INSTITUTION OF ENGINEERS OF KENYA (IEK) POSITION ON THE NATIONAL TREASURY AND ECONOMIC PLANNING FINANCIAL YEAR 2024/25 BUDGET

Last Updated 3 months ago by Kenya Engineer

The Institution of Engineers of Kenya (IEK) recognizes the importance of the Public Finance Management (PFM) Act, 2012, in ensuring transparency and accountability in the government’s budgeting process. The dissemination of the FY 2024/25 budget to the public through the Mwananchi Guide is a commendable step towards inclusive governance. Herein, we provide our analysis and position on key aspects of the budget, focusing on infrastructure, economic transformation, environmental sustainability, and overall fiscal responsibility.

1. Infrastructure Development

Allocations and Impact

• Total Allocation: Ksh 656.6 billion
• Key Projects:
• Road Construction: Ksh 193.4 billion
• Rail, Sea, and Air Transport: Ksh 29.6 billion, Ksh 12.1 billion, and Ksh 3.1 billion respectively
• Reliable Energy Supply: Ksh 70.3 billion

IEK’s Position: We commend the significant allocation towards infrastructure, recognizing its critical role in driving economic growth and regional connectivity. The emphasis on completing ongoing projects and upgrading critical national and regional trunk roads is essential. The allocation for expanding railway and port infrastructure will enhance trade efficiency and stimulate economic activities across the country. The focus on reliable and affordable energy is crucial for industrialization and improving the quality of life.

Budgetary allocation to pending bills is below the recommended proposal. Engineers/Consultants play a crucial rule in these and as such are willing to ensure the actualization and realization of the government set objects under infrastructure development. The IEK advises the government to look into the issue of pending bills. Many engineering firms are facing collapse and many engineers have gone for months without salary because of the issue of pending bills. Further, the government faces huge claims that will be costly to taxpayers because of pending bills

2. Economic Transformation through BETA

Spending Priorities:

• Agricultural Transformation and Inclusive Growth: Ksh 54.6 billion
• MSME Support: Ksh 7 billion
• Housing and Settlement: Ksh 92.1 billion
• Digital Superhighway and Creative Economy: Ksh 16.3 billion

IEK’s Position: The Bottom-Up Economic Transformation Agenda (BETA) is well-aligned with sustainable development goals, particularly in agriculture, MSMEs, and housing. The allocation for agricultural transformation, including modern agricultural risk management and value chain development, will enhance food security and farmer income stability. Support for MSMEs through affordable credit and capacity building is a positive step towards inclusive economic growth. The substantial investment in housing will not only address the housing deficit but also create job opportunities. The Institution of Engineers of Kenya (IEK) has already established Task forces on BETA in different engineering disciplines with each task force providing strategic direction on how we can support the People of the Republic of Kenya from an Engineering Perspective in offering our expertise. Engineers are at the fore front in supporting the Government address Agricultural transformation and inclusive growth and all components of the BETA by offering services and expertise to achieve these set goals. IEK BETA Task forces are ready and willing to advise accordingly.

3. Environmental Protection and Climate Change Mitigation

Key Allocations:

• Environmental Protection, Water and Natural Resources: Ksh 110.1 billion
• Climate Change Adaptation and Mitigation: Emphasis on green energy, smart agriculture, and decarbonized manufacturing

IEK’s Position: We support the government’s commitment to climate change mitigation and adaptation. The focus on green energy and smart agriculture aligns with global environmental standards and sustainability practices. Investments in expanding access to dean water and managing natural resources are crucial for resilience against climate-related challenges. The National Tree Growing Programme is a noteworthy initiative towards achieving zero carbon by 2050.

4. Supporting Manufacturing sector for productivity and job creation

This is great for the Engineering fraternity; however, the budget statement factors in VAT imposed which we consider to be a challenge to the manufacturing sector. A taxation regime that encourages manufacturing should be embraced. We are aware of companies that have send home as many as 300 employees at a go due to the difficult business environment created by the tax regime. Businesses prefer to import steel from Chine and elsewhere because manufacturing steel in Kenya makes it 20 to 40 percent more expensive than the steel imported. IEK recommendation is also lowering of cost of power and ensuring its reliability as part of boosting manufacturing. IEK advises the government to ensure all infrastructure Projects are registered on the Portal for ease of actualization and ensuring compliance

5. Support to counties

Settlement of pending bills and boosting allocation to counties would ensure that counties have sufficient funds to run devolved functions. This would in turn ensure that our members offer services and are remunerated commensurately

6. Fiscal Responsibility and Public Expenditure

Fiscal Outlook:

• Total Expenditure and Net Lending: Ksh 3,992.0 billion
• Deficit: Ksh 597.0 billion (3.3% of GDP)
• Revenue and Financing: Total revenue Ksh 3,343.2 billion, with net foreign and domestic financing Ksh 333.8 billion and Ksh 263.2 billion respectively

IEK’s Position: We appreciate the government’s efforts to maintain a stable macroeconomic environment and manage public debt. The fiscal consolidation plan aimed at reducing the deficit from 5.7% to 3.1% of GDP by FY 2027/28 is prudent. However, it is crucial to balance fiscal consolidation with the need to sustain essential public services and investments in infrastructure and social programs. Efficient public expenditure tracking and minimizing non-priority expenditures are necessary to ensure fiscal discipline.

Conclusion

Engineers are ready to work together with both National and County Governments as well as other relevant professional expertise in matters to address and ensure that the budget items are executed as planned through provision of designs and professional advice.

We advise all the agencies involved in the infrastructure sector to publish their procurement plans as required by law. This will ensure that our members can scrutinize them and offer technical support in implementation of infrastructure programs all over the country. Our member are all over the country and they are willing to engage with the County Governments and the National Government to spearhead sustainable development through prudent use of our financial resources.

IEK appreciates that the Government has already put in place a Multi sectoral team to work on budgetary items. IEK calls upon the Government of Kenya to seek prompt advice to enhance disaster preparedness and response mechanisms, strengthen infrastructure resilience, promote sustainable land use practices, and raise awareness about the need for nuclear power and mitigation measures.

IEK views the issue of pending bills as being key to unlocking the country’s development potential while avoiding exorbitant claims from contractors.

Signed

Eng. Shammah Kiteme, CE, FIEK President

The Institution of Engineers of Kenya