Treasury Cabinet Secretary nominee John Mbadi on Saturday outlined his strategic plan to tackle Kenya's fiscal challenges.
Mbadi, while appearing before the National Assembly Committee on Appointments for vetting argued that the government could raise an additional Ksh600 billion in revenue if the government reverted to tax measures it applied in previous years.
He pointed out a historical benchmark when Kenya successfully collected 18% of its GDP in taxes, compared to the current rate of 14%.
"If we could just increase from 14% to 18% of GDP, you would be adding about 600 billion to our revenue base. So, you will be reducing the fiscal deficit and the fiscal gaps that we have," he noted.
According to the nominee, this initiative is pivotal to reducing the country’s fiscal deficit and addressing significant economic gaps.
Mbadi emphasized the crucial role of the Kenya Revenue Authority (KRA) in achieving this target.
Mbadi's ambitious plan is driven by the potential to significantly boost tax revenue by improving collection efficiency.
The proposed reforms are seen as a critical step towards achieving this goal.
Mbadi also laid out his comprehensive plan to address inefficiencies and wastage within the Treasury, aiming to establish a more equitable and functional financial system.
The CS Treasury nominee emphasized the importance of a robust and fair system to ensure effective financial management and equitable distribution of resources across the country.
“I am going to look at the Treasury in its totality and see whether there are gaps and if there are areas where we can change or move one person from one place to another,” Mbadi said.
He stressed that the foundation of a well-functioning Treasury lies in creating and maintaining a robust system.
“The most important thing to do is to have a system that functions because if you don't have a system that functions, whoever you bring may just mess you up.”
One of Mbadi’s primary concerns is the issue of favouritism in funding allocations, which he views as a systemic failure that needs urgent correction.
“The issue of favouritism whereby some get funded and others are not, to me is a failure of a system. We must correct that and ensure that there is equity and fairness and that the system serves all Kenyans equally,” he asserted.
Mbadi also highlighted the financial burden that delayed disbursements to counties impose on local governments. Counties often resort to borrowing from commercial banks at high interest rates to cover essential expenses like salaries due to the delayed funds from the Treasury.
“We are incurring a lot as a country by failing to send money to counties within the required time because counties end up borrowing money from commercial banks and paying huge interest on borrowed funds just to pay salaries. We must manage our cash flow,” he explained.
