate levels of official foreign exchange reserves thus creating buffers against short-term shocks in the foreign exchange market. Hon. Speaker, the aforementioned economic outlook may be affected by emerging domestic and external risks. The emergence of new COVID-19 variants could lead to reinstatement of containment measures disrupting, among others, trade and tourism. In addition, adverse weather conditions could lead to lower agricultural output. Further, increased public expenditure pressures, particularly wage demands could put a strain to the fiscal space. The Government will continue to monitor these developments and take appropriate policy interventions to safeguard the economy where the risks do materialise. Having outlined the economic policy context for this Budget, we have carefully reflected on a theme that would resonate with our strategies to protect lives and livelihoods during this period of COVID-19, cushion the vulnerable and support economic recovery for employment creation and poverty reduction. In this respect, we have framed the theme for this Budget as “Building Back Better: Strategy for Resilient and Sustainable Economic Recovery and Inclusive Growth.” The next section of my Statement will give highlights of the policy priorities of the Government and the strategy for economic recovery. I will later provide highlights of the fiscal framework underpinning this Budget, spending priorities and the proposed tax policy measures. The implementation of the “Big Four” Agenda remains a high priority and critical to economic recovery. In this regard, the Government will fast-track the implementation of programmes and projects under the “Big Four” Agenda to enhance food and nutrition security, achieve universal healthcare, provide affordable housing, and support the growth of the manufacturing sector for job creation. The Government will also undertake the following targeted strategic interventions to achieve a resilient and sustainable economic recovery: 1. Maintain macro-economic stability and enhance security to foster a secure and conducive business environment and security of Kenyans and their properties. 2. Scale up development of critical infrastructure in the country such as roads, rail, energy and water to reduce the cost of doing business and ease movement of people and goods as well as promote competitiveness. 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.

3. Enhance investment in key economic sectors for broad-based sustainable recovery by promoting agricultural transformation, growth in manufacturing, environmental conservation and water supply, stimulating tourism recovery, and sustainable land use and management. 4. Expand access to quality social services in health, education and appropriate social safety nets for the vulnerable population. 5. Support the youth, women and persons living with disabilities through Government- funded empowerment programmes that leverages on partnerships with private sector organisations. 6. Support the County Governments through transfer of sharable revenues to strengthen their systems and capacity in service delivery. 7. Implement various policies, legal and institutional reforms to enhance efficiency of public service delivery. Hon. Speaker, following the outbreak of the Pandemic, we implemented the Economic Stimulus Programme to support economic activities and mitigate the adverse impact of the pandemic on Kenyans and businesses. The achievements of the Programme include: 1. Creation of over 100,000 job opportunities for the youth under the “Kazi Mtaani” initiative and 5,500 community scouts in wildlife conservation areas across the 47 counties. 2. Improvement of education outcome through construction of additional classrooms in secondary schools, procurement of locally fabricated desks for both primary and secondary schools and recruitment of 4,000 and 8,000 primary and secondary school intern teachers, respectively; 3. Enhancement of healthcare system capacity by recruiting 5,000 diploma and certificate level healthcare workers for one year under the Universal Health Coverage; 4. Enhancement of liquidity to business through payment of VAT refunds of Kshs10 billion and clearance of pending bills of Kshs13.1 billion; 5. De-risking of lending to micro, Small and Medium Enterprises by providing Kshs3 billion to the Credit Guarantee Scheme as a seed capital; and, 6. Cushioning the vulnerable particularly, the emerging urban vulnerable, with an additional Kshs10 billion to the cash transfer programme. Hon. Speaker, building on the success of the aforementioned interventions, the Government is now set to implement an elaborate Economic Recovery Strategy that aims to reposition the economy on an inclusive and sustainable growth trajectory. This Strategy seeks to enhance resource mobilisation to ensure sustainable funding of our development programmes from diverse sources, including Public Private Partnership (PPP) and lease financing. The Strategy will also support the role of the private sector in the economy and further facilitate credit access by Micro, Small and Medium Enterprises through the Credit Guarantee Scheme. Under the Strategy, the Government will upscale investment in ICT and digital infrastructure in order to facilitate e- commerce and efficient delivery of public services. The Government shall also promote local production processes and domestic supply value chains and strengthen social-protection through targeted policy interventions and programmes. Undoubtedly, successful implementation of this Strategy will enable us realise the aspired economic growth, create employment and narrow income inequalities. I will later in this Statement, propose budget allocations to the Government priority areas. Besides the achievements under the Economic Stimulus Program, the on-going key 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.

