- Says Kenya should be playing in the league of countries like South Africa, whose collections are about 25 per cent revenue to GDP ratio
- Budget chair says it was paradoxical that there is growth in nearly all sectors yet there is no collection to help meet the targets
Image: EZEKIEL AMING'A
In a candid reflection of Kenya's fiscal landscape, Kiharu MP and Budget Committee Chairman Ndindi Nyoro has sounded the alarm on the pressing challenge of revenue generation.
The hiccup threatens to derail Kenya Kwanza's ambitious plan, but Nyoro remains optimistic that President William Ruto's administration is on course to fulfil its promises to the Kenyan people.
“We have very good thoughts, but the biggest challenge we face as a country is revenue,” he asserted in an exclusive interview with the Star.
Nyoro's concerns highlight a broader economic issue: Kenya's current GDP stands at Sh18 trillion, yet the country only manages to collect 14 per cent of this in revenue.
“If we compare Kenya to other nations, we should be aiming for a revenue-to-GDP ratio akin to South Africa's 25 per cent,” he explained.
If Kenya could achieve similar revenue collection, it would yield Sh4.5 trillion, eliminating the need for borrowing and potentially creating a fiscal surplus.
The lawmaker pointed out that Kenya's economic structure complicates matters significantly.
A large portion of the economy operates informally, making tax collection a daunting task.
“Our economy is overly informal and as a result, tax administration is an expensive affair,” he said, underscoring the paradox of growth in different sectors without a corresponding increase in revenue.
Recent half-year reports from sectors such as banking, hospitality and agribusiness, show a rise in profitability.
Yet, Nyoro raised a critical question: why hasn’t this growth translated into increased tax revenue?
“We have to work on these areas to improve revenue collection,” he urged.
Nyoro believes that effective communication is vital for improving revenue collection efforts.
“We need to inform the public about the importance of collecting taxes to fund essential services such as education and infrastructure.”
This emphasis on transparency aims to foster public understanding and support for government revenue initiatives.
Despite the hurdles, Nyoro highlighted significant strides made by Ruto's administration.
The budget for the fiscal year allocates Sh1.6 trillion for recurrent expenditure, Sh641 billion for development and Sh410 billion for county governments.
However, projected revenue still falls short, with a gap of Sh767 billion that will need to be filled through borrowing.
He expressed cautious optimism as the deficit has decreased from over 7 per cent of GDP to approximately 4.4 per cent.
“This indicates that our austerity measures are working,” he stated.
The administration has made headway in delivering key projects, including the completion of stalled initiatives like the Mau Mau roads.
Nyoro revealed that 15 roads across the country have received funding for completion, with an additional Sh50 billion earmarked for road projects.
He also pointed to ongoing housing developments and improvements in urban infrastructure as evidence of the administration's commitment to progress.
In education, Kenya Kwanza has made headlines by hiring 56,000 teachers, with plans to confirm 46,000 into permanent positions this year.
“We will be hiring more teachers this financial year to ensure a smooth rollout of the Competency-Based Curriculum,” he noted.
Nyoro also outlined efforts put towards agriculture, highlighting that coffee farmers have received about Sh8 billion in aid.
Sugar reforms have positively impacted cane farmers by introducing payment systems based on sucrose levels rather than weight, thereby increasing their earnings.
On the issue of national debt, the MP asserted that the current situation is a culmination of mismanagement over the past decade.
“In 2013, our debt was Sh1 trillion; it ballooned to Sh10 trillion last year,” he explained.
He reassured Kenyans that every penny borrowed or collected would be used prudently, citing evidence of efficient fiscal management under the current administration.
Nyoro emphasised the importance of cutting costs and reforming parastatals to address the deficit, saying the government should prioritise ongoing projects.
“This year, 47 state corporations were not funded as they are being considered for winding up.”
He also addressed concerns about budget cuts, arguing that the government does not exist to prop up local businesses through unnecessary spending.
“We have cut budgets for non-essential items and focused on what truly matters,” he said, reinforcing a commitment to disciplined fiscal policy.
The Budget chair laid out a vision for the next one to two years, saying the goal is to eliminate stalled projects and focus on energy initiatives to further stimulate economic growth.
“I believe our economy will serve many more Kenyans,” he concluded, reflecting a determination to navigate the landscape with resilience and innovation.