Thursday, 13th June 2024

Hon. Members, we have quorum to transact business. Clerk-at-the- Table.

Order, Hon. Members. Take your seats. Hon. Osoro, take your seat. I have two short Communications to make.

Hon. Members, I wish to introduce to you a delegation of Members from the African Organisation of Public Accounts Committees (AFROPAC) who are seated in the Speaker’s Gallery. They comprise:

Order, Hon. Members.

Hon. Members, as you may be aware, since 2009, the National Assembly and the Kenya Private Sector Alliance (KEPSA) jointly holds an annual engagement under the auspices of the Speaker's Roundtable.

The annual event aims at bolstering the roles of the two institutions, including consideration of legislative and legal frameworks that are necessary for supporting the economic sector. Over the past 14 years, those engagements have been instrumental in providing policy and legislative underpinnings which have greatly impacted the sector. Indeed, various amendments and reforms to the law have been initiated as a result of those collaborative meetings, thus supporting business and economic growth, and contributing to overall national development.

The 2024 Speaker's Roundtable is scheduled to take place on Friday, 21st June 2024, at the Argyle Grand Hotel, Machakos County. The meeting will be held under the theme of leveraging the role of the legislature in enhancing Kenya's competitiveness for the creation of jobs, wealth and inclusive prosperity. The Roundtable discussions will focus on, among other areas, governance, access to finance, competitive logistics and utilities, industrialisation and trade, human capital development, and social development and inclusion.

Participants in the meeting will include all Members of Parliament, senior parliamentary staff and representatives of the business community under the KEPSA umbrella. In this regard, Hon. Members, I wish to invite all of you to the meeting as those engagements will afford the House an opportunity to engage with the business community as we seek to set the foundations for greater national economic development.

I thank you. Next Order.

Hon. Speaker, I beg to lay the following Paper on the Table:

Legal Notice No.96 of 2024 relating to the Independent Policing Oversight Authority (General) Regulations, 2023, including the Explanatory Memorandum, Executive Summary and Synopsis of Stakeholders Engagement from the Independent Policing Oversight Authority (IPOA) . I thank you, Hon. Speaker.

Thank you. Next Order.

Hon. Robert Mbui.

Hon. Speaker, pursuant to the provisions of Standing Order 44 (2) (c) , I rise to request for a statement from Leader of the Majority Party regarding a directive issued by the Private Security Regulatory Authority to private security service providers on minimum wage payable to private security officers.

On 10th June 2024, the Private Security Regulatory Authority issued a public notice, purportedly published as Legal Notice No.PSRA/002/2024, directing all private security

service providers, users, prospective users and representatives of users of private security services to submit to it legal commitments to comply with the set minimum wage for private security guards. In the said notice, the Authority threatened immediate cancellation of certificates of registration and subsequent deregistration of any private security firm that will not comply with the directive by close of business on Monday, 17th June, 2024.

Section 70 of the Private Security Regulation Act, 2016 requires the responsible cabinet secretary to make regulations for the proper administration of the same and give effect to the Act, including matters of employment of security guards. By operation of Article 95 of the Constitution, the purported legal notice, not having been laid before Parliament in accordance with Section 11 of the Statutory Instruments Act, 2013, is void.

It is against this background that I request for a statement from the Leader of the Majority Party on the following—

Committee on Delegated Legislation.

Thank you, Hon. Robert Mbui. Two joyriders have requested for an opportunity. Maj. Bashir. Where is he? Are you a Major or a Colonel? Proceed, Major Bashir.

Yes, Hon. Speaker. I am a Major. It is not easy to achieve the rank of a Major. It is not like going to an election and winning.

I support the request for statement that has been read by Hon. Mbui. The matter here is about regulating the private security industry. The Private Security Regulatory Authority (PSRA) together with the Ministry of Interior and National Coordination appeared before the

Committee on Delegated Legislation sometime last year. I am a member of that Committee.

because the law does not bind it. An example is the minimum wage issue that is not under the purview of the PSRA.

Make your point, Hon. Bashir. We do not have much time.

The mandate to determine the minimum wage lies with the labour council. The PSRA is to ensure it implements and enforces the minimum wage set by labour laws. It is not under their purview to set the minimum wage.

Secondly, there is much despondency on the private security industry now because they are getting new legal notices every now and then, or after every two weeks or two months. My understanding and that of our Committee is that Parliament has not approved it. Therefore, the regulations out there are null and void. The Ministry of Interior and National Coordination should ensure they abide by the rule of law. Thank you, Hon. Speaker.

Hon. Osoro, make your point in one minute.

Thank you, Hon. Speaker. I also rise to support Hon. Mbui’s request for statement on the conduct and the directions given by the PSRA in regard to private security firms raising the minimum wage of security officers to Ksh30,000. The era of people or authorities making unilateral statements or directions is long gone. One cannot wake up one morning and do letters and spread them across all the security firms and tell them that they must pay their security officers Ksh30,000 by a particular date. Security firms operate under contractual agreements with their clients. Even Government entities pay security officers between Ksh21,000 to Ksh25,000. A CEO of PRSA cannot wake up one morning and direct security firms to pay security officers Ksh30,000. That is an illegality. You cannot bypass this House. This House makes laws. One cannot wake up one morning, bypass this House, ignore subsidiary legislation process, and decide the rule is this way.

Hon. Speaker, we support Hon. Mbui’s request for statement.

Thank you. Hon. Tongoyo, you have one minute. You are the Chairman of the Committee on Administration and Internal Affairs. Give him the microphone.

