Kenya's Finance Minister Presents Sh1.45 Trillion Shilling 2012/2013 Budget

Kenya Finance Minister Njeru Githae

Kenya's Finance Minister Njeru Githae today tabled the 1.45 trillion shilling 2012/2013 estimated Budget in Parliament. Revenue in the 2012/2013 financial year is expected to be KSh. 1.1808 trillion, creating an overall deficit of KSh. 279 billion shillings that will be financed through domestic and foreign borrowing.

In the budget speech, Githae predicted Kenya's GDP to grow by 5.2% in 2012, with the world economy projected to grow by 3.5%.

In the budget proposal, the government plans to set aside KSh 2.5 billion to recruit 3,500 additional police officers. The government also plans to hire an additional 10,000 teachers and 5,200 health workers (including 915 doctors) in the next financial year.

To improve revenue collection, Githae said that KRA will implement a comprehensive strategy to hold landlords and tenans accountable in collecting tax. “To safeguard the revenue base and ensure equity, the Kenya Revenue Authority will institute an effective excise tax management system to ensure that all products produced by licensed manufacturer are fully accounted for by type and quantity,” he said.

For the non-resident taxpayers who engage in the business of transmission of messages with a base in Kenya, he proposed "to amend the Income Tax Act to align their taxation with that of other non-resident taxpayers who engage in other businesses and whose base is in Kenya."

Today's budget being the last to be presented in Parliament under President Kibaki's administration, Hon Githae highlighted some key notable achievements by the Kibaki administration since 2003. Among these include:

• Economic recovery with real GDP growth rising from as low of 0.8 percent in 2002 to 7 percent in 2007. The domestic and external shocks of 2008 and 2009 adversely affected growth, but following return of peace in the country, our economy rebounded in 2010 and remained resilient in 2011 despite the challenges we went through. We now project a growth of 5.2 percent in 2012;
• Increased the number of children going to school under the free primary education programme from 5.9 million in 2003 to 10 million;
• Provided tuition fee for 2 million more in secondary schools and increased by threefold the number of students in university;
• Increased the number of people accessing ARV drugs to 350,000, up from just 10,000 in 2003; and distributed close to 20 million mosquito nets forestalling a malaria endemic;
• Tarmacked over 2,700 kilometres of roads, rehabilitated over 4,000 kilometres of road and connected to the electric grid 1.7 million Kenyans, up from 700,000 in 2002;
• Disbursed over Ksh.100 billion under CDF, which financed construction of over 1,000 health centres,10,000 classrooms, numerous roads, security posts as well as water and fish projects throughout the country;
• Introduced the Women and Youth Enterprise Funds, SME Fund and Agri-Business Fund to provide affordable credit accessible to women, youth and other small business enterprises and expand employment; and
• Revived and expanded irrigation projects throughout the ASAL areas to secure food
  security.

Here are some of the budget estimates for the 2012/2013 financial year:

• KSh. 268.1 bn for various infrastructure projects, including roads, energy, rail, and ports, with Ksh. 123.6 bn being for roads
• KSh. 233.1 bn for education, including free primary and secondary education and teachers salaries
• KSh. 148.0 bn for setting up devolved county governments
• KSh. 85.0 bn for healthcare (includes construction of hospitals, hiring of additional 5,200 health workers, and purchase of essential medical supplies)
• KSh. 83.5 bn for the National Security sector
• KSh. 79.9 bn for energy
• KSh. 65.9 bn for provincial administration and internal security
• Ksh. 65.9 bn to the Internal Security Ministry (out of this, KSh. 2.5 bn to recruit 3,500 additional police officers, and KSh. 300 million to set up the National Police Commission and the Independent Oversight Police Authority).
• KSh. 49.2 bn for environment, water and irrigation
• KSh. 53.3 bn for agriculture
• KSh. 17.5 bn for IEBC Independent Electoral and Boundaries Commission (IBEC)
• KSh. 17.0 bn for the National Assembly budget
• KSh. 15.4 bn for the Judiciary budget
• KSh. 14.9.bn for prison services
• KSh. 9.6 bn for social safety nets (includes KSh. 2 bn for famine relief and KSh. 342 million for persons with severe disabilities)
• KSh. 8.0 bn for Irrigation
• Ksh. 5.0 for Contingency Fund to cater for unforeseen expenditures
• KSh. 3.0 bn for Constitutional Reforms
• Ksh. 2.0 bn for Famine relief
• KSh. 1.8 bn for resettlement of IDPs
• Ksh. 1.6 bn for Strategic Grain Reserve (SGR)
• Ksh. 1.0 bn for Agribusiness Fund
• KSh. 550 million for the Kenya Youth Empowerment Project (KYEP)
• KSh. 440 million for the Women Enterprise Fund

Some of the proposed changes to taxes and import duty:

• Increasing import duty on galvanized wire from 0% to 10%.
• Removing duty on the importation of digital TV set op boxes, to mmet the 2015 deadline of migrating from analog to digital TV signals.
• Removing duty on all imported software.
• Reducing the rate of duty of food supplments from 10% to 0%.
• Minimum tax payable on imported second hand cloths to go up from Sh1.1 million to Sh1.9 million per 20 foot container has forced dealers to reduce imports significantly.

View/Download the entire 2012/2013 Budget Statement here.