Since the onset of Covid-19 at the beginning of this year and it’s attendant socioeconomic disruptions, every unit of activity from family, corporates to governments must switch on their emergency buttons in order to cope and survive.

Critical re-alignment

While the timelines for priority setting, adjustments and allocations by the government essentially remains the two months of April and May, the earlier objectives and foundations of a stable macro-fiscal frameworks as spelt out in this year’s Budget Policy Statement are no longer valid. Further, the prior assumptions of steady growth, premised on revamped agricultural activities due to heavy rains, enhanced revenues from tourism and the manufacturing sectors can no longer hold; not this fiscal year, not in the medium term.

In short, governments’ well-thought-out plans and strategies have been shattered completely, and everybody must go back to the drawing board.

The National Treasury, and indeed all spending departments and agencies, must with utmost urgency revisit their policy prescriptions, strategies and priorities to align them with the unfolding reality that is externally enforced and calls for serious mitigation. The same is expected of County Governments. Lately, leaders of these devolved units have been reported aggressively making demands and seeking financial assistance from the National Government. They conveniently refuse to appreciate that they too must look inwards and make drastic adjustments to their budgets and planned activities. The situation calls for cooperation from all stakeholders and none should appear to want to benefit from this grim situation.

Looming economic crisis

The imminent dwindling of income levels to families and revenue sources from small and medium enterprises, corporations and Investments, is soon going to stretch the resilience of Kenyans and the Kenyan economy beyond their elastic limits.

We are in a period that calls for government to critically assess how citizens are changing, or likely to change their consumption patterns, and how they make choices of deploying their stretched resources to meet their immediate and future objectives.

The situation is further aggravated by the fact that none is able to predict how long it’s going to hold and how the government is going to manage it.

The Presidents’ proposed economic and legislative adjustments are highly commendable but not sufficient. Parliament must reawaken and stand up to its call of duty, by not only debating and approving them urgently but also making drastic proposals, in exercise of their budget-making function, to appropriate sufficient funds in the next financial year for revitalisation of the health sector. Though the health function is devolved and operationally under County Governments, all indications are that unless the national government acts decisively for the greater good of all Kenyans, the situation can easily slide into anarchy. This is the moment for the government to ensure one of its Big Four pillars, the Universal Health Care (UHC), gets a shot in the arm by taking it to a whole new level across the country. The recently concluded pilot program must have provided the foundations for rolling out the scheme in a long term, sustainable manner.

Needless to re-invent the wheel, the need for a targeted Economic Stimulus Program (ESP) is dire. This will act to supplement the short-term efforts and objectives of the National emergency and response committee set up recently with the task of mobilising resources. The underpinning aim of any ESP is to boost and catalyze an economy that is experiencing sluggish growth to save it from collapse. Citizens need to be maintained at a certain minimum level of well-being where no new taxes are added, while the government keeps on hold all new capital projects.

Learn from and with others

As the global economy is poised to slide into a new era thanks to Covid-19, the onus is on each individual nation to demonstrate aggressive and proactive leadership with a determination of advocating measures and safeguards that sets their citizens on a contingent recovery path towards a shared prosperity. We must as well remain very vigilant and observant on the measures likely to be taken by other nations, particularly those that we trade with and share common comparative advantages.

Hon. Elias P. Mbau (PhD)

Institute of Budget & Devolution Studies

Public Finance Expert

#thebudgetguru

PUBLICATIONS

Mbau, E P, Iraya, C. M., Mirie, M., & Njihia, J. M. (2020). An Empirical Study on the Moderating Effect of Public Governance on the Relationship Between Fiscal Decentralization and Performance of County Governments in Kenya. 9(2), 37–58. Retrieved from https://www.scienpress.com/journal_focus.asp?main_id=69&Sub_id=IV&Issue=1645247

Mbau, Elias Peter, Iraya, C., Mwangi, M., & Njihia, J. (2019). An Assessment of the Effect of Fiscal Decentralisation on Performance of County Governments in Kenya. 15(25), 109–129. https://doi.org/10.19044/esj.2019.v15n25p109