Economic outlook set to change under new governance structures

Kenyans are set to see a significant change in the economy as new governance structures come into force after the 2012 elections.

The devolution of governance will see a change in how taxes are collected and how revenue is shared by different counties.

Business analysts agree that the new structures are set to make the country’s economic governance more equitable and transparent.

The national government will be in charge of collecting income tax, value added tax, customs duty and excise duty.

County governments, on the other hand, will collect property rates, entertainment taxes and any other as authorised by Parliament.

The Auditor-General’s scope will be extended to counties, thus monitoring use of resources there.

Poorest parts of Kenya

On revenue allocation, through the Equalisation Fund, set at 15 per cent of the national revenue, there is expected equitable resource allocation to the poorest parts of the country.

According to Section 201 (b) of the Constitution, the public finance system will promote an equitable society and in particular, the burden of taxation will be shared fairly.

Revenue raised nationally will also be shared equitably among national and county governments.

The new Constitution takes away the power to distribute resources from the Executive, which experts say will de-politicise the presidency.

The 47 county governments to be established will be expected to have a larger share of control of resources available.

A county assembly may receive and approve plans for the management and exploitation of the county’s resources and the development and management of its infrastructure.

“With the introduction of devolution most of the functions conducted by the government are simply being transferred to the county governments, hence there is not much additional cost,” says Ms Njoki Ndung’u, who was a member of the Committee of Experts on the Constitutional Review process.

County governments will also have a role in procurement, which has in the past been done or mandated at the national level.

Procurement will be extended to the counties resulting in the localisation of business at the county level eliminating monopoly previously held by the national government.

“Once enacted, the new Constitution is expected to delegate a part of the governments’ public finance function to county governments.

“This will usher in transparency and accountability in public finance expenditure and spur development at the county level,” says Dr David Ndii, an economist and Public Finance expert who was a CoE adviser.

Dr Ndii says unlike in the previous constitution, the new one provides for more parliamentary control and oversight of public finances.

Traditionally, legislators have controlled how money is deposited and withdrawn from the Consolidated Fund only, through an Act of Parliament.

The budget process has also been improved giving the public more say in the drawing up of the national budget.

With better control of public finance via a pre-budget statement, parliamentary committees will be able to consult with the public.

Through the two-tier government system under the new Constitution, a new threshold for investment through counties is introduced.

Rising prices could sour taste of sweet potatoes

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The price of sweet potatoes has risen by about 21 per cent in the past three months, driven by high demand as Kenyans shift to healthier foods

The price of sweet potatoes has risen by about 21 per cent in the past three months, driven by high demand as Kenyans shift to healthier, natural food diets, according to Agriculture ministry figures.

Prices of the tuber have steadily increased to Sh2,785 in Nairobi and Sh958 in Mombasa per a 98kg bag from Sh2,310 and Sh725 respectively between September and end of November.

Refined foods

“The consumption of sweet potatoes has gained popularity in the recent past as consumers move away from the refined foods to traditional foods due to the promotion of the traditional foods and their high nutritional benefits,” said the Ministry of Agriculture in a report.

“As people become more health conscious, the trend in consumption of traditional foods including sweet potatoes is increasing” the report added.

The national average price of a 98kg bag of sweet potatoes mainly used as a breakfast snack was Sh2,085, the Ministry data showed.

Food and health experts say that as awareness on lifestyle diseases such as diabetes and hypertension especially increases, the popularity of traditional foods is expected to continue rising especially among the affluent.

The tuber has been finding its way to urban consumers as a breakfast delicacy due to its nutritional value as compared to refined bread and other foods such as mandazis (buns).

“The fundamental issue is that food inflation has been going up across the board over time and the cost of roots and tubers has been higher than that of other staples such as maize because they are not produced in bulk and are more labour intensive,” said James Nyoro, the managing director of global development group Rockefeller Foundation in Africa, and a food security expert.

“Their demand has been increasing especially with the higher class particularly because of increasing incidence of diabetes and other lifestyle diseases,” he said.

Mr Nyoro said the rise in demand for traditional foods is not as strong among the poor due to their relatively higher prices than comparable alternatives.

He said as incomes increase people move away from basic staples and spend more on other healthier foods.

According to the Ministry of Agriculture data, sweet potatoes are grown mainly in Nyanza, Western, Rift Valley and in some parts of Eastern, Central and Coast Provinces.

Total hectarage under this crop was about 61,000, producing 880,000 tonnes in 2008 with marginal changes in hectares from year to year.

“But there has been a steady increase in yields to due to improved farming practices” notes the Ministry.