Budget Statement and Economic Policy 2020/20201

Presented to Machakos County Assembly on 26th June, 2020 by H.E. Francis W. Maliti, Deputy Governor and County Executive Committee Member-Finance and Economic Planning

Theme: Building Resilience and Enhancing Sustainable Socio-Economic Development.

Introduction

Madam Speaker, It is indeed an honour for me to present to this honorable House the Highlights of the Budget for Financial Year 2020/2021. This is in fulfillment of the requirement of the Constitution of Kenya, PFM Act 2012 Section 132 and other County laws.

Madam Speaker, before I proceed, allow me to express my gratitude to the Chair and Members of the Budget and Appropriations Committee, and other sectoral Committees of the County Assembly for the constructive engagements and support in the review of the financial year 2020/21 Budget Estimates.

Madam Speaker, allow me also to express my appreciation to all our development partners for the support they have extended to this government over the years since the advent of devolution. Their support has gone a long way in addressing the development challenges facing our County.

Madam Speaker, this budget is prepared against the emergence of COVID-19 pandemic both on the global and on domestic front which dictated that more resources are channeled to fight the pandemic. I take this opportunity to thank this honourable house for heeding our clarion call and approving the second supplementary budget within a short time to ensure that resources are channeled towards fighting the pandemic as well as continuing to offer essential services to our populace.

Madam Speaker, we have time and again demonstrated that we can rally and overcome calamities, however insurmountable they may appear, under the leadership of His Excellency the Governor Dr. Alfred Mutua through the maendeleo chap chap philosophy. To put this in context I wish to quote the former British Prime Minister, Winston Churchill who said, “Never let a good crisis go to waste”. Churchill was using the phrase in a wartime context but what he meant was that a crisis can bring out the best in us as evidenced in our resilience and swift response to the Covid-19 pandemic.

In preparing this Budget Madam Speaker, I put the focus on sustainable socio-economic growth which will see improvements in agricultural production, expansion of infrastructure, better healthcare services, provision of clean and safe water besides development in our technical institutions hence the theme “Building Resilince and Enhancing Sustainable Socio-economic Development”. I am well aware Madam Speaker that financial resources alone are not enough to tackle the challenges we are facing. However, making good use of fiscal reserves to support growth and ease impact of hardships is certainly in line with our people’s expectations towards the Government under the current challenging environment.

Madam Speaker, this year’s theme has been aligned to the National 8-point Economic Stimulus Programme which include; Infrastructure, Improving Education Outcomes, Enhancing Liquidity to Businesses, Improving Health Outcomes, Agriculture and Food Security, Tourism Promotion, Improving Environment, Water and Sanitation Facilities and Manufacturing.

Madam Speaker, the combined efforts of my colleagues and the public officials in the various departments have once again produced technically sound reviews and assessments of the County as well as our upcoming plans and programmes. I wish also to acknowledge the presentations made to the County Treasury by various stakeholders in the County, including the business and labour organizations through public participation engagements. As usual, I have found their recommendations to be particularly relevant to our circumstances and their inputs are part of our budget agenda.

Outbreak of COVID-19 Pandemic

Madam Speaker, the global outbreak and the rapid spread of the Covid-19 Pandemic has led to contraction of the global economy with disastrous consequences. The Pandemic containment measures aimed at saving lives have disrupted the businesses environment, including international trade, leading to loss of livelihoods for millions of people globally.

Madam Speaker, Kenya and our County in particular has not been spared. Evidently, the pandemic and the swift containment measures have not only disrupted our ways of lives and livelihoods, but to a greater extent the businesses. These measures including enforcement of basic hygiene and social distancing were not only necessary but also timely as they have indeed stemmed a surge of infections and loss of lives.

