Kenyan budget 2008-09

I just skimmed through Finance Minister Kenyatta’s budget speech and I must say that I am impressed. He is cutting taxes on a few essential commodities and promises to implement business and tax laws that will make Kenya more business-friendly. And his development proposals, if followed through, will help the average Kenyan a great deal.

The best part of the budget, to me, was the allocation of Shs. 30 million (per constituency) to create high performance high schools. Being a product of a national school I think that it is time all of Kenya’s constituencies had places like Mang’u and Alliance Girls. I am hoping that someone at the education ministry will also think of expanding the Kenyan public university system to accommodate the increasing number of high school graduates.

I was disappointed though by Mr. Kenyatta’s decision to reduce the import duty on imported second hand clothes. The import duty on mitumba should not have been reduced. We need to encourage the growth of a domestic textiles industry. The job gains if such an industry were to be allowed to flourish would far outweigh the job losses in Nairobi and other urban areas. Remember Mr. Kenyatta, the three pillars are textiles, agriculture and construction!

2 thoughts on “Kenyan budget 2008-09

  1. I find the budget peculiar.
    No details on how to create wealth, just more spending, i.e giving people borrowed cash through CDF money that is being spent on recurrent expenditures, bursaries and paying staff. A policy that drove south american countries broke in the 1990s, remember Argentina. Japan has been doing a similar fiscal policy since 1990s but the country has never recovered.

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  2. While Uhuru’s budget is well intentioned and seeks to help an average Kenyan, as you say, I think it fails to look into the future of the economy. What do I mean by that? Mr Uhuru gives a very ambitious budget but fails to tell us how he is going to prudently fund it. He elects to take us back to IMF and World Bank. Same same institutions we are trying so hard to run away from because of their negative influence in African economy (read Dambisa Moyo’s Dead Aid). He talks of borrowing from domestic financial institutions. What do we get from that? a crowding-out effect, escalating interests rate and reduced domestic investment. What is an economy without domestic investment? Mr Uhuru believes that the best way to stir Kenyan economy at the moment is to increase expenditure and money supply, especially borrowed money. But he fails to explain to us whether our financial institutions (read central bank) is in a stable and independent position to handle inflation and its effect that would result from an economy with overflowing borrowed money. My bottom line is that Uhuru’s budget is as unrealistic as asking ministers to drive in 1800cc toyota corollas. It is meant to make us happy, in the short-run.

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