Uhuru spends Sh67bn on subsidies in four months to July
Residents queue outside a supermarket on Digo Road in Mombasa town on Friday in search for Sh100 maize flour. They say the flour is hard to come by.
President Uhuru Kenyatta spent Sh67.17 billion in subsidies for key commodities such as fuel, maize flour, and fertilisers in his last four months in office to ease the burden of high cost of living on households.
The latest data from the National Treasury shows the government spent Sh46.5 billion in subsidies between April and June as high commodity prices forced it to avail emergency funding to cushion consumers.
The outgoing Head of State last month unleashed a further Sh16.67 billion fuel subsidy package to keep fuel prices unchanged for the July-August price review saving consumers from a record increase in the cost of the key commodity.
He also spent another Sh4 billion between July and August on maize flour subsidy to cut the prices of the product by more than half.
The programme was inked last month between the government and millers to reduce maize flour prices to Sh100 per 2kg packet down from Sh205.
The Ministry of Agriculture has, however, informed millers participating in the subsidy programme of the termination of their contracts after a four-week run.
The subsidies were aimed at easing public pressure over the high cost of living that had become the main campaign issue for both leading presidential candidates in the run-up to last week’s polls.
The state spent Sh80.67 billion on subsidies for the financial year 2021/22, which is 28 times the Sh2.87 billion it had budgeted to spend on the same during the year.
Market pressures both from within and outside the country forced government to spend Sh5.62 billion in subsidies in the first quarter of the financial year before spending another Sh6.7 billion in the second quarter.
But with an unrelenting rise in global fuel prices following the outbreak of war between Russia and Ukraine in February, the government was forced to spend a further Sh21.84 billion between January and March to keep fuel prices low.
Last Sunday, the Energy and Petroleum Regulatory Authority (Epra) kept fuel prices unchanged for the third month in a row at Sh159.12 for a litre of petrol, diesel at Sh140 per litre, and kerosene at Sh127.94 saving consumers from higher fuel prices.
To underline the possible impact of a total withdrawal of the fuel subsidy, Epra said the commodities would have cost Sh214.03 for petrol, Sh206.17 diesel, and Sh202.11 kerosene per litre respectively minus the subsidy. For fertiliser, the state subsidised 2.28 million 50kg bags of for farmers growing food crops.
It disbursed Sh3 billion to subsidise the prices of fertiliser for the April to June planting season with a further Sh2.7 billion allocated for the next planting season in October.
These fertilisers will support the cultivation of 1.13 million acres with farmers paying Sh2,800 per bag compared to a market price of Sh6,400.
The government is also in a subsidy plan with Kenya Power which has allowed electricity prices to remain stable since January despite high fuel prices.
