Yatani keen to cull white elephants in 2021

 

The National Treasury will not clear for funding mega projects that do not  meet feasibility requirements, Cabinet Secretary  Ukur Yatani has said.

Yatani is counting on the Public Investment Management Unit at the National Treasury to lock out such projects.

The unit is responsible for ensuring that all capital projects are planned, appraised and evaluated before funds are finally committed in the budget.

In the next financial year starting July 1, Yatani has proposed a cut on development spending to Sh611 billion , from Sh678.5 billion in his Sh2.97 spending plan.

The  CS  last week called for public participation in the 'Draft 2021 Budget Policy Statement (BPS)', ahead of its submission to Cabinet for approval and subsequently submission to Parliament.

The exchequer has year-on-year noted low absorption of funds allocated to a number of major projects , where some either turn into white elephant projects or overshoot their completion time-lines.

The lower-than-projected spending on development expenditure poses a risk to the fiscal programme, going forward

National Treasury CS Ukur Yatani 

According to Treasury, the average deviation of total expenditure and net lending between financial year 2017/18 and 2020/21 was an under spending of Sh127.7 billion.

This shortfall was mainly due to lower absorption in development expenditures of Sh70billion.

“The lower-than-projected spending on development expenditure poses a risk to the fiscal programme, going forward,” Yatani said.

In order to prevent this risk from materialising and improve efficiency of public investments, the National Treasury froze initiation of new capital projects until the completion of ongoing ones.

This was on President Uhuru Kenyatta's orders, on July 20, 2018, when he issued a directive freezing all new government projects until those that were ongoing were completed.

The President issued the directive to all government accounting officers warning they would be held responsible if they sanctioned new projects without express authority from the National Treasury.

Projects exempt from the freeze are those directly aligned to the 'Big Four Agenda' but even then, there must be written authorisation from the National Treasury.

“Even if new projects are aligned to the Big Four, they cannot be started without express authority from CS or PS of the National Treasury,” Uhuru told government accounting officers at KICC.

They included Principal Secretaries, parastatal heads, vice chancellors of public universities and chairmen of state corporations.

The government has in recent times lost Sh72.5 billion in 545 stalled government projects valued at Sh365.9 billion.

Some of the projects are heavily inclined towards the Big Four — healthcare, food security, manufacturing and housing, with their stalling threatening Uhuru's legacy by end of 2022.

Most affected were irrigation projects where 193 had stalled in a Sh5.5 billion budget.

They included two mega dam projects-the Badassa dam(Marsabit) and  Umaa Dam(Kitui), valued at Sh6.4 billion that had stalled since 2009.

Two key airports and four airstrips among them Wajir Airport upgrade, Wagadud Airstrip, Voi Ikanga Airstrip and Nanyuki Airstrip, had stalled despite contractors pocketing more than Sh495.3 million.

44 key projects valued at Sh14.9 billion under the Transport, Infrastructure, Housing and urban Development Ministry were also incomplete despite contractors cashing in Sh10.1 billion.

Others were Sh43.02 billion worth of projects under the State Department for Crop Development, where contractors pocketed Sh6.02 billion and the National Treasury and Planning which had Sh11.2 billion worth of stalled projects.

Development of Sh43.8 billion worth of projects at the Sports Ministry had also  stalled  despite the contractors and initial works gobbling Sh3.8 billion.

 25 stalled projects at 13 universities in the country were also on the list with Sh2.7 billion pocketed in a development budget of Sh6.1 billion.

Yatani is keen to cut on wastage and manage the country's public debt which has hit Sh7.3 trillion, with heavy borrowing being pegged on development projects and bridging the budget deficit.

In the 2021/22 financial year, Treasury plans to borrow slightly above Sh1 trillion with Sh572.7 billion to be sourced locally, while foreign borrowing is projected at Sh427.5 billion.

Heavy spenders in the next financial year includes education which has a proposed budget of Sh510 billion up from Sh505 billion, energy, infrastructure and ICT (Sh401.3 billion from Sh362.7 billion) , national security (Sh170 billion from 154.3 billion) and health (Sh119.9 billion from Sh111.7 billion).