BUDGET

Mr. Henry K. Rotich, CS,

National Treasury

The Mwananchi Guide

HIGHLIGHTS

15/16

Dr. Kamau Thugge, PS,

National Treasury

June 2015

ENHANCING ECONOMIC TRANSFORMATION FOR A SHARED PROSPERITY

Overall Budget Financing

KSh 1,358.0 bn
Grants
KSh 73.4 bn

Others
KSh 121.5 bn

KSh 2,234.0 bn

Revenues

Foreign Borrowing
Ksh 283.7 bn

In the Budget Year 2015/16 the Government

will spend KSh 2,234.0 bn to nance priority
development programs. Out of this
amount
K Sh 784.2 bn will be on minister ial
recurrent expenditure
K Sh 721.3 bn will be on development

expenditure Other Expenditure includes:

KSh 287.0 bn for county tr ansfer s

KSh 27.3bn for parliament
KSh 17.2 bn for judiciary
KSh 441.5 bn for Consolidate Fund
Service (CFS)

Domestic Borrowing
KSh 222.5 bn

Sources of the KSh 1,358.0 billion Total Revenues

Domestic Debt
Roll Over
Ksh 174.9 bn

PRIORITY AREAS FOR 2015/16

Where are some of your taxes going?

Investing in Security
Education
Preventive and Curative Health
Social Safety Nets
Infrastructure
Agricultural Development
Tourism Recovery
County Government
CDF

THE NATIONAL TREASUR

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KSh 241.8 billion

For Military, Police and Prisons service

335.7billion
KSh 336.3
billion
Includes free primary and secondary education, school feeding program,
university
education,
TSC,
andand
the laptop
program
university
education,
TSC,
the laptop
program

KSh 59.2 billion

Includes free maternity health and leasing of medical equipment

KSh 31.5billion
Social Protection, Culture and Recreation

KSh 404.7billion
Energy, Road, Ports, Standard Gauge Railway and Airports

KSh 79.7billion
On-going Irrigation projects, Fisheries Launch and Livestock

KSh 5.2billion
For Tourism recovery

KSh 287.0billion
Shareable to all the 47 Counties

KSh 35.2billion
Shareable to all the 290 Constituencies

BUDGET

The Mwananchi Guide

HIGHLIGHTS

15/16

FRAMEWORK FOR THE BUDGET

This 2015/16 budget is prepared against a backdrop in which
Accelerate economic growth of between 6% and 7% in 2015 and
7% in the medium term, supported by conducive business climate
and investment in energy, transport, and agriculture.
Stable ination within single digit with upper limit target of 7.5%
in 2015/16.
A budget decit of 8.7% of GDP in 2015/16, declining to 4.0% in
the medium term.

Public
debt to GDP ratio of 46.1% at the end of June 2015 to decline to 43.3% in 2017/18.

Tax revenue for 2015/16 expected to be KSh 1,358.0 billion up

from KSh 1,170.5 billion in 2014/15.

National

government expenditure on travel, hospitality, advertisement, transfers to semi-autonomous agencies, and other administrative payments to decline as share of spending.

THE FIVE PILLAR ECONOMIC TRANSFORMATION AGENDA

i)
ii)
iii)
iv)

Creating a conducive business environment

education as well as strengthening the social safety net to reduce
Investing in agricultural transformation and food security
the burden on the households and
Investing in rst-class transport and logistics
v) Supporting devolution for better service delivery and enhanced
Investing in quality and accessible healthcare services and quality
economic development.

ENHANCED SECURITY FOR INVESTMENT, GROWTH AND EMPLOYMENT

POLICE AND MILITARY MODERNIZATION
Security is necessary for encouraging investment, accelerating economic
growth and creating more jobs for our youth. As such security remains a priority. In the FY 2015/16, KSh 241.8 billion has been set aside for the security
sector to modernize both the Military and the Police.

Modernizing Security (Military & Police)

Leasing of Police/Prisons Vehicles

- KSh 7.7 bn

Police Medical Insurance

- KSh 1.7 bn

Police/APs Housing

- KSh 1.3 bn

Anti-Poaching

- KSh 1.4 bn

AMISOM/Peace Keeping Missions

- KSh 6.4 bn

KSh 25 bn

The President and his Deputy test

- drive one of the newly leased
police vehicles at Uhuru Park on November 7, 2013. The proposed leasing of additional 800 vehicles in 2015/16 will help the
police enhance security of the citizens.