Thank you, Hon. Speaker. I also want to comment on the issues raised by my colleagues on PSRA’s proposed increase of the minimum wage. As much as we agree with the concerns raised by Members, minimum wage is an ongoing discussion. It is good to agree that some of those big institutions like Equity pay their security officers as little as Ksh10,000. We proposed that security institutions be classified into different categories and be given different certification depending on their capacity. Large security firms like G4S that can afford the Ksh30,000 should be classified and certified differently, depending on their capacity just like NCAA does.

This is a valid discussion. We should also acknowledge that a majority of those institutions pay extremely low compared to the profits they make. Our proposal is that PSRA classifies and gives different certification to different security firms. Big companies with capacity should pay the minimum wage. Those in villages and guard primary schools and small institutions should pay the minimum they can afford.

Thank you. Leader of the Majority Leader, this request for statement was directed at you. You also have your Thursday Statement. We only have nine minutes to start the next business. Give the Leader of the Majority Party the microphone.

Thank you, Hon. Speaker. Let me thank Hon. Robert for that request for statement. Many concerned people who run security firms have reached out to me. I commit that I will get in touch with the Ministry and give a response by Thursday next week.

In the interest of time, let me go to the usual Thursday Statement. Pursuant to provisions of Standing Order 44 (2) (a) , I rise to give the following Statement on behalf of the House Business Committee, which met on Tuesday, 11th June 2024, to prioritise business for consideration during the week.

You communicated that the Cabinet Secretary for the National Treasury and Economic Planning, Prof. Njuguna Ndung’u, EGH, will today make a public pronouncement of the Budget Highlights and Revenue Raising Measures for the Financial Year 2024/2025 and the Medium-Term Revenue Strategy. I urge Members to listen keenly and actively participate in this important business when the opportunity for debate on the matters raised comes up in the House.

It is also important to mention to the members of the public that this is not the 2024/2025 Finance Bill. There has been a misconception out there that what the Cabinet Secretary for the National Treasury and Economic Planning is coming to spell out today is the 2024/2025 Finance Bill. It is important for the members of the public to get the understanding that the Statement is just about revenue raising measures. It is not the Finance Bill. I know members of the public have harassed most of these Members on maters touching on voting on the Finance Bill. There will be no voting today on anything.

Regarding the business scheduled for Tuesday next week, the House is expected to consider the following Bills at various stages:

Order, Hon. Members. Hon. Karemba and your team. Hon. CNN, go and take your seat.

Hon. Speaker, the only word I could understand in their conversation was Muguka. The House will consider the following Motions.

Order. Take your seat. Hon. Karemba, can you go to where you normally sit? Hon. Karemba, go and sit where you normally sit. Wind up, Leader of the Majority Party.

Hon. Speaker, those seats are actually reserved for Members of the Parliamentary Service Commission (PSC) and the Deputy Speaker. The Commissioners have been displaced. The House will consider the following:

Hon. Rahab Mukami, you have a request for a statement which I have deferred to Tuesday, 18th June 2024.

On a point of order, Hon. Speaker.

Hold your horses to Tuesday.

I said I have deferred to Tuesday. I will give you an opportunity then. Yes, Hon. Wangari, what is your point of order?

Thank you, Hon. Speaker. It is not usual to comment after the Leader of Majority Party’s Statement. But indulge me on the issue of Questions by Private Notice. They are supposed to be answered within a week. For example, the Question about the case of a girl who was killed in Gilgil was asked on 12th September

I will give you guidance next week.

Order, Hon. Ruku. I have received two Statements, one from the County Woman Representative for Lamu County, denouncing and renouncing muguka, and another one from you, praising muguka as a valuable resource mobiliser crop from your region.

Yes.

The two Statements are with me. I will give you time next week, if you want to bring them to the House, so that you can present them. But I will not allow you to use a Statement that you have given to the Hon. Speaker to picket on the Floor of the House.

On behalf of the Kambas, can I say something?

No! You will not say anything. If I give time to say something, the Member for Lamu County will also want to say something. I do not want to dilute the importance of this day in this Parliament.

Mover of the Bill, Hon. Ndindi.

Hon. Speaker, I beg to move that the Equalisation Fund Appropriation (No.2) Bill, (Senate Bill No.30 of 2023) , be now read a Third Time.

Before I call the Seconder, I want to thank all the Members and the House for ably debating this matter and for passing Ksh7.4 billion that will be going into the Equalization Fund.

It is also important for Members to know that we have also budgeted for the arrears from the previous years that were never disbursed, especially because of the stand-off in terms of regulations. Therefore, we will be passing over Ksh7.4 billion to the counties and the areas that should be boosted. We have included part of the arrears of the Equalization Fund because we want Kenya to develop together. When every part of Kenya develops, the whole country ultimately develops. This is money that will be going into infrastructure projects like roads, water and other facilities like those in the education sector. That is because we want those areas that have been marginalised for too long to catch up so that Kenya develops together.

I want to thank all Members because we have consistently been appropriating money into the Equalization Fund and we will continue to do so as it is provided for in the Constitution. I now request the Member for Dadaab, Hon. Farah Maalim to second.

Thank you.

On a point of order, Hon. Speaker.

What is out of order, Hon. Member? You have the microphone.

Thank you, Hon. Speaker. Unfortunately, for the better part of this year, I have been unwell and have not been attending House sittings.

Pole.

Yesterday, when I looked at the list of the constituencies that have been allocated the Equalization Fund, unfortunately, Kilifi South was missing. I looked at the other constituencies that have been allocated the funds, but I could not understand ….

Order, Hon. Chonga. Take your seat.

Order, Hon. Chonga. The Speaker does not allocate the Equalization funds. I am sure you know where to find the answers.

Hon. Farah Maalim, to second.