Madam Speaker, cognizant of the magnitude of the effects of Covid -19 pandemic ,we have set up a robust prevention surveillance contact tracing, quarantine isolation and management program and equipped isolation wards and ICUs. This Madam Speaker, ensured that the County boldly managed to contain the pandemic and curtailed its spread though the fight is not yet over. We have also sensitized and trained 2,530 Community Health Volunteers to provide primary healthcare at the community level. Madam Speaker, this far allow me to express my deep appreciation to our frontline health professionals for the sacrifices they have made to fight this pandemic.

In addition, the County, through the department of education, has engaged five Vocational Training Centres for mass production of face masks. To date Madam Speaker, we have produced over 400,000 face masks which are being distributed to the locals free of charge. Further, in partnership with our developments partners and well- wishers we have distributed food stuffs, sanitizers and water tanks to our people. We express our sincere gratitude to our development partners and well-wishers for standing with us during this challenging time.

Madam Speaker, We have also set up 375 bed capacity isolation centres across the County with a target of 600 patients in the worst case scenario besides Machakos level 5 being one of the few public health facilities approved to undertake covid-19 testing.

Madam Speaker, In addition to the adverse effects of the Covid-19 pandemic, our economy also experienced two other shocks. First, the massive invasion of swarms of desert locusts that damaged crops. Secondly, the heavy rains that led to destruction of infrastructure especially the road network.

Madam Speaker, in addition to the recent shocks experienced by the economy, we are still confronted by other challenges which includes ; high incidences of poverty and unemployment, frequent droughts, low agricultural productivity due to overreliance of rain fed agriculture , higher investments in the health sector and inadequate revenue. Madam Speaker, these challenges, including the devastating effects of COVID-19 pandemic require bold actions and Fiscal discipline if we are to position our County on a sustainable economic growth trajectory.

Spending Priorities

Madam Speaker, allow me now to delve in to the highlights of the County’s spending priorities in the coming financial year FY 2020/2021.

Accessible and Quality Healthcare

Madam Speaker, as we strive to overcome the current challenges, we must recognize that ensuring a sustainable development requires a healthy population .To achieve this, the government will continue to strengthen the health system and provide essential medical supplies for the delivery of quality health care services as close to the people as possible. In this regard, Government will prioritize recruitment of frontline health personnel, infrastructure development and provision of medical supplies.

The County Government’s target is to have at least one community hospital in each electoral ward in order to reduce the distance wananchi travel to seek critical healthcare. Madam Speaker, 20 community hospitals have so far been completed, 56 level 2 health facilities gazzetted, while 6 level 3 health facilities have been upgraded to Level 4 Hospitals. This makes every sub-County to have a level 4 Hospital thus freeing Machakos Level 5 Hospital to handle referral cases.

In addition , the County has constructed and operationalized a Cancer center, in which cancer screening, diagnosis, treatment and research are ongoing and to date the facility has served over 5,000 clients from the local population . Further, through the Universal Health Care pilot programme, 86% of the population was recruited and offered free health services throughout the year.

To consolidate our achievements in the health sector Madam Speaker, I have allocated Kshs. 71million for community hospitals, Kshs. 71.2million for dispensaries, Kshs. 70million to improve reproductive maternal newborn child and adolescent health services including HIV prevention services and Kshs. 10million to cater for emergency services. A further Kshs. 383million has been allocated to Machakos level 5 Hospital.

Water and Environmental Conservation

Clean and safe drinking water complement efforts towards primary health care and productivity of labour. Adequate supply of water is also an essential enabler for increased agricultural production and manufacturing activities. The County intends to achieve this through the programme of drilling of boreholes and rehabilitation of the existing ones, construction of dams and desilting of the existing ones, treatment of water sources, construction of elevated water tanks, construction of gabions and water weirs besides reticulation of water from boreholes and dams to water points.
Madam Speaker, in the last one year , we have intensified our resolve to provide water to wananchi by sinking additional boreholes, powering and reticulating water to the water points . Madam Speaker, this is in keeping with the Bill of rights which states that water is a basic right. Whilst these projects are ongoing, we anticipate completing them and initiating new ones in the FY 2020/21. To this end therefore, I have allocated Kshs. 182.7million for drilling and equipping new boreholes and completing the ones started while Kshs.219million is for construction of dams and water pans.