The president overseeing the hand over of the rst phase of the
cctv installation on May 23, 2015.

KSh 1.3 bn has been allocated for Police

housing to improve their welfare

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Hughes MD500 Defender of the Kenya Army

Air Cavalry doing niche work. KSh 25 bn
has been allocated for security modernization

The President launches the Civil Servants and Disciplined Services Medical Insurance Scheme Enhanced Benets at Wilson Airport on January 14,
2015.KSh 1.7 bn has been allocated for Police
Medical Insurance

BUDGET
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The Mwananchi Guide

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STRUCTURAL REFORMS TO FACILITATE BUSINESS AND EMPLOYMENT GROWTH

Huduma Centres

Digital Government Payment through e-citizen

The government will expand the one

- stop public
service centres (Huduma Centres) to reach all
counties.

GPO - Nairobi Huduma Centre

Parastatal Reforms Progress

We program to digitize at least 100 inbound payment service transactions by end of 2015 in order to hasten service
delivery, reduce transaction cost and safeguard revenue
Services offered include:
Passport application
Business registration

and name search

Provisional Driving

License
Driving Test Booking
Interim Driving License

Driving License Renewal

Ofcial search in the
Ministry of Lands
Birth Certicate and
Death Certicate

IFMIS e-Procurement (Procure-to-Pay)

H.E President Uhuru Kenyatta, during the

launch of IFMIS e-procurement on May 20,
2015
Code of governance (dubbed Mwongozo
launched in January 2015) is expected to
strengthen governance across all State Corporations .
To realize the reforms in a timely and affordable manner, the Parastatal Refor ms Implementation Committee has outlined the following
activities
Fast tracking of enactment of the Government Owned Entities Bill, 2015
Fast tracking of enactment of the National
Sovereign Wealth Fund Bill, 2015
Fast tracking enactment of all the other enabling legislations
Capacity building of Boards on the Code of
Governance Mwongozo provisions

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In this Financial Year, the government will

roll out to parastatals and the County Governments e-Procurement by making operational
the Procure-to-Pay module of the Integrated

Financial Management System (IFMIS). KSh

1.8 billion has been allocated for the roll out
of IFMIS

Other Structural Reforms Include

Single Account and an institutional
framework for effective cash
- ow manthe declaration module under the Single
agement
Window to provide one-stop- shop for

Develop and enforce cost benchmarks

faster import clearance of cargo.
for all projects and consumables to as Enactment of the simpler and modern
sure value for money
Excise Duty Bill and a Tax Procedures

Nairobi International Financial Centre

Bill.
Authority to be made fully operational in
Roll -out and Operationalize the Treasury
2015

Make fully operational, by June 2015,

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The Mwananchi Guide

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EASING THE COST OF LIVING BY ENSURING FOOD SECURITY

Land preparation in Galana (March 2015)

Mechanized irrigation in Galana (April 2015) Maize progress in Galana (May, 2015)
The Galana Kulalu Irrigation Project whose
objectives are to enhance food security, reduce
poverty levels and create employment implementation progress is on track.
First crop harvetsfrom Galanna expected from
July 2015. Ksh 13.8 billion for ongoing irrigation countrywide of which Ksh 10.3 billion to
National Irrigation Board and Ksh 3.5 billion
for Galanna

Workers planting maize in Galana (March 2015)

Other key allocations towards food security
are:
Ksh 2.7 billion for Strategic Grain Reserves
Ksh3.1 billion for sheries development
Ksh 0.6 billion for the revival of the Kenya Meat Commission
Ksh 0.3 billion for the revival of the Pyrethrum sector

Ksh 0.3 billion for Free Disease Zone

Ksh 1.2 billion for compensation of farmers in Mwea Irrigation Scheme

Ksh 1.0 billion for coffee debt write off

Ksh3.5 billion for Land titling

Farmers at work at Mwea irrigation scheme.