Hon. Speaker, I beg to second. While seconding this Motion, it is important to mention that we were together in the 10th Parliament under the new constitutional dispensation when the Equalization Fund was created. The idea was that the traditional, historically marginalised areas be brought up to speed with the rest of the country and, more so, in light of what we had before which was called Sessional Paper No.10 of 1965, which essentially cut off the so-called buffer zones of the north and former Northern Frontier District (NFD) from development. We originally had 14…

Order, Hon. Farah. You are making an important point at the wrong forum.

I just want to make an observation. I have already seconded, in line with what the Chairperson has elaborated on why he thinks that this should be passed.

Those are matters that are canvassed in debate at the Second Reading.

I am also elaborating on that, but putting a rider, in that, this has been watered down to 34 constituent counties. So, I support it and I am happy that the Chairperson of the Committee has done a lot to make sure this money is disbursed. But how much infrastructural development will Ksh90 million do in Garissa in terms of tarmac roads, the national electricity grid and the things it is supposed to cater for? The word equalisation means bring them up to speed. But having said that, I know that I am a minority here, but I second it.

Thank you very much.

Thank you. Hon. Chonga, the allocation of the Equalisation Fund is done by the Commission on Revenue Allocation (CRA) .

Order, Hon. Farah Maalim. We are the ones who drafted the Constitution. The areas that were identified were subsequently expanded by CRA and approved by Parliament. Can I put the question?

Yes.

I confirm that we have the requisite quorum.

Order, Whip of the Majority Party. Take your seat.

Hon. Members, pursuant to the provisions of Section 40 of the Public Finance Management Act, 2012 and Standing Orders 25A (a) and 244C, I will now interrupt the business of the House to allow the Cabinet Secretary for the National Treasury and Economic Planning to make a public pronouncement on the budget highlights and revenue raising measures for the national Government for the Financial Year 2024/2025 and the Medium-Term. In accordance with the Standing Orders, I have also designated a suitable place in the chamber for the purpose.

Hon. Members, as I invite the Cabinet Secretary, I hasten to remind the House of the nature of today’s event. First, the House will not make any decision on the pronouncement by the Cabinet Secretary. This is largely a ceremonial event. Members may wish to note that the House is still in the supply period which commences with the consideration of the Budget Estimates and concludes with the enactment of an Appropriation Act. At present, the House has only considered and approved the Budget Estimates for the Financial Year 2024/2025. As you are aware, the Appropriation Bill 2024 and the Finance Bill 2024, that is the ways and means proposed to support the appropriations made by the House, will be considered at a later stage.

Order, Hon. Kagombe! There was a lot of peace in the House yesterday. But you are welcome back to the House.

Kenya has not been spared from the negative effects of climate change. The recent unprecedented floods that our country faced following the prolonged drought in 2021 and 2022 claimed lives, caused injuries to many people, and wreaked havoc on property, infrastructure and livelihoods. The Government responded promptly and undertook short-term measures to mitigate the devastating impacts of the drought and floods. Going forward, we shall formulate and implement long-term climate change adaptation and mitigation strategies to generate strong resilience pathways.

Our climate action agenda is informed by the need to restore our degraded ecosystems, which include forests, rivers and wetlands. It is for this reason that H.E. the President has rallied Kenyans to prioritise environmental conservation, implement aggressive reforestation, afforestation and wetland restoration programmes and reverse biodiversity loss and land degradation. In response to the President’s call, the Government has stepped up climate adaptation and mitigation efforts, including green energy, smart agriculture, de-carbonized manufacturing, e-mobility and green building, all aimed at the attainment of zero carbon by

Hon. Speaker, to address these challenges and enhance revenue mobilisation, we shall implement a combination of tax policy and administrative refor

program, Ksh6.1 billion for the National Agricultural Value Chain Development Project, Ksh2.5 billion for the Enable Youth Program, Ksh2.4 billion for the Enable Youth and Women in Agriculture, Ksh747 million for Small-scale Irrigation and Value Addition Project and Ksh642.5 million for Food Security and Crop Diversification project.

To improve livestock production, I propose Ksh2.4 billion for De-risking Inclusive and Value Enhancement of Pastoral Economies program, Ksh1.5 billion for Livestock Value-chain Support Project, Ksh1.5 billion for Kenya Livestock Commercialisation Program and Ksh192.5 million for the Embryo Transfer project. I have also proposed Ksh300 million for the development of a Leather Industrial Park at Kenanie.

To support the growth of the blue economy, I propose a total of Ksh11.3 billion to the blue economy and fisheries sub-sector. This includes Ksh3.7 billion to Aquaculture Business Development Project, Ksh3.1 billion to the Kenya Marine Fisheries and Socio-Economic Development Project, Ksh540 million for rehabilitation of fish landing sites, Ksh695.5 million for Liwatoni Ultra-Modern Fish Hub and Ksh600 million for marine fish assessment.

To raise agricultural productivity and enhance resilience to climate change risks in targeted smallholder farming and pastoral communities, I propose an allocation of Ksh340 million towards ending drought and emergencies projects. To ensure legitimacy of land ownership and settle the landless, I propose a sum of Ksh5.5 billion. This allocation will cater for the processing and registration of title deeds, settlement of the landless, digitisation of the land registry, geo-referencing of land parcels and construction of land registries.

I turn to transforming the Micro, Small and Medium Enterprises (MSME) economy. Accessibility to affordable credit to most Kenyans at the bottom of the pyramid remains a challenge. To address this challenge, the Government is proposing an additional allocation of Ksh5 billion to the Financial Inclusion or Hustler’s Fund to scale up access to credit for households and MSMEs. I propose an additional Ksh200 million for the Youth Enterprise Development Fund, Ksh162.5 million for the Centre for Entrepreneurship Project and Ksh1.9 billion for Rural Kenya Financial Inclusion facility.

