The Kenyan government has increased spending on security following a series of terrorist attacks, which have left key economic sectors such as tourism on their knees, and foreign direct investment at its lowest.

In the 2015/2016 budget estimates, Cabinet Secretary Henry Rotich has increased allocation to the military and the police to $2.28 billion, up from $2 billion in the 2014/2015 fiscal year.

According to estimates tabled in parliament by the Leader of the Majority Aden Duale, the government is giving the police an additional $106.38 million and the defence and intelligence departments an extra $170.21 million.

About $68 million will be spent on the African Union Mission to Somalia (Amisom) and peacekeeping missions.

According to the estimates Kenya’s total spending for the 2015/2016 fiscal year rose to $21.27  billion up from $19.14 billion in 2014/2015.

An estimated $7.6 billion will be spent on development programmes (including parliament and judiciary)  while  $8.36 billion will go to ministerial  expenditure.

The overall fiscal balance, including grants, is projected at $6 billion while excluding grants it is $6.81 billion.

The fiscal deficit will be financed  through external borrowing of $3.62 billion, domestic loan repayments ($23.4 million), a National Bank of Kenya rights issue ($53.19 million) and domestic borrowing ($2.33 billion).

“The government will ensure that the level of domestic borrowing does not crowd out the private sector given the need to increase private investment to accelerate economic expansion,” said Mr Rotich.

He said the non-concessional external borrowing will be undertaken in a cautious manner and limited to bankable projects.

“Wage pressures and the inefficiencies in devolved services may limit continued funding for development expenditure,” said Rotich through the Budget Policy statement.
The budget has largely focused on security and development spending to shore up an economy weighed down by terrorism, the high cost of living, drought and a growing public sector wage bill.

Mr Rotich  increased  funding to energy, infrastructure and ICT sectors, surpassing education, which usually  receives a big share of the national  budget, in an attempt to reinvigorate  economic activities, spur  public spending and create employment for the youth.

The energy, infrastructure and ICT sectors account for 27.3 per cent of total sectoral funding in 2015/16 compared with 21.7 per cent in 2014/2015.

According to the estimates, the energy sector has been allocated $587.23 million for investment in power transmission, rural electrification, geothermal development, street lighting and last-mile connectivity.

The education sector will receive $1.42 billion, transport and logistics $2.95 billion, agriculture and food security $167 million, health $575.21 million, and tourism $63.82 million.

Kenya will be borrowing an estimated $2.26 billion from the domestic market compared with $1.29 billion in the 2014/2015 fiscal year.

Kenya’s s economy grew by 5.3  per cent in 2014 compared with 5.7 per cent in  2013 and is expected to expand by  6.9 per cent in 2015 and seven per cent over the medium term.

READ: Kenya growth shrinks to 5.3pc on tourism, agriculture slump

According to Mr Rotich, the national government’s borrowings will be used only for financing development expenditure while external financing will be largely on concessional terms.

“It is the government’s policy to procure external financing only for development projects, a practice which is in line with this principle,” he said.

“In addition, the sum of domestic borrowing and additional external financing is consistently less than the allocation to domestically financed development projects in line with the stated principle.”