Ksh 1.2 billion has been allocated for compensation of farmers in the Irrigation
Scheme (October, 2013)

Ksh 29.5 billion for water supply and sanitation

Ksh 2.1 billion for water storage and ood

In addition, measures to control oods and
control
harvest water will be implemented. Activities
Ksh 12.6 billion for environmental protecallocated resources include :
tion conservation and management.

IMPROVING THE ECONOMY BY PROMOTING TOURISM AND INDUSTRIALIZATION

Special Economic Zones (SEZs)

Tourism Recovery
The tourism industry has been
severely affected by the current
spate of insecurity which has
made our aspirations of attaining and sustaining economic
growth blurred. In order to rehabilitate the industry, an additional KSh 5.2 billionhas been allocated in this budget for Tourism
recovery.

As part of the strategy to

grow the manufacturing
sector and boost trade, the
government continues to
prioritize and facilitate the
establishment of industrial
parks and special economic zones.

Workers prepare clothes at an Export Processing Zone factory. Kenya plans to convert
EPZs to special zones.
KSh 3.0 bn has been allocated to facilitate
development and establishments of SEZs and
industrial parks.

Industrial Parks
Other initiatives include
Entrenching Buy-Kenya-Build-Kenya

An artist impression of Innity Industrial

Park located along Eastern Bypass.
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policy in all public procurement and

most of the local purchases.
Introducing legislation to require at least
40 percent local content in projects

BUDGET
HIGHLIGHTS

The Mwananchi Guide

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INVESTMENT IN INFRASTRUCTURE TO SPUR ECONOMIC GROWTH

REDUCING COST OF ENERGY TO ENHANCE DOING BUSINESS CLIMATE

KSh 404.7 billion has been set aside in the FY 2015/16 for support of
the on going developments in infrastructure. This includes improving
infrastructure in counties, cities and urban centres, attain efcient and
economic road transportation, expansion of electricity generation and
access, modernizing ICT infrastructure, expansion of the port and Standard Gauge Railway Construction and facilities.
On going road construction & maintenance- KSh 85.2 bn
Road Annuity Programme
- KSh 5.0 bn
Foreign nanced roads
- KSh 42.0 bn
Standard Gauge Railway Construction - KSh 143.9 bn
Ferry replacement
- KSh 1.3 bn
Geothermal development
- KSh 13.2 bn
Power transmission
- KSh 21.1 bn
Rural Electrication Programme
- KSh 14.9 bn
Street lighting
- KSh 4.5 bn
Last mile connectivity
- KSh 1.5 bn
The president inspecting the progress of the SGR on May 26, 2015
Digital Talent
- KSh 0.25 bn

Geothermal Power Production in Naivasha. Street Lighting Using Renewable Energy.

KSh 13.2 bn has been allocated for Geother- KSh 4.5 bn has been allocated for street lightmal Development
ing to enhance security for investment

KSh 14.9 bn has been allocated for Rural Electrication Program

The President launches the Last Mile Connectivity Project, an initiative geared
towards increasing electricity access to Kenyans across the country on May 27,
2015. KSh 1.5 bn has been allocated in this budget for the last mile connectivity project.

KSh 21.1 bn has been allocated for Power

Transmission
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KSh 1.3 bn has been allocated for replacement of ferries to ease the movement of
workers in and out of Likoni

THE NATIONAL TREASUR

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BUDGET

The Mwananchi Guide

HIGHLIGHTS

15/16

ROAD CONSTRUCTION

FACILITATING THE PRIVATE SECTOR THROUGH IMPROVED INFRASTRUCTURE

KSh 58.5 billion for on-going road
construction

KSh 26.7 billion for road maintenance

KSh 42.0 billion for foreign nanced roads
KSh 5.0 billion for Road Annuity
Programme (included in the provision for on-going road construction)

President Uhuru Kenyatta together with leaders from other East African Community member states during the commissioning of the new Mombasa Port Berth 19 on August 29,
2013