Regarding Housing and Settlement, the Government is committed to turning the housing challenge into an economic opportunity to create quality jobs for the youth directly in the construction sector and indirectly through the production of building products. This will be achieved through, among other measures, facilitating delivery of 200,000 houses per annum and enabling low-cost housing mortgages. To continue supporting this initiative, I have proposed an allocation of Ksh92.1 billion for housing, urban development and public works. This includes Ksh8.3 billion under the Kenya Urban Programme, Ksh3 billion to Kenya Mortgage Refinance Company for enhancement of the company’s capital as well as for lending to primary mortgage lenders, Ksh32.5 billion for construction of affordable housing units, Ksh15 billion for construction of social housing units and Ksh14.7 billion for social and fiscal infrastructure.

Other proposed allocations in the housing, urban development and public works include Ksh11.3 billion for the Kenya Informal Settlement Improvement Project Phase III, Ksh1 billion for construction of markets, Ksh1 billion for the National Slum Upgrading Programme, Ksh1 billion for construction of housing units for the National Police and Kenya Prisons, Ksh496.3 million for construction of foot bridges and Ksh444 million to support the construction of targeted county headquarters.

Regarding the Universal Health Coverage (UHC), the Government is committed and determined to realise the constitutional right to health by promoting access to quality and affordable health care through the UHC programme. Towards this end, I propose an allocation of Ksh127 billion to the health sector to support various activities and programmes. This includes Ksh4.2 billion for UHC Coordination and Management Unit, Ksh2 billion for Free Maternity Health Care, Ksh3.6 billion for Managed Equipment Services, Ksh861.5 million to

provide medical cover for orphans, elderly and severely disabled persons in our society, Ksh4.6 billion to cater for the stipend and acquisition of specialised medical equipment for community health promoters and Ksh4.1 billion for the Primary Health Care Fund.

To lower cases of HIV/AIDS, Malaria and Tuberculosis and enhance the vaccines and immunisation programme in the country, I have proposed Ksh28.7 billion for the Global Fund and Ksh4.6 billion for Vaccines and Immunisation Programmes, respectively. To enhance early diagnosis and management of cancer and reduce the burden of treatment among Kenyans, I have proposed an allocation of Ksh1.1 billion to strengthen cancer management at Kenyatta National Hospital and Kisii Level 5 hospitals. I have also proposed Ksh2 billion to the Emergencies, Chronic and Critical Illness Fund.

To improve health service delivery, I have proposed a sum of Ksh29.7 billion for Kenyatta National Hospital (KNH) and Moi Teaching and Referral Hospital. This includes Ksh2.6 billion for construction of KNH Burns and Paediatrics Centre. I have also proposed Ksh5.2 billion for the Kenya Medical Supplies Agency, Ksh2.5 billion for the Kenya Medical Research Institute, Ksh1 billion for procurement of family planning and reproductive health commodities and Ksh760 million for procurement of equipment at the National Blood Transfusion Services. Further, to strengthen the capacity of medical personnel, I have proposed Ksh3.7 billion for medical interns, Ksh406 million for training of health personnel and Ksh8.6 billion for Kenya Medical Training Centres.

Investment in digital superhighway and creative economy continues to play a critical role in enabling the Government achieve the objectives of the Bottom-up Economic Transformation Agenda (BETA) through increased productivity and competitiveness. On the creative economy, promotion of music, theatre, graphic design, digital animation, fashion and craft, among others, continues to create job opportunities for the youth.

To support the growing digital superhighway and creative economy, I have proposed an allocation of Ksh16.3 billion to fund the initiatives in the ICT sector. Specifically, this proposed allocation includes Ksh1.1 billion for Government shared services, Ksh704 million for digital superhighway, Ksh2.3 billion for the construction of Kenya Advanced Institute of Science and Technology at Konza Technopolis, Ksh2.8 billion for Kenya Digital Economy Acceleration Project and Ksh2.8 billion for maintenance and rehabilitation of the Last Mile County Connectivity Network. In order to fast-track the developments of the Konza Technopolis City, I have proposed an allocation of Ksh1.5 billion for the horizontal infrastructure Phase I and Ksh5.2 billion for the Konza Data Centre and Smart City facilities.

Other key allocations to critical sectors supporting BETA include investment in critical infrastructure. The Government continues to expand and maintain critical infrastructure in roads, railways, sea and airports to achieve socio-economic transformation that will also enhance Kenya’s competitiveness and facilitate cross-border trade and regional integration. Towards this end, I have proposed an allocation of Ksh193.4 billion for development of roads. This includes Ksh86.2 billion to support construction of roads and bridges, Ksh37.7 billion for rehabilitation of roads and Ksh69.5 billion for road maintenance.

To expand the railway transport and associated infrastructure, I have proposed Ksh25.2 billion. I have also proposed Ksh2.4 billion for infrastructure development at Dongo Kundu Special Economic Zone, Ksh1 billion for Nairobi Bus Rapid Transport Project, Ksh316 million for promotion of e-mobility project and Ksh239.4 billion for the development of Nairobi City Railway. To facilitate movement of goods and people in inland waters, I have proposed an additional Ksh200 million for acquisition of ferries for Lake Victoria.

To scale up production of reliable and affordable energy, I have proposed an allocation of Ksh69.7 billion to the energy sub-sector. This includes Ksh27.8 billion for the national grid system, Ksh24 billion for rural electrification, Ksh14 billion for the development of geothermal

energy, Ksh2.2 billion for alternative energy technologies and Ksh920 million for the development of nuclear energy.

