On 13 June 2019 Kenya’s finance minister Henry Rotich announced his budget for the 2019/20 financial year, which starts on 1 July.
Rotich said the government plans to spend KSh2.8 trillion (about US$27.5 billion) over the year.
His speech included claims on Kenya’s economic growth, public service wages, government tenders and e-commerce readiness.
But were the claims on the money? We checked.
The actual growth figure will be confirmed in the next economic survey, to be released in the second quarter of 2020. But an Africa Check analysis of GDP growth data since 2013 shows revised figures have been very close to the provisional figure.
The survey estimates that the Kenyan economy grew 4.9% in 2017. The statistics office said this lower growth rate was due to “uncertainty associated with a prolonged electioneering period coupled with adverse effects of weather conditions”.
We therefore rate Rotich as correct. – Alphonce Shiundu
It’s not clear why Rotich chose eight years, although this puts back the clock to 2010, when Kenya formally proclaimed a new constitution. This was after political violence following a disputed election in 2007 crippled the economy.
Charting the country’s economic growth since then shows an upward trend.
The 2018 GDP growth of 6.3% is the highest in eight years, indeed in 10 years (In 2007 the economy grew by 7.1%.) Rotich’s claim is therefore accurate. – Alphonce Shiundu
The world’s economy grew an estimated 3.6% that year. (Note: The IMF estimated Kenya’s economic growth for 2018 at 6.0%.)
Only 21 countries achieved a growth rate of at least 6.3%.
But Kwame Owino, head of Kenya’s Institute of Economic Affairs, previously told Africa Check it would be better to compare Kenya’s growth to growth in countries with similar economic conditions, especially its regional peers. This is because more mature economies generally grow at a slower pace. There’s more actual growth in the US economy than in Kenya’s, for example, even though that country has a much lower GDP growth rate.
Kenya had the third fastest growing economy among the five members of the East African Community, according to the 2018 economic survey. It was behind Tanzania (6.6%) and Rwanda (8.6%), but ahead of Uganda (6.2%) and Burundi (0.1%). – Alphonce Shiundu
Kenya’s statistics office has details of wages paid in the public and private sectors. These “relate to basic salary and other allowances which are paid regularly to employees”.
|Kenya public sector wage bill 2013-2018|
|Year||Total (KSh bn)||Increase (KSh bn)|
Rising wages, Rotich said, left “fewer and fewer resources for development”. – Alphonce Shiundu
The numbers support Rotich’s claim.
|Kenya’s excise duty as share of GDP in 2003/04 and 2017/18|
|Financial year||Excise duty (KSh billion)||GDP (KSh billion)*||Excise duty as % of GDP|
*Nominal GDP at market prices
Kenya’s tax agency defines excise as “a tax levied on goods manufactured in Kenya or imported into the country”. The European Commission says “excise duties are indirect taxes on the sale or use of specific products”.
They’re “indirect” because they’re paid by producers or traders, who then pass the excise cost on to consumers, in the final price.
But the reality is now different. “Because they’ve put up the rate on a number of products, it has affected consumption,” Hira told Africa Check. This has led to lower collections.
Hira gave the example of Senator Keg, a beer aimed at the lower income market to prevent the consumption of illicit alcohol. After excise tax was added to it, sales tanked.
“Traditionally, excise has been a sin tax. Now it’s extended to so many products that it’s not working.”
A ‘structural problem’ with excise
“On the other hand, it is odd that excise may drop as a percentage of GDP when it is applied to goods and services that are not usually excisable, such as airtime, water, fruit juice, cash transfers and banking.”
Development economist Anzetse Were said the national treasury faces a structural problem. “From a macroeconomic perspective, the cabinet secretary is trying to get excise duty to generate the revenue it used to,” she told Africa Check.
“What he didn’t say is that tax revenue has been declining as a percentage of GDP for a while now.” – Vincent Nge’the
Rotich said data on contracts made by public entities were published monthly on a dedicated portal.
The Public Procurement Regulatory Authority oversees purchasing by Kenya’s government entities.
Rotich said the ranking was in the 2018 UN Conference on Trade and Development (Unctad) Business-to-Consumer E-commerce Index.
Unctad works to “support developing countries to access the benefits of a globalised economy more fairly and effectively”.
The index measures how prepared an economy is to support online shopping.
It is calculated from four indicators, all with the same weight: account ownership at a financial institutions or mobile money service provider, the share of individuals using the internet, reliability of postal services and the number of secure internet servers per 1,000 people.
But the country isn’t ranked 85th globally. Ghana occupies that spot, while Kenya is ranked 89th of 151 countries.
But Rotich was on the right footing when he said the 2018 index puts Kenya at seventh in Africa.– Alphonce Shiundu
Note: We are still working on this claim:
“…the pension budget has increased by over three-fold in the last 10 years from Ksh 25 billion in FY2008/09 to Ksh 86 billion in FY 2018/19.”
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