Expansion and Modernization

of the Port of Mombasa

Aerial view of Berth 19

LAMU PORT SOUTH SUDAN ETHIOPIA TRANSPORT (LAPSSET) CORRIDOR PROGRAM

The LAPSSET Corridor Project is the rst
single Gigantic, Integrated, Transformative
and Game
-Changer infrastructure Project
the Government has initiated
Out of the seven LAPSSET Components,
the Government of Kenya has put priority
on the development of the First Three
Berths and Associated Port Infrastructure,
which is expected to trigger development of
the other components.
The administrative infrastructure for the
LAPSSET project is complete and the initial
three berths of the Lamu Port have already
been commissioned.
Lamu Port housing

LAPSSET Corridor

Isiolo-Marsabit-Moyale Road

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Lamu Post police Station is complete

Power sub-Station that will supply power to

Lamu Port

BUDGET

The Mwananchi Guide

HIGHLIGHTS

15/16

PROMOTING EQUITABLE AND ACCESSIBLE QUALITY HEALTH CARE SERVICES TO ALL KENYANS
The Government has allocated KSh 59.2 bn in
2015/16 for preventive and curative health services. Of this KSh 4.3 bn is allocated for free
access to maternal health care while KSh 1.0 bn
will go towards slum health care program.
Other allocations are as follows:
K
Sh 4.5 bn for lease nancing of health
care equipment
K
Sh 0.9 bn for free access to all health centres and dispensaries
K
Sh 3.5 bn for Kenya Medical Training
Centres
K
Sh 9.3 bn for Kenyatta National Hospital
K
Sh 5.8 bn for Moi Teaching and Referral
Hospital
K
Sh 1.9 bn for Kenya Medical Research

The President being shown some of the equipment leased under the Medical Equipment A state-of-the-art Cancer Treatment Equipment
Services programme on February 6th, 2015.
Institute

KSh 3.0 bn for doctors/clinical ofcers/

KSh 0.9 bn for National Aids Control Council

nurses internship program

ENHANCING ACCESS AND TRANSFORMING THE EDUCATIONAL SYSTEM THROUGH E -TEACHING AND E-LEARNING
To supplement access and quality of educa-
KSh 14.1 bn for free primary education
tion, the budget has made the following allo-
KSh 2.3 bn for recruiting additional
cations:
5,000 teachers
KSh 32.5 bn for free day secondary
KSh 2.2 bn for promotion of teachers
education

KSh 1.0 bn for school feeding program

Through this budget, a total of KSh 17.6 billion has been proposed for
deployment of laptops to schools, development of digital content, building capacity of teachers and rolling out computer laboratory for class 4
to class 8 in all schools throughout the country.
This will be in addition to KSh 0.3 billion provided for the purchase of
computers in the on going Economic Stimulus Projects

KSh 3.0 bn has been allocated for

technical training institutes, KSh
7.5 bn for Higher Education Loans
and KSh 52.9 bn for University
Education. KSh 0.4 bn has also
been allocated to provide sanitary
towels for girls in schools to en-

sure that they do not miss out in

school in some days.
In addition, under the economic
stimulus that was started some
years back, KSh 0.6 bn has been
allocated for upgrading of National Schools.

ENHANCING WOMEN AND YOUTH EMPOWERMENT

Other interventions include:
KSh 0.85 billion for
Uwezo Fund
KSh 0.5 billion for
Women Enterprise Fund
KSh 0.3 billion for
Youth Enterprise Fund
KSh 1.8 bn for construc- Revamping of Kipchoge Keino Stadium in Eldoret. KSh 1.8 billion has
tion of stadia
First ever graduates with albinism from
been allocated for construction of
NYS passing out on April 23rd, 2015 with
stadia.
The President
KSh 25.0 billion has been allocated towards youth employment and
reengineering the NYS as a vehicle
for transforming and empowering
the youth.

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Uwezo Fund Capacity Building Workshop in Laikipia

County

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The Mwananchi Guide

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CUSHIONING THE POOR AND THE VULNERABLE IN THE SOCIETY: SOCIAL SAFETY NETS
To address the plight of the less disadvantaged
in society, combat poverty, and promote equity,
the social protection safety net in form of cash
transfer has been enhanced. In addition an allocation for the equalization fund, Constituency
Development Fund (CDF), and Afrmative
Action for Social Development has been set
aside as follows:
Ksh 35.2 billion for CDF

Ksh 1.8 billion for constriction of stadia

KSh 1.0 billion seed capital for the National Fund for Restorative Justice

Slum upgrading program in Kibera on progress on December 7th, 2014.

