Treasury Cabinet Secretary nominee John Mbadi recently outlined a strategic approach to enhance Kenya’s revenue collection without resorting to new taxes. During his vetting by Parliament’s Committee on Appointments, Mbadi proposed three key measures to boost revenue streams and address fiscal challenges facing the country.
1. Revamping Kenya Revenue Authority (KRA) Infrastructure
Mbadi’s first strategy involves a comprehensive overhaul of the Kenya Revenue Authority’s (KRA) infrastructure. He stressed the importance of modernizing KRA’s systems to curb inefficiencies and corruption. With KRA’s collections rising to Ksh.2.4 trillion in the 2023/24 financial year, an increase from Ksh.2.16 trillion the previous year, there is significant pressure to double this amount, as directed by President William Ruto. Mbadi likened KRA’s current system to a “cow which we milk without feeding,” indicating that the system is outdated and needs substantial engineering improvements.
The nominee emphasized that instead of imposing new taxes, the focus should be on optimizing existing revenue collection mechanisms. By adopting advanced technologies and systems, KRA can plug revenue leaks and enhance its collection efficiency, thus increasing overall revenue without adding to the tax burden.
2. Leveraging Climate Change Financing
Mbadi’s second measure proposes tapping into climate change financing to alleviate budgetary pressures. He highlighted the potential of climate change funds, which amount to approximately Ksh.167 trillion (USD 1.3 trillion) globally, as a significant revenue source. Kenya has already secured USD 259 million for climate change initiatives, which will be allocated to 47 counties. Mbadi suggested that leveraging these funds could help finance the Ministry of Environment’s budget and create job opportunities, particularly for the youth.
This approach aligns with global trends where climate financing is used to support environmental projects and infrastructure. By directing climate funds towards key areas, Kenya can reduce the strain on its traditional budget while advancing its environmental goals.
3. Promoting Public-Private Partnerships (PPP)
The third strategy Mbadi proposed is the increased adoption of Public-Private Partnerships (PPP) for both large and small projects. He argued that PPPs could significantly reduce the financial burden on the government by involving private sector players in funding and managing projects. This arrangement allows the private sector to recover their investments through leasing agreements or other arrangements.
Mbadi acknowledged the public’s skepticism towards PPPs, citing the controversial proposal by Adani Holdings to upgrade Jomo Kenyatta International Airport (JKIA) as an example. The lack of transparency surrounding this deal led to public opposition. To address such concerns, Mbadi stressed the need for clear communication and transparency in PPP agreements. He proposed that the Treasury enhance its capacity to manage and oversee PPPs effectively, ensuring that both large-scale and small-scale projects benefit from this model.
Ensuring Transparency and Reducing Wastage
In addition to these measures, Mbadi called for greater transparency in the budgeting process to minimize wastage. He criticized the opulence observed in government spending and stressed the importance of practical measures to curb unnecessary expenses. By making the budget process more transparent and accountable, the government can better manage its resources and reduce inefficiencies.
In summary, John Mbadi’s proposed strategies reflect a forward-thinking approach to revenue generation. By modernizing KRA, leveraging climate change financing, and promoting PPPs, Kenya can enhance its revenue collection capabilities without burdening taxpayers. Mbadi’s emphasis on transparency and efficiency further underscores his commitment to improving fiscal management and reducing governmental waste.
