Outlook of Kenyan Budget: How SMEs gained from it
National Treasury cabinet secretary Ukur Yatani on Thursday ( 10th of May 2021 ), released the long awaited fiscal year 2021/22 budget despite facing lots of criticism from different experts and organisations. The budget which accumulated to 3.64 trillion had been distributed into several sectors to boost the economy from the hard hit pandemic. Among the wins were health sector, defence, transport, agriculture, education and the small and medium sized enterprises among the few.
The National budget has been presented by the treasury today in the parliament by the Treasury CS despite heavy punches received by some players in the economy.
The budget which went high from the previous FY’2020/21, 2.9 trillion has had so many interactions. From the executive to the lowest Mwanainchi who feel it has overstepped the bar required for the country. While the basic commodities are expected to shoot in prices exponentially because of the tax reviews, SMEs have a reason to smile because the budget has been of consideration to them.
The Government has allocated an additional Sh 2 billion for the Credit Guarantee Scheme. This will be on top of the Sh 10 billion that was allocated in the 2020/21 year. The main reason of this top up is to elevate the lowest income earner from the scars left by the pandemic. According to the CS, the pandemic had left the country into a pale state, as the lowest earners were left to feel the pinch of the economy so deep.
“I assure Kenyans that their concerns of the high cost of living and Covid-19 pandemic have been taken into consideration,” the CS said in his speech at Parliament on Thursday.
The treasury had projected an unbalanced economic growth, with the changing wave of the pandemic. As at last year many businesses were closed while some had to employ a cut-off salary/staff methods of survival. This accumulated to the 75% of the major problems that led to the shrinking of the economy in 2020.
In line with this, the CS proposed an allocation of Sh14.3 billion to facilitate the roll-out of Covid-19 vaccines to create herd immunity, in addition to the Sh7.6 billion surrendered in the 2020/21 budget.
The transport sector has been allocated a total of Sh 182.5 billion by the government. A sector that was badly hit in relation to cessation of movements within and outside of our borders. The SMEs has benefited here by reducing the laxity witnessed in ferrying products. According to the CS the agenda has been to enable the economy recover despite the hurdles experienced in financing it.
Apart from the SMEs some of the big fish who have managed to swim in the treasuries water are as broken down, the health sector, with an allocation of Ksh 121.1 billion to support some of its projects and programmes it is among the highest. This is to help roll up new supplies of the vaccine and create more chances of helping Kenyans in case the pandemic strikes more on them.
The education sector too has been allocated Ksh 2.2 billion to support it’s programmes making it among the biggest winners today. According to the estimates, Sh 62.2b has been set aside for the free day and secondary education programme, Sh4 billion for examination waiver for Class 8 and Form 4 students, and Sh 4.2 billion for primary and secondary infrastructure. Teachers Service Commission (TSC) has been allocated Sh 281.7 billion while Sh 15.8 billion will go to the Higher Education Loans Board (HELB). Sh 2.5 billion will go into the recruitment of teachers. While a further Sh 5.2 b has been set aside for TVET students, Sh 76.3 billion for universities and Sh 323 million for the National Research Fund.
An allocation of Ksh 60 billion has been set aside for Agriculture sector. This would include covering up for food shortages and securities of farmers and the other players in the sector. The coast region will benefit on this also as Ksh 1 billion has been set aside to boost exports in Lamu, by constructing a fish processing plant. Agriculture was given Sh 3 billion to subsidise farm inputs and Sh1.5 billion for flower and horticulture farmers to access international markets.
Economic stimulus programme that includes Kazi Mtaani has been given Ksh 23 billion. The financing of the Big Four Agenda -health, food security, affordable housing and manufacturing has been allocated Ksh 142.1 billion.
The Kenyan budget in general has affected very many and as the government foresee a huge recovery with laying down more loans to fund the economy, the curve still remains negative. This FY deviation has risen to a bad stage. Basic commodities such as petrol and Unga are expected to increase with more than a shilling as the tax reviews on falls on them.
The CS however assured that Kenya’s public debt, currently sitting at over Sh 7 trillion is sustainable. A thin life of defence in relation to the statistics showing how the Kenyan debt has been rising over the years. 2021/22 FY becomes the riskiest plan of Treasury CS as he plans to continue funding some of president’s Big 4 projects such as the LAPPSET among others.
SMEs are walking on thin ice, with an expected increase in goods and services which they highly depend on. The risk for entrepreneurs is the high cost of business which makes a majority of sales output noncompetitive in the global scale. Despite all these, Kenyans are still entrepreneurial in nature, determined to say the least and at most, very aggressive in their business acumen, which will be a strong advantage for the SME market.