Failure to specify funding for Jubilee’s Big Four plan a fundamental omission

President Uhuru Kenyatta with his Deputy William Ruto. [Photo: Courtesy]

Jubilee’s 2018 Budget Policy makes for interesting reading. The underlying theme of the policy is the “Big Four Plan.”  The Big Four Plan aims at creating jobs, achieving food security, providing free health coverage for all Kenyans and the construction of five hundred thousand affordable new houses for Kenyans by 2022. Like every government policy, the Big Four Plan looks good on paper. However, the question we must all ask of it and of the government is whether the plan is achievable or will it be another big flop.

National Treasury projects that revenue collection for the 2018/2019 financial year will be 18 per cent of GDP. The financing of the budged from external and internal debt will be more than 50 per cent of GDP. By and large, the budget for the 2018/2019 financial year will be financed by debt. 

The budget policy does not earmark what part of the budgeted expenditure will be financed by revenue collections, what part will be handled by domestic debt, and what part will be financed by external debt. This, in itself, is a fundamental lapse.

Incentives

The success or failure of a project cannot be tested by the delivery of the project. It can only be tested by the short and long term costs of delivery. Short and long term costs for government projects are pegged on the source of the finance.

The government, as part of the Big Four, plans to construct 500,000 houses for Kenyans between 2018 and 2022. The total cost of this project, the source of the finance, and the cost of the finance is not specified. 

One of the incentives government is offering in this project is the waiver of part of corporate tax for companies who construct more than 100 houses.

The government can and should offer much more. Preference should be given to local companies for the construction.

Preference should be given to the use of local materials in the project. A 30 per cent quota of financing, construction and supply of materials should be set aside for the youth, women and those with disability. 

The government, if it is indeed serious in its promise and plan to create jobs and invest in economic growth, should receive financing for this project in cash or its equivalent, and give loans to Kenyans and Kenyan companies to carry out the construction and supply of materials and labor. 

The Chinese, Japanese, British and now Americans have for a century built our roads and railways at our cost and for their benefit.

They should also not build our houses. Not unless they are doing it for free. There is sufficient labour, skill and materials in Kenya for the construction. It will be a slap in the face of the government’s commitment to create jobs if there is a single foreigner involved in the construction, in whatever capacity.

Beggars may not be choosers; but beggars can only be called beggars if they don’t intend to pay back their benefactor. In this project, the government of Kenya should put Kenya and Kenyans first.

If the financing for the 500,000 houses will be repaid in full with interest, the government should not give any foreigner any job in the construction and supply of materials if there is a single Kenyan who can also deliver. The first 8,200 houses will be constructed in Mavoko, Machakos County. This pilot phase is likely to point to the method of delivery of the project, and the source of the finance. Kenyans should not wait for construction to begin to ask the estimated cost of putting up a single house.

                     

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I thank readers who pointed out an error in the opening paragraph of my column last week. IEBC is not responsible for collection of statistics in Kenya. It is the Kenya National Bureau of Standards (KEBS). 

 

- The writer is an Advocate of the High Court of Kenya. [email protected]