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40 MINISTERS AND WHAT IT COSTS THE TAXPAYER

Cabinet: What it will cost the taxpayer

Published on April 4, 2008, 12:00 am

By James Anyanzwa and James Ratemo

It is now official — Kenyans will have to dig deeper into their pockets to maintain a bloated Cabinet.

The proposed 40-member Cabinet agreed between President Kibaki and Prime Minister-designate, Mr Raila Odinga, will cost the taxpayer at least Sh352 billion a year.

And analysts have warned that the already battered economy, due to the recent post-election skirmishes, could compromise recovery and reconstruction efforts.

The consequences of the huge numbers could lead to higher taxation and an even higher cost of living.

Annual revenue collections, estimated at Sh375 billion, are projected to sink by as much as 30 per cent (Sh90 billion).

The additional costs were anticipated when the Bill creating the offices of prime minister, two deputies and now the additional ministries were tabled in Parliament.

However, they were not budgeted for, in addition to the costs of resettling displaced people. This means the overall costs to the taxpayer could skyrocket.

The cost of running 34 ministries this year is Sh299.6 billion, according to the 2007/8 Budget, translating to an average of Sh8.8 billion for each ministry.

Using the average cost, 40 ministries could cost the taxpayers about Sh352 billion a year. Capping ministries at 24 would have reduced expenditure on ministries by Sh130 billion.

For instance, a minister earns Sh887,500 salary and Sh200,000 in allowances. This adds up to Sh1.087 million a month.

An assistant minister earns Sh887,500 and Sh100,000 in allowances, translating to about Sh987,500 a month.

Forty Cabinet ministers will, therefore, cost the exchequer Sh43.5 million a month, and 40 assistant ministers Sh35.5 million.

This means that it would cost the exchequer a whopping Sh1.06 billion annually in salaries alone.

Although the pay for the prime minister and two deputies is still unclear, the figure is bound to skyrocket.

The public wage bill has often constituted four per cent of recurrent expenditure.

Other additional costs would include 40 permanent secretaries, new office space, additional support staff, housing and vehicles.

Expenditure to constrain development

The Institute of Certified Public Accountants of Kenya (ICPAK) said the country couldn’t afford a bloated Cabinet, while the Institute of Policy Analysis and Research (Ipar) said the move would erode donor confidence towards the Government reconstruction agenda.

But on the overriding issue of national reconciliation, the European Union has applauded the gesture, saying the country needs a Government that is representative and power-sharing between equals to ensure stability and prosperity.

The chief political players have agreed on a Cabinet of 40 instead of 24 members of civil society have been calling for.

Mr Barasa Tiberius, a research fellow in Governance and Development Programme at Ipar, said a Cabinet of 40, the biggest in Kenya’s history, would cost close to Sh2 billion annually.

Though the cost implications are yet to be assessed, according to Barasa, it was obvious that expenditure would constrain development.

Barasa said the Government was likely to pay each minister close to Sh2 million a month. He said a huge Cabinet would put Kenya in conflict with donors.

“The Cabinet is a disadvantage to donors and some will not give aid to Kenya to pay salaries at the expense of development,” he said.

He expressed fears that the two leaders were under pressure to reward their loyalists, a move that would promote patronage.

“Evidence from countries with a lean Government show they are efficient,” he said.

ICPAK chairman, Mr Stephen Lugalia, cautioned that development would be hampered.

“The additional ministries are a cost we can ill afford,” he said.

Lugalia said a bloated Cabinet would mean an expanded Civil Service, whose top officials also enjoy hefty salaries and allowances.

For instance, permanent secretaries take home a minimum salary of Sh213,640 and a maximum of Sh423,280 a month, besides Sh80,000 and Sh75,000 entertainment and extraneous allowances.

More begging bowls

ICPAK Vice-Chairman, Mr Michael Itote, told The Standard that the situation would lead to higher taxation and increased prices for basic commodities and more “begging bowls” to donors.

“What will certainly irk the public is that the perks the extra ministers will earn do not take into account the state of the economy,” said Itote.

Last year’s wage bill as a percentage of the gross domestic product declined from 9.7 per cent to eight per cent in 2006 on the back of improved economic performance.

In the first sign yet that the downturn in the economy is taking its toll, the Government unveiled tough measures to cut spending as Treasury sought to plug a shortfall in the Sh603 billion Budget.

The new budget cutbacks, called Austerity Expenditure Measures, are aimed at cushioning the economy in the face of post-election turmoil that appears to have slowed down revenue collection gains made in recent years.

Treasury Permanent Secretary, Mr Joseph Kinyua, is understood to have ordered all departments to cut budgets by up to 40 per cent to help cater for the anticipated shortfalls.

The PS also announced a freeze on employment of new staff in a bid to lessen the wage bill.

Civil Service recruitment, which resumed during President Kibaki’s first term, had been frozen in the early 1990s following donor withdrawal.

The unforeseen political instability situation is also said to have contributed to increased demand for extra financial allocations from Government departments reached Sh52 billion this month.

“I think it is going to be a difficult thing for the Government in the short term,” Mr Billow Kerrow, the former Mandera Central MP, said.

Additional reporting by Samuel Otieno and Mutinda Mwanzia

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About SG

Secretary general of Chama Cha Mwananchi. This blog www.chamachamwananchi.wordpress.com, is based in Sweden.

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