Budget 2020/21: The highlights

Treasury Secretary Ukur Yatani presented his Sh2.7 trillion Budget for the year starting July 1, outlining the spending plans, including the taxation measures to finance the proposals.
Here are the highlights:

  1. ECONOMY: Government projects the economy to grow at a lower rate of 2.5 percent in 2020, down from the 5.4 percent growth recorded in 2019. 2021 growth forecast at 5.8 percent and 6.5 percent by 2024.
  2. BUDGET DEFICIT: The government has set a budget deficit of 7.5 percent of the GDP for the financial year 2020/21 following the impact of coronavirus, locust invasion and flooding. The targeted fiscal deficit for the year ending June 30 has been revised from 8.3 percent of the GDP to 6.3 percent.
  3. SMES: Treasury CS has directed ministries, departments and agencies to clear all pending bills failure to which funding will be withheld.
    To support the recovery of SMEs the State shall gazette the list of goods for local procurement to support the Buy Kenya Build Kenya Initiative.
  4. EDUCATION:The Government has waived examination fees for KCSE and KCPE candidates.
  5. TAXES: Treasury has imposed 1% minimum tax on revenues for all companies, targeting firms that repeatedly declare losses to run away from taxes.
     Tax cheats have been given three years to declare correct taxes to enjoy a waiver on penalties.
     Agriculture: Maize or corn seeds to be exempted from value added tax (VAT) to make them available to farmers.
     Raw materials needed for local manufacture of baby diapers to be imported duty-free as will material for assembly and manufacture of cell phones.
     Government introduces digital tax of 1.5 per cent on value of transaction.
     Ambulance services exempted from Value Added Tax.
  6. DIGITAL: Online transactions to now attract a 1.5 percent digital tax as govt goes after growing e-commerce in the country.

Budget Allocations per Sector

Construction: Sh5 billion for rehabilitation of access roads and bridges across the country.

 Youth: Sh10 billion set aside for the Kazi kwa Vijana programme.

 ICT: Sh300 million set aside to recruit 1,000 ICT interns to support digital learning in schools.

 Health Care: Sh111.7 billion allocated to the health sector. Out of this Sh50.3 billion is towards activities and programs to achieve universal health care in all counties.Sh1.2 billion set aside for the recruitment of health workers for a period of one year. Sh500 million to go to the supply of beds and beddings to hospitals.Sh25 million to support the establishment of 50 modern walk-through sanitizers in border points and main hospitals across the country.

 Tourism: To support the sector, the government has temporarily lifted the ban on holding meetings in private hotels.

 Local Industries: Sh18.2bn allocated to the support of local industries, Sh3bn for Ndongo Kundu Economic Zone

 SGR: Sh18.1 billion for SGR Phase Two development and Sh5 billion for Mombasa Port development.

 Education: Sh59.4 billion for free day secondary education and another Sh1.8 billion for school feeding programme. Sh94.9b to support university education.

 CDF: Constituency Development Funds gets Sh41.7 billion.

 NYS: National Youth Service gets Sh10.2 billion.

 Lands: Sh1.6 billion to support processing and registration of title deeds.

 County governments: Counties to receive Sh361.9 billion in 2020/21 budget.

 Parliament: Sh37.3 billion allocated to Parliament, to support oversight.

 Environment: Sh82.7 billion to support environment and water conservation; Sh10.9 billion setaside for conservation of forests and water towers.

 Ethics and Anti-Corruption Commission: EACC allocated Sh3.1 billion as does the Directorate of Public Prosecutions (DPP).

 Nairobi Metropolitan Service gets Sh26.4 billion and Unclaimed Assets Finance Authority gets Sh149 million.

 Konza technocity: Sh400 million for the ongoing construction of Konza phase 1b and Sh5.1 billion for Konza data center.

 Sports: Sh14 billion to sports and social development funds.

 Agriculture: Sh3 billion set aside to subsidise farm inputs and Sh1.5 billion for flower and horticulture farmers to access international markets. Sh52.8bn for nutritional and food security.

 Natural disaster: Sh1 billion to support flood control in the local areas; Treasury to finalise a policy on disaster management regulation fund.

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