What you need to know:
- While questioning the credibility of individuals appointed to critical government institutions like the National Treasury, the Central Bank of Kenya (CBK) and the Kenya Revenue Authority (KRA), Azimio said the inquiry should be undertaken before “we collapse like other African countries” .
- Counties have not received devolved funds from the National Treasury for at least four months now.
- In addition, the national government currently owes State agencies Sh204 billion while counties are demanding Sh92.5 billion, which is the equitable share for January to March.
Politician Raila Odinga’s Azimio coalition has decried delays by the government in paying its workers, among them MPs, while demanding that Parliament undertake an inquiry on the financial and economic crisis building up in Kenya.
Mr Odinga’s coalition wants to know what the government did with the money it saved when it scrapped subsidies on basic goods.
While questioning the credibility of individuals appointed to critical government institutions like the National Treasury, the Central Bank of Kenya (CBK) and the Kenya Revenue Authority (KRA), Azimio said the inquiry should be undertaken before “we collapse like other African countries” .
In a statement issued on Friday morning, signed by National Assembly minority leader and Ugunja MP Opiyo Wandayi, Azimio said the inquiry should compel the production of documents to establish what has gone wrong in critical financial institutions.
“Azimio is deeply concerned at the worsening economic situation in the country, which has seen the government unable to meet one of its most basic of obligations, which is paying its workers. We fear this country is collapsing while we sit pretty, hoping for miracles,” stated Mr Wandayi.
The coalition noted that the government can no longer hide behind the Covid-19 pandemic, the war in Ukraine and the general economic meltdown around the globe.
“We believe a lot of our cash flow problems have to do with the corruption, tribalism, nepotism, incompetence and plain theft at critical revenue collection points, starting with the KRA, in addition to wrong spending priorities,” Mr Wandayi wrote.
State heavy in debt
Counties have not received devolved funds from the National Treasury for at least four months now.
In addition, the national government currently owes State agencies Sh204 billion while counties are demanding Sh92.5 billion, which is the equitable share for January to March.
However, the government is busy setting up offices and working on salaries and other benefits for 50 chief administrative secretaries (CASs) and their staff, in addition to creating offices for spouses, first sons and first daughters.
“How can it be that we scrapped subsidies, increased taxes, continued to borrow, only for our financial situation to get worse? Where is the money going? This is the sad state of affairs that the administration is hiding from Kenyans,” said Mr Wandayi.
“For the first time in our history, even MPs have not been paid as we head towards mid-month. Only members of the security services – police and military – have been paid as we speak and the reason must be obvious to all. The result of the blatant theft and incompetence at critical institutions in charge of revenue generation and collection is that civil servants and MPs have gone to Easter without salaries.”
The payment delay, he noted, affects a long chain of people who depend on civil servants’ salaries.
“It is a sad time indeed for Kenya. We never ever imagined this could happen in Kenya and warned that it won’t be long before members of the disciplined forces also begin missing salaries, if we continue this way.”
By Thursday afternoon, MPs and parliamentary staff had not been paid their March salaries. Nearly all civil servants don’t know when or if they will get paid.
The situation has been degenerating progressively since December last year, when the MPs and government employees started experiencing periodic salary delays. Things came to a head this month.
More taxes, less subsidies
Immediately after the Kenya Kwanza administration came to power in September last year, it removed subsidies on basic goods, arguing that subsidising consumption was a waste of money.
The government then announced that from the scrapped fuel subsidy alone the Treasury would save Sh9.49 billion.
Other savings would come from the removal of subsidies on maize flour and tuition fees for learners in public primary and secondary schools.
For instance, in the first supplementary budget for the 2022/23 financial year, the National Assembly declined to approve the Sh4 billion maize flour subsidy.
The Kenya Kwanza administration then embarked on massive tax increases that saw a 20 per cent tax on M-Pesa transactions while internet transactions went up to 16 per cent.
And then there came a 15 per cent capital gains tax imposed on the transfer of property, and VAT on e-books and videoconferencing.
These were just a few of many upward tax adjustments.
According to Azimio, the net effect of all these measures was supposedly to increase revenue collection to between Sh4 trillion and Sh5 trillion per year and enable the government to finance its operations.
“But today, about six months into this regime, Kenya cannot pay salaries, leave alone finance its other operations,” said Mr Wandayi.
Azimio wants the inquiry to “take a close and thorough look at the goings-on” at revenue collection points and revenue sources like the Kenya Airports Authority, the courts, customs, the National Social Security Fund, aids and grants and revenue administration, in addition to probing government spending.
“The government should come clean and tell Kenyans where the proceeds from taxes and savings from scrapped subsidies are going, because we can’t tell,” its statement said.
“The easy conclusion is that some individuals at the KRA are collecting and pocketing taxes as the incompetents at the National Treasury also skim off the revenue while failing to come up with sound policies for cash flow,” it added.
It is likely the situation will get worse as the country’s cash flow issues have come at a time when the Kenya shilling is gasping for air.
The shilling has not only weakened against the US dollar but also diminished significantly against the Tanzanian shilling by nearly 10 percent since September last year.