Madam Speaker, the, incidences floods, droughts and famine are some of the indicators of climate change. Recognizing the importance of our environment for sustainable development, the Government remains fully committed to addressing the deterioration in the forest cover and quality of the urban environment.

Madam Speaker, the County will develop County climate change fund regulations and submit to this honourable house for approval. This will provide a regulatory framework for enhanced response to climate change, mechanism and measures to achieve carbon climate development. To this end madam speaker I have proposed an allocation of Kshs. 33 Million for mitigation of Climate Change under the Climate action Plan.

Education and Youth Development

Madam Speaker, education is what will forge the County of tomorrow. As the Country moves towards a knowledge based and innovation driven economy, the County needs to expand capacity, and have a greater diversity of courses especially in the fields of new technologies and innovation.

With regard to skills development Madam Speaker, support to technical education, vocational and entrepreneurship development, as a means of job and wealth creation, will remain a priority. Skills and entrepreneurship training to the out-of-school youth and young adults will be accelerated by allocation of more funds to the Vocational Training Centres.

The County is committed to construction of more ECDE classes in public primary school, distribution of learning materials construction and improvement of vocational training institutions. Madam Speaker, in the last one year, we have constructed several ECDE classes and employed 950 ECDE teachers (one of the highest in the Country).

Madam Speaker, we have also disbursed Kshs. 51million to the 40 Vocational Training Centres in the County, constructed three workshops at: Matuu, Kalukuni and Mbusyani VTCs and completed a dormitory at Kyemutheke VTC.

To build on these achievements Madam Speaker, I have proposed an allocation of Kshs. Kshs. 93.1million for the rehabilitation and construction of Vocational Training Centres and Kshs. 43million for the construction of ECDE classrooms.

The County remains fully committed to providing opportunities for physical activity, sport and recreation to all. To this end, the department of youth and sports has established five sports stadia whose constructions are ongoing and currently are at different levels of completion rate. I have therefore allocated Kshs 100million for the completion of these stadiums.

Food Security and Improved Nutrition

Madam Speaker, In order to enhance agricultural productivity among the smallholder/large scale farmers the County Government will continue to provide subsidized certified seeds and fertilizers, free tractor services, train farmers on post-harvest management and establish demo-farms. To reduce over reliance on rain fed agriculture, the Government will support irrigation schemes as well as enhance water harvesting through provision of water tanks.

To increase fish production, the County Government will strengthen extension services, establish fish feed pelletizers, provide quality pond liners and cold storage facilities, establish demo- farms and carry out surveillance of dams and rivers.

Madam Speaker, our free tractor services are ongoing across the County and since the inception of the program, more than 15,000 acres have been ploughed benefitting 32,210 farmers.

Madam Speaker, under the quarter acre program, 1,026 ponds have been excavated and seeds (Capsicum, Black nightshade and Kunde Mboga) targeting 2,000 farmers procured while 79 pond liners are ready for demonstration. A further 60 tons i.e. 36 tons beans and 24 tons green grams targeting 30, 000 beneficiaries.

The County has equally embarked on fruit tree promotion and to this end 10,000 seedlings each of avocado and macadamia have been distributed to 4,000 farmers. 106,015 animals have been vaccinated against various diseases in the County and 25,792 chicks distributed. A total of 7,753 farmers have benefited in the Kenya climate smart program through the provision of seeds, fertilizer, tarpaulins and agrochemicals.

To continue supporting these initiatives Madam Speaker, I have allocated, Kshs. 280million to Kenya Climate Smart program, Kshs. 29.6million for crop development, Kshs. 11million for livestock management and Kshs. 7.7million for veterinary services.

