Where will funds for Ruto projects come from?

Since taking over the reins of power, President William Ruto has launched several ambitious multi-billion shilling projects and programmes that have left economists questioning their sustainability in the face of the current economic situation.

With a reeling economy badly battered by the weakening shilling, external debts, weakened consumer spending and lower public investment and fiscal austerity, coupled with devastating impacts of Ukraine war and ugly face of Covid-19 pandemic, questions have emerged over the President’s mega multi-billion shilling projects that would cost the country trillions of shillings to implement.

Some economists estimate that President Ruto’s government would require in excess of Sh3 trillion to successfully implement all the mega projects that he has either embarked on or promised to implement within his first years in office.

“This is going to be a herculean task because the government does not have that money. In any case, they are inhibiting people from spending through high taxation and high prices of essential commodities,” Prof Anthony Osambo, a lecturer at the Jomo Kenyatta University of Agriculture and Technology and tax expert said.

Prof Osambo further argues the President’s promises reflect an over-ambitious man without a grand strategy. “Practically the country is broke. Some of the projects he is embarking on are very good, but not realistic. Where is the money to implement them?” quips the tax expert.

Top on the government’s shoulder is the $300 million debt payment next month towards the $2.0 billion Eurobond maturing in June 2024.

President Ruto has set his eyes on the implementation of the Universal Health Care, cultivation of 300,000 acres of Galana Kulalu; co-hosting of 2027 African Cup of Nations Cup (Afcon); implementation of Presidential Working Party on Education Reforms; affordable housing; Variable Scholarships and Loan Funding for universities; improvement of police and prisons officers’ welfare; Maisha card; construction of 1,000 new dams; planting 15 billion trees, employment of 58,000 teachers annually; and  recruitment of 40, 000 National Youth Service recruits each year.

Other projects include construction of Rironi-Mau Summit superhighway; provision of Wi-Fi in all towns; construction of airstrips in all the 47 counties and the Sh56 billion JKIA-Greenfield Terminal, among others. Besides these projects, the government is grappling with the Free Primary and Secondary School Education that it has been sending mixed signals over its sustainability.

For Afcon to be held here, the country needs billions of shillings to refurbish Nyayo National Stadium, Moi International Sports Centre Kasarani, Kipchoge Keino Stadium, Ulinzi Complex and development of Talanta Complex.

The country also needs well equipped media centres in all the stadia, upgrade road network in Nairobi and Eldoret, a well-coordinated security and modern equipment, merchandising spots and standard hospitals with experts and equipment.

“All these promises are a lack of clear thinking and grand strategy. They may have good intentions but lack the strategy on how to do it. Just as much as some of the projects such as housing are good, in practicality they are financial burdens to Kenyans,” says  History and International Relations Prof  Macharia Munene.

Sermon delivered

With Kenyans growing restless over the litany of unfulfilled promises from the Kenya Kwanza administration, the  President, perhaps in a bid to dissuade the public from falling into despair, has called for patience while his Kenya Kwanza administration works toward fulfilling its election pledges

Inspired by a sermon delivered by the presiding Bishop during a thanks giving service in Mombasa,  Ruto emphasised the virtue of patience in religious teachings. He acknowledged that leaders are eager to fulfill their pledges, but progress is affected when the necessary patience is lacking.

“I have come to understand that for me to fulfil the promises made to Kenyans, there needs to be patience. Sometimes I wonder why this promise has taken so long. However, I have learned that this is because I fail to understand that patience is crucial to fulfill any promise,” he said.

And in response to claims that the Head of State may be over-ambitious in his projects, National Assembly Finance Committee chair Kimani Kuria says one of the strategies they intend to use to achieve their target is by dropping all the non-core projects.

 “If you look at the recent supplementary budget, we have dropped non-core things like travel, workshops and certain allowances and instead re-directed the funds to projects on the Kenya Kwanza agenda,” Kimani told  People Daily.

The government has at the same time signalled a reduction in the disbursement of the much publicised financial inclusion fund popularly as Hustlers Fund –a cheap State-backed mobile loans.

This is after Treasury resized the fund’s budget by to Sh5 billion from the Sh10 billion Treasury Cabinet Secretary Prof  Njuguna Ndung’u initially set aside for  it in June for 2023/24.

In response to queries on where the government expects to get all the trillions of shillings to implement its ambitious projects, Treasury CS says they would rely on multilateral and bilateral support as well the Public Private Partnership (PPP) to provide the required support and momentum in targeted areas for investments, internet ions and policy shift.

“The Bottom up Economic Transformation Agenda- BETA is premised on building capacity and capability of the economy through projects and programmes that are innovatively financed to provide the greatest impact and momentum for economic recovery,” Ndungú said. In the previous Financial Year ended June, the Hustler Fund, one of President Ruto’s flagship campaign promises, was allocated Sh20 billion.

Last month, the Head of State assented to four health care Bills namely the Social Health Insurance Bill, Digital Health Bill, Facility Improvement Bill, and Primary Health Care Bill that are set to strengthen UHC in a significant step towards accessible and comprehensive healthcare for all.

Under the ambitious plan, the country seeks to build at least one health facility for every 5,000 citizens.

The Primary Health Care Act, 2023 provides for the construction of community health units across the country to facilitate delivery and access to primary health care services at the grassroots.

Contributions for Kenyans in the formal sector will be pegged at 2.75 per cent of monthly pay while those for the informal sector will be Sh500.

Mixed signals

National and county governments will pay contributions for needy Kenyans.

Contribution to the fund will be mandatory for all adults seeking government services. It is a move that has remained unpopular amongst Kenyans, who are increasingly accusing Ruto’s administration of continuously imposing heavy taxes at the height of deteriorating cost of living.

For many Kenyans, Ruto’s regime has been on a taxing spree and the new healthcare fund could just open another loophole for corruption just like it was witnessed in the existing Nhif  which was hit with reports of irregular tendering and allegations of fraud in payment of claims.

 The New university funding model that incorporates a diverse blend of grants, loans, and household contributions, closely aligning with the specific needs and circumstances of individual students is another government’s ambitious project.

There has been a public resistance against the new funding model amidst concerns the new system would lock out thousands of deserving students from public universities.

Initially, students were eligible for capitation funds from the Ministry of Education to pursue university courses. This has since been scrapped and replaced with bursaries and scholarships.

Human rights lobby groups under Elimu Bora Working Group have raised concerns that the new university funding model was “hurried and premature.”

“President’s hurried and premature roll-out transferred the responsibility of providing education from the State to  parents, many of whom are struggling to keep their children in school,” the group stated.

Affordable housing is yet another project that would require at least Sh700 billion to implement.

In August, Ruto launched the Open University of Kenya, touted to be game-changer in the higher learning programme.

According to Ruto, the Open University will herald a new dawn in the enhancement and access to affordable and quality education in the country as the government seeks to deliver a 100 per cent transition to university.