Ksh 0.8 billion for Children Welfare Society

Ksh 0.4 billion for Presidential Secondary
School Bursary Scheme for orphans, poor Health insurance program under the social

and bright students.

Elderly persons during the launch of the Elderly Ksh 2.2 billion for Resettling the IDPs
welfare kitty on February 4th 2014. KSh 7.4 Ksh 1.3 billion for hunger safety net
billion for the elderly persons
Ksh 1.3 billion for slum upgrading

Ksh 2.1 billion for Afrmative Action for

safety nets

Social Development

Ksh 6.0 billion for Equalization Fund

Ksh 9.0 billion is for orphans and vulnerable children

Ksh 7.4 billion for elder persons

Ksh 1.2 billion for those with extreme
disability

Ksh 0.3 billion for other disabled persons

under coverage of cash transfer

Ksh 0.3 billion for street families

Ksh 0.5 billion for insurance cover for
persons under the social safety net pro-

KSh 2.2 billion for resettling the IDPs

Merciful hearts orphanage Kenya on November 1st, 2012. KSh 9.0 billion has been allocated for orphans and vulnerable children

ONGOING ECONOMIC STIMULUS PROJECTS

KSh 0.23 billion for Jua kali sheds.

Ksh 0.32 billion for purchase of computers

KSh 0.6 billion for upgrading of National Schools

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KSh 0.3 bn for prototype fresh produce & wholesale markets

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The Mwananchi Guide

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STRENGTHENING DEVOLUTION THROUGH EQUITABLE DEVOLUTION

PROPOSED REVENUE ALLOCATION FOR EACH COUNTY
GOVENMENT FOR FY 2015/16

Ksh 259.8 billion as Sharable revenues to the Counties

Ksh 27.3 billion has been set aside as additional conditional allocations to Counties in the FY 2015/16 Budget
as follows:

Ksh 4.3 billion as conditional grant for Free Maternal

Health Care

Ksh 4.5 billion as conditional grant for Leasing medical

equipment

Ksh 3.6 billion as conditional grant for level

- 5 hospitals
Ksh 0.9 billion as conditional grant to compensate
county health facilities for user fees forgone

Ksh 3.3 billion as conditional grant from the Road

Maintenance Fuel Levy Fund and
Ksh 10.7 billion as conditional allocations from donor
loans and grants.

Rolling out Modern Medical Equipment for Counties

Some of the state-of-the-art equipment in Machakos level 5

hospital commissioned by The President on May 27, 2015.

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BUDGET
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The Mwananchi Guide

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OTHER ALLOCATIONS INCLUDING CONSTITUTIONAL OFFICES

Judiciary has been allocated KSh 17.2 billion

KSh 27.3 billion has been allocated to Parliament

KRA has been allocated KSh 1.0 billion for modernization

KSh 1.5 bn has been allocated to IEBC for voter Registra-

KSh 0.3 billion for CRA

KSh 181.4 billion allocated to TSC

KSh 0.7 billion for SRC

KSh 1.5 billion for NLC

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BUDGET
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The Mwananchi Guide

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PUBLIC EXPENDITURE TRACKING

Contingencies
Fund
KSh 5.0 bn
CDF
KSh 35.2 bn

Education
KSh 336.3bn

National
Security
KSh 112.5 bn

Health
KSh 59.2 bn
Agriculture,
Rural & Urban
Development
KSh 79.7 bn

Public
Admin & International Relations
KSh 243.4 bn
Energy, Infrastructure & ICT
KSh 404.7 bn

Parliament
KSh 27.2 bn

Total Government
Budget
KSh 2,234.0 bn
Environment Protection, Water &
Natural Resources
KSh. 63.0 bn

County Shareable Revenue

KSh 258 bn

GJLOS
KSh 154.0 bn

Judiciary
KSh 17.2 bn

Orphans and
Vulnerable children
KSh 9.0 bn

Economic and
Commercial
Affairs
KSh 21.3 bn
Social Protection, Culture &
Recreation
KSh 31.5 bn

