MPs alarmed over cost of devolved governance

By JAMES ANYANZWA

The Parliamentary committee on Finance, Planning and Trade has raised concerns over the devolved system of governance, saying the central Government does not have enough funds to finance its operations.

 Last week the Committee headed by Ainamoi MP Benjamin Langat committed to relook the constitution, which it says has created a very expensive system of governance. The committee noted that the government would be forced to either tax Kenyans more or   borrow more to fund the expanded government’s operations.

“Given the structures that we have established in this country we will be forced either to borrow or tax more. Kenyans will be taxed from the feet to the hair because it is a very expensive system,” said Langat.

 He said the structures in place require funding and for the country to do any serious development it has to either tax more or borrow, adding, “This constitution is costly.”

The 2013/2014 budget estimated at Sh1.64 trillion is expected to finance expanded government operations under the devolved system of government and at the same time help spur economic growth, which has been weighed down by both domestic and external shocks.

But growing government spending, burgeoning public wage bill and uncompetitiveness of the economy as an investment destination is creating discomfort among the public.

It is feared that growth in government’s recurrent expenditure would put considerable strain on the availability of resources dedicated to infrastructure development. Kenya is also currently hard pressed for funds to support key programmes pledged under the ruling coalition’s Jubilee manifesto.

The government’s second medium term plan seeks to, among other things, successfully implement development projects based on high levels of public private partnership and direct foreign investments and raise GDP to double digits.

The plan also seeks to continue implementation of the government’s development blueprint — Vision 2030 — and implementation of the nine-point Jubilee government action plan, which seeks to modernise agriculture, improve environment for doing business and create more jobs for the youth.

Public wage bill

The Jubilee government has promised to make credit affordable for the youth and women enterprises, enhance equitable resource distribution through devolution and invest in ICT.

Other promises include provision of sufficient water for irrigation and human use, strengthen medium-Small Enterprises and deepen economic and political relations with neighbouring countries.

However, over the past decade, Kenya’s public debt has increased significantly. 

Data from the National Treasury shows that the cost of serving these debts is now worrying after the amount of money the government spends yearly on repaying loans increased from Sh49.5 billion in June 2004 to Sh137.6 billion in June 2013.

 This is mainly as a result of an increase in the level of debt stock as well as repayment of previous rescheduled loans. 

Kenya’s total public debt has risen from Sh750 billion in June 2005 to Sh2 trillion by June 30, 2013. Domestic debt and external debts rose from Sh315.5 billion and Sh434.4 billion to Sh1.06 trillion and Sh852.6 billion in a similar period respectively.