Thursday, 14 June 2012

Budget2012: - Is East Africa Spending where it matters?

This afternoon, finance ministers from across the East African region – Kenya, Uganda, Tanzania and Rwanda simultaneously tabled budget estimates for the fiscal year 2012/2013 to their respective legislative organs. As per usual, it has been almost routine that around this time of the year as citizens anticipate these budget pronouncements: retailers/traders horde their stock pending tax decisions that could affect their pricing; citizens look forward to price reductions, revellers hold their breath for cuts on booze etc ... Arguably for the ordinary citizen, that’s almost as far as it has always gone. What remains is always but the mundane phase of adapting to the system with the new fiscal indications and their implications on everyday life. Otherwise, the rest has always been largely dominated by government - the bits about how the budget is actualised into expenditure and further to tangible developmental returns to citizen from whom the revenue basket was obtained.

Citizens across the region received their budgets with mixed reactions: Tanzanians worried about the big proportion of their budget consumed by recurrent expenditure, escalating costs of living, inflation and taxation. Kenyans irked by an outrageous Ksh 179 billion budget deficit apparently to be financed by borrowing and ODA; Rwandese happy about the facts that for the first time about 54% of national budget financed not by aid but domestic resources notably tax. For me I took the liberty to highlight a few imperatives about the trends in allocation of public resources and their expenditure across East African states. By so doing I thought, this could stimulate your thinking around how these resources have been obtained in the past, what has been done with them and maybe to give some implicit indications on what things would look like in the future today’s pronouncements notwithstanding.  I selected three sectors I deemed most relevant owing to the challenges the region is facing and the collective aspirations of people around the region.

 I look at the Agriculture, Education and Health sectors basing my rationale on their relevance to poverty reduction and general individual well being. See how governments have been performing: make your own judgement based on what you hear from budget speeches year in year out and what you experience in a daily life.

Agriculture: There is the common notion across the region that 'Agriculture is the backbone of the economy' – employs over 90% of the workforce in Burundi, contributes approximately 51% of GDP in Kenya, a leading export facilitator and foreign exchange earner in Uganda, provides crucial raw materials for industrialisation in Tanzania and is the ultimate answer to food security. Logically, this can only mean then that the policy makers that yap about this put their money where their mouth is. However it does not look like that is the case. 

The agriculture sector has been largely underfunded despite its renowned relevance in dealing with both rural and urban poverty, creating employment and bolstering economic growth in many economies worldwide. On average none of the EAC countries (save for Rwanda lately) spends more than 5% of total government expenditure on the agriculture sector. I listened pensively to Kenya’s Finance minister eloquently indicating that agriculture will be one of the key sectors to drive economic growth in the country in FY 2012/2012 without allocating significant amounts of resources to the sector! What’s more astounding is how these leaders have gone to lengths of committing our countries to better allocation of resources for agriculture but resigned to business as usual. A case example is the Maputo Declaration on Agriculture and Food Security and the 10 percent national budget allocation to agriculture development. At an AU summit in 2003 African heads of state committed to increase public investment in agriculture by a minimum of 10 per cent of their national budgets and to raise agricultural productivity by at least 6 per cent. Well I leave the judgement to you; take a look at the status of affairs ten years down form Maputo:

Health: It is no news that East Africa is home to a large population of sick and poor people. Disease, hunger, and malnutrition is rife. There are about 76.37 million poor people in East Africa, nearly 53.86% of the regions entire population; and a huge constituency of people living with HIV/AIDS let alone other ailments. So again, logically you expect the honourable men and women on the policy making tables to be scratching their heads thinking of how to deal with this.  In fact they on record having committed themselves to increasing spending/allocations for the health sector. In 2001, African Heads of state congregated in Abuja Nigeria and ratified what came to be known as the Abuja Declaration: the communiqué – to increase spending on health care to at least 15% of total state spending. 

However in reality the average proportion of health expenditure between 2000 and 2010 has been well below the target 15% for all the EAC states. Furthermore, when measured against total population, per capita health sector spending in the EAC states has been below the 44 USD per individual World Heath Organization set standard for minimum resources required to strengthen healthcare systems and service provision in low income countries. Have a look at how folks in East Africa are doing; again the judgement is yours.

Education: When it comes to education, politicians in the region have amassed handsome points and political accolades in the international arena. Behold 'free primary education’. Give credit where its due, universal primary education has seen increased enrolment (90% in Burundi by 2010), enhanced adult literacy and furthered a very crucial social protection agenda for many children caught up in chronic poverty across the region. But then again, could this be done any better? is it enough? See how far East Africa has gone with regards to substantial investment in education:

Well I tried to follow up and see where funds get to then, having established that Education, Health and Agric are not the trendy things when it comes to the people who decide on what goes to what. Looks like we are spoiling ourselves with bloated bureaucracies, ‘fancy infrastructure’ and ‘top notch security’. May be its time to ask, where the infrastructure is, what the dividends of increased security spending are! 

A big thank you to E. Rukundo @lukusem and K. Rono @ronokaren for helping with the data and analyses


  1. Ken,i think u hit the nail on the head on the budget allocations especially the key economic sectors,its awesome the way you've comparatively put the facts.very well done.

  2. A good analysis Okwaroh. The Kenyan budget deficit is truly worrisome, added to the fact that the minister was not categorical on how the deficit will be raised, its disquieting. Most of us are thrown into speculation; domestic borrowing? ODA? both? Whichever choice will have negative consequences if you factor in the resulting inflation and donor conditionality. The budget gaps have to be shrinking the fraction allocated to non-recurrent expenditure has to wane if we are to head anywhere near middle income status.

    We form institutions and try to fund them directly while they can be funded under established ministries to avoid duplication. NACADA was allocated Ksh 1 Billion to enforce Mututho laws and for drug rehabilitation. When did the police stop enforcing laws? Shouldn't NACADA be funded under the ministry of public health?

    All in all we should still be hopeful, and pray that the landlords will not pass their tax obligations to the poor Kenyan tenants.

  3. Very comphrehensive you hit the nail on the head!! Kenya still has a long way to go!! Its all about the mindset; i long for the day our leaders will finally realise "the needs of the nation are greater than an individual."

  4. first, i salute u, okwaro, 4the critical n pinned-eye analysis on EA but allow me to think Kenya first. this is my take: education get lion's share, while agriculture, which feeds the school going pupils, is once again squeezed with petty budget. i asked y? i saw coffee farmers, once again, get their debts written off, while tea, sugarcane, etc owes government debts dating back to i dunno when and no one cares, and i asked y? on health; i think a good chunk of it should have been given to county level has become unattainable to directly involve central government into health of rural folks. lastly, i know some counties will rush into building houses and buying cars for county officials. and u know how costs are exaggerated. i propose they be given house and transport allowances wajipange- Maisha ni ngori bana!
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  6. Write, write on brother. Very informative!

  7. really well researched ken. thanks - i feel less out of touch when it comes to my second "home" when i read your stuff...