NAIROBI, Kenya, Jun 11 – Finance Minister Uhuru Kenyatta has said that the country needs a fiscal stimulus to spur economic development in the coming year.
While giving his maiden speech for the 2009/10 budget, Mr Kenyatta said this was one of the measures that the government would employ to broaden economic activities, enhance the country’s competitiveness and ensure that economy returns to the recovery path.
“To this end, the government will allocate Sh140 billion to infrastructural spending in roads, rail, ports and energy,” the minister said.
Observing that the Port of Mombasa plays a strategic role not only in the country but in the region, Mr Kenyatta said the government would establish a Single Window Port System which would facilitate the clearance of cargo.
He said that they would also fast track the dredging of the port which will involve deepening and widening of the port channel to ensure that the facility is capable of handling bigger ships.
His speech, which he said was formulated on five key themes including stable macro economic environment, key infrastructural facility, equitable development, food security and strengthening of governance was meant to stimulate growth and reduce poverty in the country.
The Minister said that the government in conjunction with their Ugandan counterparts had agreed on the need to construct a standard rail railway line from Mombasa to Kampala beginning the last quarter of the 2009/10 financial year.
“This will not only help to reduce the cost of transportation but will also ensure our private sector competitiveness. The rail system will also help reduce the money spent on maintaining the northern corridor” he emphasised adding that he had allocated Sh3 billion towards this project.
Still on infrastructure, the Minister disclosed that the fuel levy would from now on be channelled through the Constituency Development Fund to ensure the timely utilisation of funds for rural roads development and that they are maintained at the grass root levels.
While acknowledging that the country was facing a myriad of internal and external challenges, Mr Kenyatta called on Kenyans to adopt a positive attitude which would go a long way in helping to address the challenges that are currently being felt in the country.
He added that an electronic system dubbed ‘e-promise’ would be implemented before the end of the year through which the pubic would be able to monitor the performance of various government projects.
To ensure that the country is food secure, the Minister set aside Sh3 billion for the rehabilitation of several irrigation schemes across the country. This, he explained, would help the government embark on a strategy that will see the country reduce its reliance on rain-fed agriculture and ensure that Kenyans never go hungry.
The program would also include the introduction of farming machines, use of hybrid seeds, efficient storage systems which would all go towards helping the country harvest one million bags of rice and maize by next year and ensure that Kenya becomes a net food exporter by 2012.
Horticulture exports and dairy farmers will benefit from the zero rating of refrigerated trucks and heat insulated tankers. ‘Boda-bodas’ and mobile phones sets will now be affordable after the minister zero-rated bicycles and hand sets. The prices of power generators are also expected to come down significantly.
Import duty on spare parts, second hand clothes locally known as ‘mitumba’ and jewellery had also been exempted. To make cosmetics and beauty, he proposed to reduce the excise duty from 10 percent to seven percent. All these measures, he said would ensure that the products become affordable for the average Kenyan.
There were also incentives for local companies wishing to list on the Nairobi Stock Exchange after Uhuru proposed to reduce the (listing fees) by 50 percent to 0.15 percent of their capital investments.
Mr Kenyatta said that his budget would have a Sh109 billion hole which would be filled through domestic borrowing. There is speculation that if the Retirement Benefits Authority (RBA) Act is amended, as the minister proposed then the government could be able to access the pension money to finance its projects.
In his speech, the Finance Minister said a review of the Act would see new pension investments be put in government securities and infrastructure bonds. This would ensure good returns to the investors and discouraged investments in dubious pyramid schemes.