strategic interventions of Government as well as sustained policy reforms over the years have greatly transformed the economy and improved the welfare of Kenyans. I will now highlight some of the key achievements realised from these investments and reforms: Hon. Speaker Sir, at the macro-economic level, our prudent fiscal, monetary and financial policies have resulted into: First, strong economic growth that averaged at 5.6 per cent between 2013 and 2019. However, the onset of the COVID-19 pandemic slowed growth in the year 2020. The GDP per capita increased by an impressive 80.4 percent from Kshs113,000 in 2013 to Kshs204,000 in 2019. New jobs created by both the formal and informal sector increased by 12 percent from 755,000 in 2013 to 846,000 in 2019. Second, inflation rate has remained within target range, averaging 6.1 per cent. Third, interest rates have declined while credit to the private sector increased. Lending rates declined from 17.3 per cent in 2013 to 12 per cent in 2020, while the Central Bank rate declined from 8.5 per cent in 2013 to 7 per cent in 2020. As a result, credit to the private sector increased from Kshs1.5 trillion in 2013 to Kshs2.8 trillion in 2020; Fourth, the current account deficit improved from 8.8 per cent of GDP in 2013 to 4.7 per cent of GDP in 2020, thus supporting the stability of the foreign exchange market; and, Fifth, revenue collection including Appropriations-in-Aid (A-in-A) doubled from Kshs900 billion 2013/2014 to an estimated Kshs1.8 trillion in the Financial Year 2020/2021. Hon. Speaker, our investment in the expansion of road networks, railways, seaports, airports and energy has enhanced domestic and regional connectivity, boosted rural productivity and reduced urban congestion. These investments include: One, the Standard Gauge Railway and the urban commuter rail in Nairobi; the ongoing rehabilitation of meter gauge railway line along various routes including Nairobi-Nanyuki and Nakuru-Kisumu-Butere. Two, the recently launched first berth in Lamu Port as a critical pillar of the LAPSSET corridor. Our focus is to make Lamu a free port for both domestic and trans-shipment purposes. In addition, the Government is establishing a disease free zone in Lamu to support export of live animals and processed meat; Three, the rehabilitation and subsequent use of Kisumu Port will enhance efficiency in regional trade; and, Four, expansion in energy generation and connectivity with over 7.5 million households connected to electricity today compared to 2.3 million households in 2013. Hon. Speaker, the Government has provided various incentives at our ports including exempting the fuel supplied to the shipping lines from import and excise duty, VAT as well as railway development levy and import declaration fees. To further attract more ships to our ports, particularly to the recently launched Lamu Port, the Government will review the arrangements on fuelling by vessels calling at the Kenya Ports with a view to allowing ship to ship refueling and establishment of fuel bunker facilities. In addition to the various reforms in the agricultural sector, we focused on the livestock sector by reviving the Kenya Meat Commission. We shall set up a meat processing plant in Lamu to provide ready market for livestock, increase income to farmers and enhance the meat value chain. We also focused on increasing fish production by refurbishing Liwatoni Fishing Complex and setting up a new fish processing plant in Lamu. This will promote exports and increase incomes for the local fishermen. 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.