Hon. Speaker, I will now turn to improving education outcomes. The Government continues to invest in education to improve education outcomes and create a level playing field for all Kenyan children. From this end, I have proposed a total allocation of Ksh656.6 billion or 27.6 per cent of total expenditures to the education sector. This includes Ksh358.2 billion to the Teacher Service Commission (TSC), Ksh142.3 billion for basic education, Ksh128 billion for higher education and research and Ksh30.7 billion for Technical Vocational Education and Training (TVET). The allocation of the education sector includes Ksh9.1 billion for free primary education, Ksh61.9 billion for free day secondary education, Ksh30.7 billion for Junior Secondary School (JSS) capitation and Ksh5 billion for the examinations fee waiver.

In addition, Hon. Speaker, I have proposed an allocation of Ksh13.4 billion for the conversion of 46,000 JSS interns to permanent and pensionable terms, Ksh1.3 billion for the training of teachers on Competency-Based Curriculum (CBC), Ksh360 million for the Digital Literacy Programme and Information and Communication Technology (ICT) integration in our secondary schools. To support infrastructure development and ensure safe learning in our schools, I have proposed an allocation of Ksh3.2 billion for primary and secondary schools infrastructure, Ksh1 billion for construction of classroom for JSS and Ksh2.3 billion for the construction and equipping of technical training institutes and vocational training centres. Further, I have proposed Ksh11.1 billion for the Kenya Primary Education Equity in Learning Programme, Ksh1.8 billion for construction of integrated resource centres and Ksh1.5 billion for the Kenya Secondary Education Quality Improvement Project.

Hon. Speaker, other proposed allocations to the education sector include Ksh1.1 billion for the research, science and technology innovation. The Government is implementing the new funding model for public universities and TVET institutions through the provision of Government scholarships and loans, apportioned according to students' needs. The new funding framework seeks to offer students whose households are at the bottom of the pyramid an equal opportunity in accessing university education, as well as technical training. Towards this end, I have proposed an allocation of Ksh35.9 billion to the Higher Education Loans Board (HELB) for provision of loans to university and TVET students, Ksh16.9 billion for the scholarship for university students and Ksh7.7 billion for capitation and scholarship for TVET students.

Let me now move to supporting manufacturing for job creation. Further, to promote local industries, I have proposed an allocation of Ksh23.7 billion under various implementing ministries, departments and agencies. Out of these, Ksh4.5 billion will support the establishment of county integrated agro-industrial parks, Ksh1.9 billion for Supporting Access to Finance and Enterprise Recovery (SAFER) project, Ksh1.1 billion for construction of investors sheds in Athi River, Ksh1.9 billion for establishment of six flagship Export Processing Zones (EPZ) hubs, Ksh440 million to the development of Special Economic Zones (SEZ) Textile Park in Naivasha, and Ksh1 billion for the Kenya Jobs Economic Transformation (KJET).

In addition, Hon. Speaker, in order to revitalise and maximise the benefits from our cash crops, the Government will make further investments towards revival and enhancement of output. In this respect, I have proposed Ksh2 billion for Coffee Cherry Revolving Fund. This is in addition to Ksh4 billion that has been allocated in the current fiscal year, Ksh1.5 billion for payments of debts owed to sugar-cane farmers, arrears to employees and maintenance of cane testing units, Ksh120 million for Cotton Industry Revitalisation Project and Ksh150 million for the pyrethrum industry recovery.

In order to reduce over-reliance of the importation of edible oils and encourage local production and processing, I have proposed Ksh90 million for the Coconut Industry

Revitalisation Project, Ksh260 million for the National Edible Oils Crop Promotion Project and an allocation to National Agricultural Value Chain Development Project, which includes support for cashew nut development.

To enhance milk processing, I have proposed Ksh1.5 billion for excess milk mop up, Ksh500 million for modernisation of Kenya Co-operative Creameries (KCC) milk factories, and Ksh250 million for the construction of a milk factory in Narok.

To equip our youth with essential training and internship opportunities, I have proposed an allocation of Ksh1.3 billion for the Kenya Industry and Entrepreneurship Project, Ksh119.9 million for the construction of industrial research laboratories and Ksh114.3 million for the Constituency Industrial Development Centres.

I will now turn to improving security. Enhanced national security creates an enabling environment for businesses to thrive, while aiding faster economic recovery. In this regard, I have proposed an allocation of Ksh377.5 billion to support the operations of the National Police Service (NPS), Kenya Defence Forces (KDF), National Intelligence Service (NIS) and Kenya Prisons Service. The proposed allocations include Ksh173.1 billion for KDF, Ksh110.6 billion for NPS, Ksh46.3 billion for NIS and Ksh32.7 billion for Kenya Prisons Service. I have proposed an allocation of Ksh13.9 billion to cater for leasing police motor vehicles and the modernisation programme. To step up the war on crime and embrace support to administration of justice, I have proposed Ksh918.4 million to equip the National Forensic Laboratory.

As a caring Government, we shall continue to protect the vulnerable members of our society. I have in this regard proposed an allocation of Ksh31.3 billion for social protection and affirmative actions in this Budget. Out of this allocation, Ksh18.6 billion will cater for cash transfers to elderly persons, Ksh7.9 billion for orphans and vulnerable children and Ksh1.2 billion for persons living with severe disabilities. The proposed allocation includes Ksh1.5 billion for the Kenya Hunger Safety Net Programme and Ksh1.9 billion for the Kenya Social and Economic Inclusion Project. In addition, Ksh815 million will go to Child Welfare Society of Kenya, Ksh400 million to the Presidential Bursary for the Orphans, Ksh600.1 million for National Council for Persons Living with Disabilities, Ksh100 million for the National Albinism Support Programme and Ksh100 million for National Autism Support Programme.

