With an insensitive budget, we are widening economic inequality

Maina Kiai by Maina Kiai
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The Jubilee government has just unveiled a Sh3 trillion budget for 2018-2019. This is the biggest sign yet of burying our heads in the sand. 

It is a sign of the unbridled greed that thrives in the ruling class, especially since at least half of the budget--Sh1.5 trillion--will be lost in looting, or wasted in living large. The regime’s own estimates are that a third of our budget is stolen each year.

It is also a budget that expresses the contempt this regime holds for ordinary Kenyans. For them, we are just an ATM to be squeezed to the last drop. It has already accumulated more debt than any other, and includes even more debt! 

Loans are normally used for activities that can generate income. But what we see is borrowing of extraordinary amounts, followed by looting, and then a scramble to force payments one way or the other. The loan to construct the Standard Gauge Railway (SGR) is the pinnacle of this senseless borrowing.

The SGR saga is like going to the bank and borrowing enough money to build a KICC with 27 floors. But instead of constructing 27 floors, we put up a building with 8 floors—after borrowing enough for 27 floors--and swallow the rest. And we then expect it to pay for itself! If there ever was an example of abuse of office, corruption and wastage this is it! But instead of being investigated; instead of all officials concerned being sacked, impeached, jailed and made to pay back this loan, it is ordinary Kenyans left with the bill!

So all manner of tricks and ruses are hatched to ensure that we keep our eyes closed, as they revel in their impunity. First, they direct that all cargo from the port of Mombasa must be loaded onto the SGR, which is totally unconstitutional. It is like forcing all Kenyans to ride only on NYS buses so that the loans that bought the buses can be repaid! But even with that order, the SGR at the best of times can only take 20 per cent of the cargo that dock into the port.

Watch this space, soon we will start hearing of the mess, inefficiency and looting that this directive will inevitably generate. Compounding matters, now they are increasing the burden on ordinary Kenyans so as to pay off loans that benefited a few much more than the rest of us.

We are already one of the most unequal societies in the world, in terms of income inequality, but rather than deal with that by increasing taxes on the rich, and reducing the living large of public officials that occurs at our expense, we are increasing taxes on consumption that hurts the poor disproportionately. Value Added Tax (VAT) affects those with lower incomes much more than those with larger one, thereby increasing—rather than decreasing—the income inequality that is a time bomb.

We also have weird provisions, such as making huge allocations to buy vehicles for the Teachers Service Commission that could have been used to not only increase the meager wages of teachers but also hire more teachers. We increase the allocation to Parliament, with fewer roles and employees, all based in only one location, and decrease the allocation to the Judiciary which should be in every part of Kenya.    

Tax on mobile money

We are increasing the cost of sending mobile money which disadvantages those whose dependents live further from Nairobi than those within a radius of 100 miles who can physically get to their homes at least once a month.

We have allocated billions to the so called “Big Four” agenda which will be a hotbed for tenderpreneurs by design and default, as our recent history of big budget allocations has proven time and again.

Yet, there are better and more economically viable ways to increase livelihoods for the poor as economist David Ndii reminds us. It just takes a mind shift from big shiny white elephants to a focus on increasing the money available to the majority poor. This is not rocket science as Equity Bank has proven, but it requires a change in the software of those in power—which perhaps is impossible given that that would decrease what is available for looting.

There are solutions to the imminent crises, with the first being to cut the budget by the third that is lost annually, and to make it realistic. By increasing it, this regime is knowingly facilitating corruption even as the rhetoric of anti-corruption increases.

Second, we need to recover the looted money from Eurobond, SGR, NYS1 and 2, National Cereals and Produce Board, Kenya Pipeline and more. Attempts to circumvent the big looting scandals such as the SGR will have unintended--or are they intended?--consequences, such as weakening devolution in the Coast. Depriving the Coast of the economy around the port is nothing less than destroying devolution through back door. 

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