Social Safety
Nets
KSh 19.1 bn

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Children welfare
society
KSh 0.8 bn

Street families
KSh 0.3 bn

Elderly persons
KSh 7.4 bn

Presidential Secondary
school Bursary scheme
KSh 0.4 bn

Consolidated
Fund Services
KSh 441.5 bn

Extreme
disability
KSh 1.2 bn

Other disabilities under

cash transfer
KSh 0.3 bn

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SUMMARY OF PROPOSED TAX AND MISCELLANEOUS MEASURES

Youth Empowerment for Job Creation
Deepening tax Administration Reforms to Ease Compliance
Tax Rebate for Employers who employ and train at least ten fresh
graduates for more than six months in internship and apprenticeship New Tax Procedures and Excise Duty Bills to simplify tax adminiprograms.
stration and reduce cost of compliance.

Exemption from withholding tax payments by lm producers, actors and crew members to develop Kenya as a leading lm production destination and create jobs for talented Kenyans.

Encouraging Growth and Stability of Financial Sector

Increase of minimum capital for banks from Kshs 1.0 billion to
Kshs 5.0 billion by December 2018 and for general insurance companies from Ksh 300 million to 600 million by June 2018 in order
to develop a strong, stable and internationally competitive nancial
sector

Increased duties on imported alum inium cans and gas cylinders to

cushion local manufacturers against unfair competition.

Duty Remission on importation of semolina to encourage local

production of pasta.

Exemption from VAT for taxable goods and services used in construction of infrastructure in industrial and recreational parks of 100
acres or more to encourage local and foreign investors and create
jobs.

Reduction of Import Declaration Fee (IDF) from 2.25 percent to 2.0

percent to reduce cost of doing business and increase competitiveness.

Promoting Equity and Fairness

Returning residents who have owned left-hand drive vehicle for at
least twelve months to be allowed to import a right-hand drive vehicle of equivalent value VAT free.

Withholding tax on rental income plus tax amnesty to encourage

property owners with rental income pay their fair taxes.

Enhanced excise duty on non-biodegradable plastic bags plus exemption of VAT on plastic bag bio-digesters so as to reduce environmental degradation

Clarications on Capital Gains tax to ensure enforceability.

Amendments to the Central Bank Act to allo w for perpetual licensing to facilitate risk based supervision and improve ease of doing
business.
Amendments to Insurance Act to facilitate risk based supervision
and introduce broad insurance guidelines for insurance companies
to enable them better manage risks.
Stamp Duty exemption for Asset Backed Securities (ABS) and Real
Estate Investment Trusts (REITS) for capital markets development.
Amendments to retirement benets regulations to allow members to
also share in surpluses during winding-up of dened benets
schemes.
Strengthening of supervisory powers of the Sacco Societies Regulatory Authority (SASRA) and the Financial Reporting Centre
(FRC).

NOTES
Figures

may not necessarily add up due to rounding off

Grey colour represents the Global budget and includes
National Government, Judiciary, Parliament, CFS,
County Allocation, Civil Service Contributory Pensions
and Contingency Fund

Blue Colour represents the different sectors

Green Colour represents Judiciary, Parliament,
CFS, County allocation and Contingency Fund

ABBREVIATIONS
CDF
CCF

Constituency Development Fund

Contingencies Fund

CFS
ESP
ICT
NYS

Consolidated Fund Service

Economic Stimulus Programme
Information Communication Technology
National Youth Service

CDI
IFMIS

Composite Development Index

Integrated Financial Management
Information System
AMISOM African Union Mission in Somalia
GDP
Gross Domestic Product
JKIA
Jomo Kenyatta International Airport
GJLOS
Governance, Justice, Law and Order

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TREASURY BUILDING, HARAMBEE AVENUE
P.O. BOX 30007 - 001000, Nairobi - Kenya Tel: +254 (0)20 225 2299
Email: pronance@treasury.go.ke Website: www.treasury.go.ke
matumizi bora ya fetha wajibu wetu

For any comments on the Peoples Guide please send them to: Email: pronsnce@treasury.go.ke

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