Let me turn to equity, poverty reduction, women and youth empowerment. Hon. Speaker, the most pressing challenge in our country at the moment is lack of job opportunities for the youth. This has been exacerbated by the multiple shocks that have hit our economy. In order to empower the youth and support businesses owned by the youth and women, I have proposed Ksh89.5 billion for those initiatives. This allocation includes Ksh10.4 billion for the National Youth Service (NYS), Ksh1.1 billion for the Kenya Youth Empowerment Programme, Ksh200 million for the Youth Enterprise Development Fund, Ksh162.5 billion for the Centre for Entrepreneurship, Ksh230 million for the establishment of youth empowerment centres and Ksh2.7 million to National Youth Opportunity Towards Advancement (NYOTA). In addition, I have proposed Ksh649.8 million to strengthen the film industry in Kenya.

The Government is committed to ensuring increased income for our women through employment creation and supporting women-led enterprises. To empower our women further, I have proposed Ksh182.8 million to the Women Enterprise Fund (WEF) and Ksh3.5 billion for the National Government Affirmative Action Fund (NGAAF).

To promote regional equality and equity, reduce poverty and enhance social development, I have proposed Ksh63 billion to the National Government Constituencies Development Fund (NG-CDF) as well as Ksh8.08 billion for the Equalisation Fund to finance programs identified in marginal areas.

On stimulating tourism growth, sports, culture, recreation and arts, the Government has prioritised expanding the space for creativity. That includes freedom of expression and protection of intellectual property rights. The Government will also strengthen and mainstream

the arts and culture, infrastructure. It will support cultural production as well as the creative economy. We are also cognisant of the brand value of Kenyans participating and excelling in international sports arena.

To support tourism, sports, culture and even recreation, I have proposed an allocation of Ksh23.7 billion. This includes an allocation of Ksh16.5 billion for the Sports, Arts and Social Development Fund, Ksh4.9 billion to the Tourism Fund and Ksh2.2 billion to the Tourism Promotion Fund.

Let me turn to the protection of the environment, water and natural resources. In order to support environment and water conservation, and respond to climate change, I have proposed an allocation of Ksh10.7 billion to the conservation and management of forest resources. There is Ksh1.7 billion for forest research and development, Ksh2.7 billion for environmental management and protection, Ksh5.9 billion for financing locally led climate action project, Ksh1.6 billion for meteorological services and Ksh13.1 billion for wildlife security, conservation and management. In addition, I have proposed Ksh1 billion for wildlife research and development. Ksh1.2 billion is for human wildlife conflict compensation and Ksh800 million for wildlife insurance.

To expand access to clean and adequate water for domestic and agricultural use, I have proposed an allocation of Ksh36.6 billion to water and sewerage infrastructure development, Ksh12.5 billion for water resources management and Ksh1.9 billion for water storage and flood control. In addition, I have proposed Ksh17.8 billion for irrigation and reclamation and Ksh1.9 billion for water harvesting and storage for irrigation.

I will turn to improving governance and sustaining the fight against corruption. To enhance good governance and scale up the fight against corruption, I have proposed Ksh4.2 billion to the Ethics and Anti-Corruption Commission, Ksh4 billion for the Office of Director of Public Prosecution and Ksh6.9 billion to the State Law Office. There is Ksh8.7 billion to the Office of the Auditor-General. In addition, is an allocation of Ksh44.6 billion to Parliament to enhance oversight and legislative roles. I propose an allocation of Ksh24.7 billion to the Judiciary to enable the administration and justice. This includes Ksh900 million for construction and refurbishment of courts and Ksh800 million for the automation of the Judiciary.

County Governments will receive a proposed allocation of Ksh400.1 billion as equitable share in the 2024/2025 Financial Year. This is the first time we have arrived at and surpassed this figure of Ksh400 in the last 12 years of devolution. This is equivalent to 25.48 per cent of the actual revenue raised nationally in the 2020/2021 Financial Year. It complies with Article 203 (2) of the Constitution of Kenya. In addition to the equitable share of revenue, a further Ksh44.4 billion has been proposed as additional allocations to county governments. This comprises Ksh8.76 billion for the national Government share of revenue and Ksh35.66 billion from proceeds of external loans and grants. We have proposed an allocation of Ksh8 billion to the Equalisation Fund. That is 0.5 per cent of the actual revenue raised nationally in the 2020/2021 financial year.

There are measures to enhance county Governments’ own source revenue. The National Treasury is implementing a policy to support the enhancement of own source revenue by county governments as we await the enactment of the National Listing Bill. This Bill will enable county governments to collect more property rates, including contribution in lieu of rates. In addition, a multi-agency committee has been formed to manage the rollout of the proposed Integrated County Revenue Management System in 47 county Governments. This system will increase transparency, accountability and efficiency in revenue collection.

Let me turn to taxation measures and tax policy measures supporting the 2024/2025 Financial Year’s Budget. In the course of the year, we embarked on tax policy review through a number of tax studies that will support the development of a progressive tax system. The

objective of these reforms is to develop an elaborate tax policy that will raise adequate revenue to finance recurrent as well as development budgets. For this reason and to materialise it, we intend:

group with a consolidated annual turnover of €750 million whose effective corporate tax rate is below 15 per cent.

The spectrum of license fees paid by telecommunication operators are currently not tax deductible, thus creating unfairness in the tax system. In this regard, I propose to amend the Income Tax Act to allow telecommunications network operators to deduct the spectrum licenses fees over a period of 10 years.

Advanced pricing agreements have emerged as a valuable tool for preventing tax disputes related to transfer pricing of cross-border transactions. In this regard, I propose to empower the commissioner to enter into advanced pricing agreement with taxpayers engaged in transactions with related entities.

