Budget 2012: Is East Africa spending where it matters?

On Thursday 14 June Finance Ministers from across the East African region – Kenya, Uganda, Tanzania and Rwanda – simultaneously announced their budget estimates for 2012/2013. At this time of the year, it has almost become a routine for retailers and traders to hoard their stock (pending tax decisions affecting their pricing), while citizens look forward to price reductions and revellers hold their breath for cuts on alcohol and other goods.

The reaction to budget announcements was mixed across the region. For Tanzanians, major concerns centred on the large proportion of their budget consumed by recurrent expenditure, escalating costs of living, inflation and taxation. For Kenyans it was the announcement that Ksh 179 billion of budget deficit would be financed by borrowing and Official Development Assistance (ODA). However, for Rwandans the outcome was more positive – for the first time ever around 54% of its national budget will be financed by domestic resources (notably tax) rather than aid.

The following article highlights some trends in public resource allocation and expenditure across the East African Community (EAC), focusing on three sectors: agriculture, education and health.

Agriculture

There is a common notion across the region that agriculture is the ‘backbone of the economy’. It employs over 90% of the workforce in Burundi; contributes approximately 51% of GDP in Kenya; is a leading export facilitator and foreign exchange earner in Uganda; provides crucial raw materials for industrialisation in Tanzania and is the ultimate answer to food security in the region.

The agriculture sector has been largely underfunded despite its potential to deal with both rural and urban poverty, create employment and bolster economic growth in many economies worldwide. On average, none of the EAC countries (bar Rwanda lately) spends more than 5% of total government expenditure on the agriculture sector (Africa Economic Outlook). Kenya’s Finance Minister, Robinson Njeru Githae, indicated that agriculture will be one of the key sectors to drive economic growth in the country in 2012/2013 (Budget Policy Statement, 2012). However, no significant amounts of resources were allocated to this sector in the budget.

In the past East African leaders have committed their countries to improve the allocation of resources for agriculture in the region. For example, in 2003 at the African Union Summit the Maputo Declaration on Agriculture and Food Security was signed. This saw agreement from African Heads of State that 10% of the national budget allocation would be spent on agriculture development, and that agricultural productivity would increase by least 6% (see CAADP).

The following graphs show agricultural sector allocations for Uganda, Rwanda and Kenya.

Figure 1: Government of Uganda, agricultural sector allocations and proportions, 1999-2012, US$ million

Source: Development Initiatives based on approved estimates of revenue and expenditure 1999-2012, Ministry of Finance, Uganda

Figure 2: Government of Rwanda, agricultural sector allocations and proportions, 2006-2014, RWF billions

Source: Development Initiatives based on Rwandan National Budget Outlays, 2006-2014, Ministry of Finance Rwanda

Figure 3: Government of Kenya, agricultural sector as a proportion of total expenditure, 2002-2012

Source: Development Initiatives based on Kenyan Boost data, 2002 to 2012

Health

It is estimated that around 41.4 million people in East Africa are poor (living below US$1.25 per day), approximately 54% of the regions entire population.

Source: Development Initiatives based on data from the African Economic Outlook, approximate figures.

Health is a particular problem. For example Burundi has the 11^th lowest life expectancy in the world, at 50.4 years.

Source: Human Development Index, 2011

As with agriculture, leaders of East African countries have also previously committed themselves to increase spending to the health sector. In 2001, African Heads of State signed the Abuja Declaration: the Communiqué, in which they committed to increase spending on health care to at least 15% of total government spending.

However, in reality the average proportion of health expenditure between 2000 and 2010 has been well below the target 15% for all the EAC states (see following graphs). Furthermore, when measured against total population, per capita health sector spending in the EAC states has been below the World Health Organisation’s standard of US$44 per capita. These are the minimum resources required to strengthen healthcare systems and service provision in low income countries.

Figure 4: Government of Kenya, health sector as a proportion of total budget expenditure, 2002-2012

Source: Development Initiatives based on Kenyan Boost data, 2002 to 2012

Figure 5: Government of Rwanda, health allocations and proportions, 2006-2014, RWF billions

Source: Development Initiatives based on Rwandan National Budget Outlays, 2006-2014, Ministry of Finance Rwanda

Figure 6: Government of Uganda, health sector allocations and proportions, 1999-2012, US$ million

Source: Development Initiatives based on approved estimates of revenue and expenditure 1999-2012, Ministry of Finance, Uganda

Education

Educational progress in the region has been substantial, especially since the introduction of free primary education for all in some East African countries.  Universal primary education has increased enrolment, for example in 2010 there were around 90% of students enrolled in primary education in Burundi (Africa Economic Outlook). As the graphs show, spending has been prioritised in the education sector in Kenya and Uganda.

Figure 7: Government of Kenya, education sector as a proportion of total expenditure, 2002-2012

Source: Development Initiatives based on Kenyan Boost data, 2002 to 2012

Figure 8: Government of Uganda, education sector allocations and proportions, 2002-2012, US$ million

Source: Development Initiatives based on approved estimates of revenue and expenditure 1999-2012, Ministry of Finance, Uganda

The author, Kenn Okwaroh, is an Analyst working with Development Initiatives – Africa Hub. Data for Uganda, Rwanda and Kenya was provided by Karen Rono and Emmanuel Rukundo, also Analysts at the Africa Hub. 

If you have any comments or questions for Kenn, please contact him at Kenn.Okwaroh@devinit.org