Today, the 18th of February, 2016 H.E. President Uhuru Kenyatta chaired the second Cabinet meeting in 2016 at State House, Nairobi.
1. Financial Year 2015/16 Supplementary Estimates No. 1
The major purpose of the meeting was to consider and approve the Financial Year 2015/2016 Supplementary Budget Estimates No. 1 which highlighted the fiscal performance for the first six months of the FY 2015/16; the challenges being encountered during budget implementation; and the proposed revisions to the FY 2015/16 Budget for submission to Parliament.
Cabinet noted that the economy grew by 5.8 percent in the third quarter of 2015, from 5.6 percent in the second quarter. This growth was supported by a robust expansion in agriculture, construction, financial, insurance services, wholesale and retail business, transport and storage.
It was noted that a weaker global economic environment due to sharp decline in commodity process has led to downward revision of global growth. According to the latest IMF forecasts, global growth is projected at 3.8 percent in 2016, with a gradual pickup in advanced economies and a slowdown in emerging market and developing economies.
In this respect, on a cumulative basis, revenue performance during the first six months of the financial year 2015/2016 fell short of the target by Kshs.67.7 billion. This underperformance comprised of Kshs.20.1 billion in Appropriations-in-Aid (A-I-A) and Kshs.47.6 billion in ordinary revenues.
Cabinet noted that the cumulative expenditure as at the end of December 2015 was below target by Kshs.228.1 billion. The bulk of the shortfall was in development expenditure which accounted for 61% of the shortfall (equivalent of Kshs.139.2 billion). Low absorption in externally funded projects accounted for Ksh.25.8 billion of the development expenditure shortfall. The scheduled transfer of development funds to MDAs and Counties for the last six months was delayed due to low realization of expected revenues. The shortfall on account of planned transfers to county governments was Kshs.50.5 billion.
The overall fiscal deficit of the first six months of the current financial year was Kshs.184.7 billion against a target of Kshs.319.2 billion. This deficit was financed by net domestic financing of Kshs.137.5 billion. Borrowing through Government securities was below target by 80.3 billion by the end of December, 2015.
2. Cabinet also made several other key decisions aimed at growing the country’s economy. Some of these decisions include: –
- The Kenya Space Policy and Strategy and the establishment of a Kenya Space Agency;
- The National Volunteerism Policy;
- The National Slum Upgrading and Prevention Policy;
It also approved: –
(i) The Development of Dongo Kundu Special Economic Zone in Mombasa as an Industrial and Commercial hub with potential for the creation of many jobs for the youth;
(ii) The upgrading of Technical and Vocational Colleges to National Polytechnics where eight institutions in all regions will be upgraded to National Polytechnics;
(iii) The Foreign Employment Administration and Labour Migration Management Framework to deal with the increasing importance of diaspora contribution to the economy but more importantly to address the plight of Kenya’s domestic workers in the Middle East;
The other important decision made by Cabinet in today’s meeting is the approval for the establishment of the African Minerals Development Centre in Nairobi. Kenya is positioning itself as a hub for mining in East and Central Africa. The hosting of this important Centre signals the Government resolve to be strategically placed in readiness for Africa’s mining take-off with a lot of potential benefits for Kenyans.
3. Kenya’s Successful Bid to Host the Sixth Tokyo International Conference on African Development (TICAD VI)
Cabinet also approved hosting of the 6th Summit of the Tokyo International Conference for Africa’s Development (TICAD VI) in Nairobi from 26th to 29thAugust, 2016.
The offer by Kenya to host TICAD VI was driven by the need to position Kenya as the premium multilateral and diplomatic hub and service location in Africa by attracting, facilitating and hosting successful international meetings, conferences and summits.
Cabinet noted that Kenya had become the transport hub for the region with excellent connectivity as well as a diplomatic hub with representatives from around the world in addition to being the only developing country to host one of the four global headquarters of the United Nations.
In addition, Cabinet noted that hosting the Summit will translate into a vote of confidence for “destination Kenya” and its state of national security. It will also confirm Kenya’s position as a continental aviation hub and hence a prime investment and business destination.
4. Offer by the Government to Host the 14th Session of the United Nations conference on Trade and Development (UNCTAD XIV)
Cabinet also approved hosting of the fourteenth (14th) Session of the United Nations Conference on Trade and Development (UNCTAD XIV) from the 17th to 22ndJuly, 2016 in Nairobi.
Cabinet noted that Kenya has continued to play an increasingly influential role as a diplomatic and commercial hub. Hosting the UNCTAD World Investment Forum (WIF) will therefore, bring together a broad coalition of investment stakeholders at the highest level who can influence the global investment landscape.
In addition, the conference will provide an opportunity to dialogue on the balance between trade-rule making process and investment regulations. It will also provide an opportunity to attract quality investment to key sectors of our economy. Under the Commodities forum, an attempt will be made to address issues that have bedevilled the commodities sector and hampered it from contributing on a maximum basis to our economic development agenda.
18th February, 2016