To attract international financial investors in Kenya and reinforce Kenya's position as a regional financial hub, I propose to reduce the rate of capital gains tax from 15 per cent to 5 per cent for firms that are certified by the Nairobi International Financial Centre of Origin.

A transfer of property between an individual and an entity where the individual holds 100 per cent shareholding does not constitute a gain. In this respect, I propose to exclude from capital gains tax this kind of transfer.

The digital services tax was introduced to prevent tax-based erosion occasioned by migration of traditional businesses from physical shops to online platform that is not visible by the commissioner for tax purposes. It has been noted that the design of the tax does not capture all taxpayers thus leading not only to loss of revenue, but also to unfairness in taxation. For this reason, and in line with international best practice, I propose to amend the Income Tax Act to replace the digital services tax with the significant Economic Presence Tax.

To expand the tax base and make our country self-reliant, I propose to introduce an annual motor vehicle tax at the rate of 2.5 per cent of the value of the vehicle subject to minimum amount of Ksh5,000.

Let me now turn to gains. There are substantial gains for Kenyans. Currently, the tax- free amount on subsistence allowance paid to employees in the private sector for a period spent outside the usual place of work while on official duties is capped at Ksh2,000 per day. This is quite low considering the inflation that has occurred over the years.To cushion employees in the private sector from the high cost of living, I propose to review the threshold to an amount not exceeding 5 per cent of the employees' monthly gross earnings.

Hon. Speaker, the Affordable Housing Levy and Pay-as-you-Earn (PAYE) are calculated from the same base, leading to double taxation. To address this, I propose to make the Housing Levy a deductible expense. This means that there is tax savings for Kenyans and, therefore, affording Kenyans more money in their pockets.

In order to encourage Kenyans to continue constructing their own houses, I propose to increase the limit of interest payments that qualify for mortgage relief from Ksh300,000 to Ksh360,000 per annum.

Let me turn to amendments to the Value Added Tax (VAT). I will now highlight the amendments to the Value Added Tax. Currently, the registration of Value Added Tax is a requirement for a person who makes taxable supplies of Ksh5 million or more. This threshold was last reviewed in 2007. In recognition to the effects of inflation over the years and to enhance efficiency in tax administration, I propose to increase the threshold to Ksh8 million.

Hon. Speaker, the VAT Act allows taxpayers making both taxable and exempt supplies to claim input tax, where the proportion of exempt supplies is less than 10 per cent. This has led to tax planning and hence loss of Government revenue. To address this, I have proposed the removal of the threshold so that only the input tax relating to taxable supplies are deductible.

In support of the Government's effort to combat malaria, I propose to remove VAT on mosquito repellents and raw materials that are used in the manufacture of repellents. This will encourage local production of the repellents.

Tax expenditure was estimated at Ksh393.6 billion, or about 2.9 per cent of GDP for the year 2022. Of this amount, VAT tax expenditure amounted to Ksh248.3 billion, or what is

by non-residents through a digital platform. The Finance Act introduced excise duty on fees charged on advertisement of alcoholic beverages, betting, gaming, rotaries and prize competition on TVs, print media, billboards and FM stations. This resulted to a shift in choice of advertisement platform from the traditional media to internet and social media. To create a level-playing field and to achieve the intended purpose, I propose to expand the scope of those taxes to include fees charged on internet and social media advertisements.

In order to enhance the administrative efficiency in the issuance of excise licenses to persons dealing with excisable goods or services, I have proposed an amendment to provide for issuance of licenses within 14 working days upon receipt of all required valid documents by the commissioner.

The Finance Act, 2023 introduced duty on imported eggs, potatoes and onions at the rate of 25 per cent. To promote trade across the East African region, I propose the removal of this Excise Duty on imported eggs, potatoes and onions originating from East African Community partner States, subject to goods meeting the East African Community Rules of Origin. Currently, Excise Duty is 15 per cent on telephone and internet data services, fees charged on money transfer services by banks, fees charged on money transfer by agencies and other financial service providers, and fees charged by cellular phone service providers. I propose to retain the Excise Duty rate of 15 per cent on fees charged on money transfer services by cellular phone service providers to benefit retail electronic payments ecosystem.

Hon. Speaker, I will now highlight the proposed amendments to the Tax Procedures Act. Currently, there is no validity period for the agency notices issued for enforcement of collection of unpaid taxes. This gap often leads to tax disputes and delayed revenue collection. To address this, I propose to amend the Tax Procedures Act to provide a one-year validity period for agency notices. In order to align the timelines for claiming VAT refunds in the Tax Procedures Act and VAT Act, I propose to delete the reference on timelines for claiming refunds under the VAT Act so that the applicable timeline is the six months that is provided under the Tax Procedures Act.

Currently, registered manufacturers whose value of investment in the preceding three years is at least Ksh3 billion are exempted from withholding VAT. In order, to promote equity and create fairness to all manufacturers, I propose to amend the Tax Procedures Act to remove this exemption and also to clarify that enforcement and collection of taxes will be undertaken where a decision of the Tribunal or Court is in favour of the Commissioner and stay orders have not been obtained against the decision. The 60 days provided to the Commissioner in the Tax Procedures Act to review documents submitted by the taxpayers in support of an objection of tax assessment by the Commissioner are not adequate to ensure comprehensive review. In order to give the Commissioner adequate time, I propose to extend the timeline to object decisions of the Commissioner from 60 days to 90 days.

Let me now move to amendments to the Miscellaneous Fees and Levies Act. Last year, a 17.5 per cent Export and Investment Promotion Levy was introduced on imported goods that are also locally produced in adequate quantities. In the Finance Bill, 2024, the list of goods has been expanded and the rate of the Levy reduced to 3 per cent for most of the items, and others to 10 per cent.