Hon. Speaker, in order to improve access to land as a factor for development, we have stepped up investment in the sector and rolled out ambitious national program of land titling and digitisation of land records. Tea and coffee sub-sectors provide livelihoods to millions of Kenyans. Despite its contribution to foreign exchange earnings, the returns to farmers have been declining due to low productivity, high input costs, low levels of value addition and weak regulatory and institutional framework. Under the ongoing reforms in the coffee and tea sectors, I will be proposing further measures to enhance competitiveness of these sub-sectors. I will be proposing further measures to enhance competitiveness of these sub-sectors. With regard to manufacturing the Government has revived and transformed textile, leather and automobile industries, which have in turn created jobs for our youth. The full operationalisation of Special Economic Zones in Dongo Kundu, Naivasha and Kisumu will support local industrial activities and unlock additional employment opportunities. The Government over the years has supported local assembly of motor vehicles and motorcycles by providing various tax incentives. These include removal of excise duty on locally assembled motor vehicles, duty-free importation of completely knocked down kits and reduced corporate tax from 30 to 15 percent for the first five years of operation. I am pleased to note that the industry has responded positively to these interventions and to date, we have approved thirteen motor vehicle and seventeen motor cycle assemblers. These local assemblers have created employment opportunities while also saving the country substantial foreign exchange. Whereas, the assembly of commercial vehicles has registered tremendous growth, the passenger category of motor vehicles remains under-developed. This category is still dominated by imported used vehicles comprising over 70 per cent of passenger vehicles, which is largely attributed to the high cost of assembly. In this regard, the Government is working on a framework to support the assembly of affordable passenger vehicles. Further, the Government, in consultations with stakeholders, is in the final stages of instituting comprehensive policy and administrative reforms to fully entrench local assembly of motor vehicles and motor cycles. While we have made tremendous progress as a nation, we remain alive to structural constraints that impede the pace of economic development. Aware that a resilient and sustainable economic recovery is indeed predicated on timely implementation of appropriate policy, legal and institutional reforms, I propose the following interventions to improve the business environment, increase efficiency in public service delivery and strengthen accountability and transparency in public finance management. Hon. Speaker, on procurement, this House approved the Public Procurement and Asset Disposal Regulations, 2020, that came into effect in July 2020. With these regulations, it is now easier for procuring entities to meet the specified requirements of bilateral and multi-lateral agreements, technology and knowledge transfer, local content and employment quotas among others. For smooth implementation of the regulations, we have conducted capacity building in all the 47 counties. I, therefore, direct procuring entities to fully comply with these regulations. In order to ensure efficiency in the procurement process and facilitate access by micro, small and medium enterprises, the Government has reviewed the consolidation policy on procurement of Information Communication and Technology (ICT) equipment and related services. In this regard, procurement of ICT equipment and related services will be decentralised to various ministries, departments and agencies with effect from 1st July 2021. Hon. Speaker, last year, we began the process of automating public procurement through end-to-end electronic procurement system. So far, we have developed an implementation strategy that re-engineers all public procurement processes, including functional and technical 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.