Infrastructure Improvement and Expansion

Madam Speaker, the importance of infrastructure can never be overstated. Good infrastructure has spurred economic growth by opening up market access to our farmers and easing movement of goods and services to the citizens of Machakos County. We take cognizance of the devastating effect that the heavy rains witnessed in the country had on our rural road network across the county. To consolidate the gains achieved in infrastructure, the County will continue to build on the existing and ongoing infrastructural development, road, energy and ICT. These will include; construction and maintenance of rural access and urban roads to increase connectivity, improve roads to bitumen standard, installation of CCTV cameras, enhance rural electrification, promotion of renewable energy use and installation of mulika mwizi.
So far Madam Speaker, we have lit 67 markets with 85 flood lights across the County. Going forward, 46 areas have been identified, surveyed and designs undertaken for rural electrification. This will be undertaken in partnership with Rural Electrification Authority to a tune of Kshs. 162.4million. I have therefore proposed a matching fund of Kshs. 40m.

Madam Speaker, the County has already awarded contracts for the upgrading of three major roads to bitumen standards namely: Kincar-Githunguri Police station Airways-Zebra Road; Kithini-Vota Road and Seveni-Kionyweni-Miu Road whose works are ongoing.

Similarly Madam Speaker, a total of 1,081.8km of access roads has been graded with a target of 1,700km in the FY2020/2021. This translates to an allocation of about Kshs. 1million per ward.

To sustain these developments Madam Speaker, I have proposed an allocation of Kshs. 1.2billion to the transport sector. Out of this, Kshs. 322.8million will go to rural access roads, Kshs. 100million to major roads Kshs. 10.9milliom for ICT infrastructure, and Kshs. 24million for energy conservation, renewable energy, street lighting and floodlights. A further Kshs. 239million has been provided through the Kenya Roads Board for routine maintenance of County roads.

Conducive Business and Investment Environment

A favorable business climate is essential for creating the conditions necessary to trigger and sustain economic diversification, job creation and inclusive growth. With the thrust of creating a conducive environment for attracting investment, the Government has continued to implement ease of doing business reforms, targeting various sectors including improvements in paying taxes, obtaining construction permits, starting a business, online building permit approvals, promotion of Machakos New City to attract investors, waiver of penalties and exemption of fees and charges to some traders like mama mboga, kinyozi etc.

Madam Speaker, we have distributed 500 outdoor parasols to our roadside traders besides completing Wamunyu cloth market, Ikalaasa market shed, Kayole market and Ngoleni market. We have also activated Mavivye , Muthetheni and Kyumbi markets, fenced Tala and Masii livestock markets and constructed perimeter wall at Athi River open-air market. These developments Madam Speaker are aimed at supporting businesses and improving their productivity and competitiveness.

The County has been able to hold SME Summit which provided entrepreneurs a platform for experience sharing, knowledge exchange and business linkages with commercial financiers and investment partners. Madam Speaker, a Business Community Meeting was also held to encourage increased collaboration between the County Government and the private sector as well as provide an avenue for constructive reforms in business environment in the County. Moving forward Madam Speaker, the County will endeavor to hold quarterly stakeholder engagement forums.
Madam Speaker, the County commits to upscale the developments highlighted above and to this end, I have proposed an allocation of Kshs. 164million for trade department. Out of this, Kshs. 10.5million has been allocated for market shades, Kshs. 15million for business incubation centres, Kshs, 5million for Small Micro Enterprise Centers, Kshs. 15million for industrial park and Kshs. 6.75million for investment promotion activities.

Tourism Promotion

Madam Speaker, the economic effects of tourism extends well beyond the core sectors. The trickledown effect is an instant economic gain for the local people through the spending of the tourists. The County offers an authentic cultural experience with its natural attraction sites and recreation centers like the Fourteen Falls, Ol-Donyo Sabuk National Park, The Magnetic Hill Anti-Gravity Site, The Masinga Dam, Iveti Forest Reserve, the Komarock shrine, Machakos People’s park, the 5,000 seater open amphitheater and the Lukenya Hills among others.

