Hustlers budget: How Ruto’s government spent Sh4bn on luxuries after poll win

Deputy President Rigathi Gachagua (left), President Dr William Ruto and Prime Cabinet Secretary nominee Musalia Mudavadi

Deputy President Rigathi Gachagua (left), President Dr William Ruto and Prime Cabinet Secretary Musalia Mudavadi at State House in Nairobi on September 27, 2022.

Photo credit: Evans Habil | Nation Media Group

The Kenya Kwanza administration splurged hundreds of millions of shillings while approving the spending of more than Sh4 billion on issues unrelated to development at the Office of the President, even as its leadership claimed to have found empty state coffers.

On November 23, 2022, upwards of Sh264 million was wired to Deputy President Rigathi Gachagua’s office, to “implement urgent planned activities” on the recurrent side.

The disbursement was part of the Sh1.59 billion that the National Treasury approved to be spent by the Deputy President’s office on September 21, a mini-budget document shows.

The Supplementary Budget one of 2022/23 shows that Treasury approved expenditures amounting to Sh127.5 billion by Ministries, Departments and Agencies (MDAs) between July and December 2022, out of which Sh66.4 billion has already been sent to respective state entities.

Since the election of President William Ruto, among spending items Treasury approved are Sh2.6 billion on State House affairs in November, Sh45 million for hospitality by the Cabinet on January 31 and Sh840 million for use by the Ministry of Foreign Affairs in September to facilitate temporary committee and other operating expenses, all recurrent.

President Ruto’s administration has also spent Sh10.2 billion to fund the Financial Inclusion Fund (Hustler Fund) out of the approved Sh12.2 billion, Sh3.79 billion on the fertiliser subsidy programme and part of Sh22.6 billion on fuel subsidy, which it scrapped, the Supplementary Budget one 2022/23 shows.

“Following the adjustments, the National Treasury has made to the votes and programmes, some programmes have exceeded the 10 per cent threshold. The National Treasury is, in this regard, requesting for special approval of the expenditure adjustments which are beyond the 10 per cent threshold in accordance with regulation 40(9) of the PFM [Public Finance Management] Regulations, 2015,” says Treasury Cabinet Secretary Njuguna Ndung’u.

The supplementary budget also shows that, in pursuit of austerity measures to cut total national government spending by about Sh13 billion, President Ruto’s administration plans to cut spending on development projects, but raise recurrent spending, including salaries, allowances, hospitality and travel.

Treasury has proposed to cut development spending by about 15 per cent from Sh715 billion to Sh609 billion, while raising spending on recurrent activities by 6.6 per cent, from Sh1.4 to Sh1.49 trillion.

This means that the government will reduce development spending by Sh106 billion but raise recurrent spending by Sh92.9 billion.

Among biggest casualties under President Ruto’s pursuit of austerity measures to cut spending are infrastructure, energy, health, housing and water sectors.

Treasury has proposed to cut infrastructure funding by Sh51.7 billion from the Sh221.3 billion that had been allocated by former President Uhuru Kenyatta’s government, attributing this to budget rationalisation.

The Ministry of Energy will also see its budget trimmed by Sh41.7 billion from the Sh95.67 billion originally set in the 2022/23 budget, while the Ministry of Health’s budget has been reduced from Sh122 billion to Sh113 billion.

President Ruto’s government, however, created a State Department for Public Health, which has been allocated Sh5.6 billion.

The National Intelligence Service (NIS), which enjoyed unbridled cash flows during the previous administrations, will also have to work on a lean budget after Treasury proposed a Sh10 billion reduction on its Sh46 billion budget as set in July 2022.

The Ministry of Water’s budget will come down from Sh83.9 billion to Sh59.7 billion, but President Ruto has created a State Department for Irrigation, with a Sh1.5 billion budget.

“The overall change in the national government ministerial budget (excluding Consolidated Fund services and county allocations) from the original approved ministerial budget is a decrease of Sh13.3 billion, which reflects a 0.6 per cent decrease. The decrease is largely on account of austerity measures to contain expenditures to remain within sustainable fiscal path that will also signal fiscal consolidation in the future,” Prof Ndung’u stated.

On the other hand, President Ruto created some state departments in line with his administration’s strategies, including the State Department for Micro, Small and Medium-sized Enterpises (MSMEs), Irrigation and Public Health.

A Sh645.8 million budget has been proposed for the MSME department, Sh1.5 billion for irrigation and Sh5.6 billion for Public Health.

The new government also proposes a Sh24 billion budget for the National Police Service (NPS), which now has its own independent budget, Sh1.6 billion for the State Department for Immigration and Sh7.2 billion for the Internal Security and National Administration, which previously didn’t have their own independent budgets.

Treasury also proposes to more than double State House’s allocation from Sh4.3 billion to Sh8.8 billion, raise Mr Gachagua’s office budget from Sh1.7 billion to Sh2.6 billion and fund Prime Cabinet Secretary Musalia Mudavadi’s office with Sh751.9 million.

The budget for Basic Education will also be increased from Sh110 billion to Sh128 billion while the Ministry of Defence’s budget will rise by about Sh7 billion, if approved.

Other entities that will get more funding as compared to the original 2022/23 budget include the Judiciary, Social Protection, Transport, Cooperatives and Arid and Semi-Arid Lands.