requirements. In order to actualise this initiative, 31st December 2021 will be the final date for rolling out the electronic government procurement system and, therefore, discontinuation of the manual procurement processes. In this regard, the Government will realise savings as a result of greater efficiency, reduce operational costs and enhance transparency and accountability through increased bidding participation. To support our local contractors and undertake the construction of infrastructural projects, we have proposed changes to the contracting framework through the Public Procurement and Asset Disposal Bill, 2020. The Bill before this House proposes among others to allow award of contract to multiple bidders. This, indeed, will support local firms and accelerate delivery of services. Given the prevailing business environment which had adverse impact of COVID-19 Pandemic, there is an urgent need to evaluate the financial position and governance of key state corporations and institutions. It is in this respect that the Government is exploring targeted reforms to strengthen these institutions, including public universities. In the interim, the Government provided financial support to strategic institutions including Kenya Airways, Kenya Power and Lighting Company (KPLC), and Postal Corporation of Kenya, which were in dire need of cash to meet critical obligations. Hon. Speaker, we have developed a robust information management system to strengthen the statutory role of the National Treasury in financial and operational oversight as well as the financial risk analysis for state corporations. You may recall that the Government introduced cost sharing in public universities in the year 1991. At that time, Government funding to public universities per year was set at Kshs120,000 per student. Of this, the Government capitation per student was Kshs70,000 while the student contributed Kshs50,000 through loan funding from the Higher Education Loans Board (HELB), out of which Kshs16,000 catered for tuition fees. This is less than half of tuition fees paid currently by students in various colleges of Technical and Vocational Education Training (TVET) institutions. The ideal cost of training a student in the university has increased from Ksh120,000 to about Ksh200,000 per year. Therefore, the prevailing funding arrangement introduced in 1991 is unsustainable. Under the current arrangement, universities have not only experienced financial constraints, but have also been unable to continuously honour their statutory obligations. In order to ensure sustainability and self-reliance of public universities, the Ministry of Education is expected to engage stakeholders beginning July 2021 with a view to addressing the matter. Hon. Speaker, delays in payment of pending bills to businesses who provide services to both national Government and county governments has affected liquidity and operations of these entities. In a number of cases, this has led to closure of businesses and affected livelihoods of the suppliers. Though progress was made in settlement of these bills by the National Government, we still have challenges with the county governments that still owe various suppliers huge amounts. In this regard, I direct Government Ministries, Departments and Agencies and the county governments to clear all their pending bills by 30th June 2021. I urge this House to support our efforts towards enforcing compliance in payment of all verified pending bills by the county governments by backing our proposal under Article 225 of the Constitution of Kenya to temporarily stop transfers to county governments that persistently fail to comply with the directive to clear pending bills. Hon. Speaker, the financial sector has remained stable and continue to make significant contributions to the economic growth. Our commercial banks continue to expand their businesses to the neighbouring markets, including recent acquisitions in the Democratic Republic of Congo 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.

and the Republic of Uganda. The continued regional expansion will leverage on the trade and investment opportunities under the Africa Continental Free Trade Area. In 2020, the Kenyan banking sector continued on its transformation journey that commenced five years ago, where the key pillar of the journey has been the strengthening of banks’ business models, governance frameworks, and entrenching customer centricity in their operations. Hon. Speaker, at the onset of the COVID-19 Pandemic in March 2020, the banking sector moved quickly to mitigate the impact of the Pandemic on staff, customers and the public, and instituted emergency measures to support business continuity, use of digital channels to mitigate COVID-19 infection risk, enhanced liquidity to businesses as well as facilitated compliance with health and safety protocols. As a result, banks continued to provide uninterrupted banking services to customers mainly through digital channels. Hon. Speaker, over the last one year, more than 54 per cent of the bank loans, equivalent to Ksh1.7 trillion

Hon. Members, I wish to thank the Cabinet Secretary for the National Treasury and Planning, for having made his public pronouncement on the Budget highlights for the National Government for the Financial Year 2021/2022, and the Medium-Term and the Revenue Raising Measures. As you know, Hon. Members, today’s Budget Speech will not be accompanied by the usual parliamentary courtesies, given the limitations occasioned by the prevailing COVID-19 Pandemic and the attendant Ministry of Health guidelines regarding public meetings. In this regard, upon the adjournment of the House and exit of the Speakers’ procession from the chamber, all the guests are asked to depart the precincts of Parliament at their own pleasure. However, arrangements have been made for a modest press conference by the Cabinet Secretary for National Treasury and Planning at Parliament Gardens. Hon. Members, you may also take opportunity to address the media on matters pertaining the Budget in the usual manner at the Parliamentary Gardens.

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Hon. Members, the time being 5.05 p.m., the House stands adjourned until Tuesday, 15th June 2021, at 2.30p.m.

The House rose at 5.05 p.m.

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