Going forward Madam Speaker , the County will boost this sector through marketing and partnering with development partners in ;

• Development of resort Cities.
• Construction of high end and budget hotel; Investment in Conference Facilities;
• Set up of Amusement Parks, Clubs, Casinos, theatres and;
• Film Development.

Madam Speaker, to develop our tourist attraction sites I have allocated Kshs. 30million.

Social Protection for Vulnerable Groups.

Madam Speaker, the County Government has a social responsibility to cushion vulnerable members of society. To this end, the County continues to subsidize the cost of education through provision of bursaries to our needy and bright students at various levels. In the last one year Madam Speaker, we have disbursed a total of Kshs. 89million benefiting 39, 770 students. Moving forward in the FY 2020/21 I have allocated Ksh. 60million to the bursary and Kshs. 10million to the Persons living with disability and the elderly.

Further in order to create employment for the youth most of the projects will be labour based.

Strengthening Governance for Sustainable Development

Madam Speaker, we recognize the importance of good governance for sustainable development. To this end we have put various strategies to address corruption and ensure there is value for money. This will ensure an efficient and effective public service that will provide an enabling environment for sustainable business growth and development. Strengthening Governance for Sustainable Development

Revenue Management and Enhancement

Madam Speaker, over the last three years the County has experienced an increase of our local revenue occasioned by various measures that have been put in place which include, Automation of Revenue, increased supervision, continuous mapping of all available revenue streams, sensitizing of all citizens on the benefits of paying County rents, rates and fees and giving incentives through interest waivers.

Despite the gains Madam Speaker, over the last few months, revenue collections shrunk considerably due to slowed economic activities attributed to COVID-19 Pandemic. Moving forward the County will implement the following measures ;

• Accelerate implementation of land titling and revaluation of properties and updating valuation rolls
• Adjusting fees and fines to cost reflective levels;
• Collapsing the pay bills to two only
• Continuous implementation of policies and legislations formulated on fees and charges;
• Continuous mapping of all available revenue streams;
• Strengthen internal controls and audit mechanisms to seal revenue leakages;
• Cascade targets to all receiver departments on behalf of Finance and Revenue Management department;

Budget Framework

Madam Speaker, a sound macroeconomic framework always lays the foundation for growth. Budgets are always complex, but the numbers seem to be simple. For the FY 2020/21, revenues are projected at Kshs. 11.02 billion which includes Kshs. 8.04billion equitable share, Kshs. 1.25 billion conditional grants and Kshs. 1.73 billion as own source revenue. Expenditures are estimated to be Kshs. 11.02 billion comprising of Kshs. 7.59billion as recurrent expenditure while development expenditure is estimated at Kshs. 3.43billion.

Conclusion

Madam Speaker, as I conclude, we continue to implement our Manifesto promises and we are ensuring that our citizens live and function in a generally conducive and safe environment. We have a five year mandate to plan, design, initiate and oversee the implementation of our programmes and policies and so far records show that we have been highly successful by any standards of assessment:
we are improving lives by rolling-out infrastructure; we are delivering quality healthcare; we are ensuring that our children are able to take their rightful places in the society in a responsible manner through early childhood and vocational training education opportunities; we are providing clean and safe water through dams and boreholes;
we are easing the cost of doing business in the County; and we are providing support to the most vulnerable groups in the society.

Madam Speaker, this is the right policy and the right direction for building a secure and prosperous future for our populace under conditions of economic stability, sustainability and growth dynamics.

Madam Speaker, allow me to express my gratitude to His Excellency, the Governor for his leadership in the management of the economic and financial policies of the County.

I would also like to thank the County Executive Committee members , Chief Officers and their Staff for contributions to the FY 2020/21 budget process
Finally, Madam Speaker, my appreciation to the citizen of Machakos County and other key Stakeholders who gave their insightful contributions, proposals and suggestions as we finalized this budget

Madam Speaker, I beg to move.

H.E. Eng. Francis Maliti

Machakos Deputy Governor and CEC
Member – Finance and Economic Planning