This archive report was first published on 5 November 2019.
Published on November 5, 2019, Kenyans have welcomed the acting National Treasury Cabinet Secretary Ukur Yatani's admission that the ministry has learned to cut its coat according to its cloth. This change of tact at the Treasury comes after years of revenue shortfalls, which led to increased borrowings to plug the budget deficit.
CS Yatani told a Parliamentary Budget and Appropriations Committee that Treasury had been setting targets too high, resulting in the refusal to acknowledge unmet collection targets. He assured the committee members that they would be making realistic budget estimates, a move that could encourage banks and other lenders to lend more money to the private sector, particularly Small and Medium-sized Enterprises (SMEs) which had been starved of credit.
There is hope that a cut in the 2019/20 financial year budget will allow more banks to increase their lending to industrial start-ups, funding expansions to grow the economy in a more sustainable manner. This could be a welcome departure from the lop-sided growth that has benefited only a tiny section of the economy, with the growth derived from much of the infrastructure development pursued over the past two decades benefiting importers of heavy machinery and other capital goods at the expense of ordinary Kenyans and owners of SMEs.
However, it remains to be seen whether the agricultural sector will attract higher banks' funding, a move that could further exacerbate the economic plight of Kenyans. The State's growing appetite for increased taxes to pay for the loans borrowed to fund infrastructure developments has already impoverished many Kenyans, who were expected to benefit from job opportunities and industries that supplied industrial materials to contractors.
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