To facilitate the National Intelligence Service (NIS) to carry out its mandate, I propose to amend the Miscellaneous Fees and Levies Act to exempt NIS from payment of Import Declaration Fee and Railway Development Levy on security equipment and motor vehicles imported or purchased locally for official use.

The high production and importation of hazardous goods, particularly electrical and electronic devices, into the country has led to a significant increase in electronic waste (e- waste) in Kenya. This surge in waste production poses a considerable risk to both the

environment and human health. In this regard, I propose to introduce Eco-Levy on various products to be payable in line with the Polluter Pays Principle. The Levy will be imposed under the Miscellaneous Fees and Levies Act.

I now move to amendments to the Kenya Revenue Authority Act. In order to enhance public knowledge and literacy on tax matters, I propose to amend the Kenya Revenue Authority Act to enable the Kenya School of Revenue Administration to collaborate with other institutions of higher learning to develop curriculum, assess and examine students, and award certificates in tax matters. I have submitted this amendment in a separate Bill.

Hon. Speaker, in conclusion, the Government, under the leadership of His Excellency the President, Hon. Dr. William Samoei Ruto, has succeeded in steering the country through a difficult period of global and domestic challenges. Remarkably, the economy has recovered from the lagged effects of COVID-19 pandemic and unwinding from persistent and successive domestic and external shocks that created some permanent effects.

The policies and structural reforms outlined in this Budget have laid a firm foundation to protect this fragile recovery for a sustained socio-economic transformation. Financing development is critical to this economic transformation. That is why raising adequate tax revenues is a core pillar for this economic transformation and growth. I am confident that these measures will create jobs, strengthen economic recovery and reduce the cost of living in the country, thereby providing the much-needed relief to the common mwananchi. I, therefore, urge Hon. Members and all Kenyans to support the implementation of the measures contained in this Budget for our mutual prosperity.

Finally, achieving a prosperous Kenya also requires leadership and the support of every Kenyan. For this reason, I wish to thank His Excellency the President Hon. Dr. William Samoei Ruto and His Excellency the Deputy President Hon. Rigathi Gachagua for their continued wise guidance, leadership and even perseverance to long working hours.

My special appreciation goes to the Prime Cabinet Secretary, the Attorney-General, my fellow Cabinet Secretaries, respective Principal Secretaries and Accounting Officers and staff in all MDAs for their support and contributions to the FY 2024/25 Budget-making process.

My sincere appreciation also goes, first, to you, Hon. Speaker of the National Assembly and your counterpart in the Senate; the Majority Leader and the Minority Leader as well as the entire leadership of the two Houses of Parliament, including the respective Clerks, for overseeing the approval process of the Budget Estimates for Financial Year 2024/25 and the related documents.

Secondly, my sincere appreciation also goes to the Honourable Chairpersons and Members of both the Budget and Appropriations Committee and the Departmental Committee on Finance and National Planning, and all other Departmental Committees of this House as well as the staff of the Parliamentary Budget Office for their constructive inputs and excellent leadership during the approval and discussions of the Budget process.

Thirdly, my appreciation goes to my colleagues at the Ministry of the National Treasury and Economic Planning led by Dr. Chris Kiptoo, the Principal Secretary for the National Treasury; and Mr. James Muhati, the Principal Secretary for the State Department for Economic Planning, including the leadership of all MDAs, for their commitment, dedication and support in the preparation process of this Budget.

Fourth, my appreciations goes to the Management and Staff of the Central Bank of Kenya, Kenya Revenue Authority, Financial Sector Regulators and other MDAs for their contributions and advice during the Budget-making process.

Fifth, my gratitude goes to our Multilateral and Bilateral Development Partners for their continued technical and financial support. Further, I thank players in the private sector for their sustained contribution and discussions in support of the growth of our economy.

Sixth, I appreciate the media and non-state actors for their active engagement and participation in the Financial Year 2024/25 budgeting process.

I remain immensely grateful to my family for their support and inspiration as I execute my duties at the Ministry of the National Treasury and Economic Planning, which is not an easy task, I can tell you.

Lastly, my utmost gratitude goes to all Kenyans for their contributions, proposals and suggestions received during the finalisation of the Budget proposals. The outcome of these measures are to our own benefits and a reward to perseverance of the difficulties that we have gone through and the difficulties ahead of us.

Thank you and may God bless you.

Thank you, Cabinet Secretary. Cabinet Secretary, I am waiting for the handing over of the documents.

Thank you. You may take your seat. Hon. Members, I wish to thank the Cabinet Secretary for the National Treasury and Economic Planning for ably making a public pronouncement of the Budget Policy Highlights and Revenue-Raising Measures for the National Government for the Financial Year 2024/2025 and the Medium-Term Debt Management Strategy 2024. In this regard, Hon. Members, I wish to confirm that in conformity with the provisions of Article 221 (1) of the Constitution, Sections 37, 39 and 39A of the Public Finance Management Act 2012 and Standing Order 244C, the Cabinet Secretary submitted to the National Assembly the documents and legislative proposals required to implement the National Government Budget for the Financial Year 2024/2025 on 30th April 2024. This is within the prescribed timeline. The documents submitted by the Cabinet Secretary included the Estimates of Revenue and Expenditure for the National Government, and the Finance Bill 2024, which is currently under consideration by the House. Hon. Members, it is now my pleasure to invite all Hon. Members, the Cabinet Secretary for the National Treasury and Economic Planning, all Cabinet Secretaries present and other invited guests to our reception at the Parliamentary Courtyard at the rise of the House.

Hon. Members, the House stands adjourned until Tuesday, 18th June 2024 at 2.30 p.m.

The House rose at 5.17 p.m.

Published by Clerk of the National Assembly Parliament Buildings Nairobi