Honorable Speaker of the National Assembly,
Honorable Speaker of the Senate,
Honorable Members of Parliament,
Ladies and Gentlemen,
It is my distinct honour and high privilege to return to the chambers of Parliament to deliver my Eighth State of the Nation Address since my assumption of Office as the Fourth President of the Republic of Kenya, on Tuesday, 9th April, 2013.
As always, it gives me great pleasure to return to this, August House where I served on both sides of the parliamentary divide, with many of you present here today.
I first served as a nominated Member of Parliament and later as a Cabinet Minister. I was a young man then; which is a testament that even the young can serve.
After an unsuccessful Presidential bid in 2002, I found myself on the opposition benches as the Leader of the Official Opposition and Member of Parliament for Gatundu South.
Five years later, and in recognition of my distinguished and principled service, I was called to serve as the Deputy Prime Minister in the Grand Coalition Government under His Excellency the Former President, Mwai Kibaki and under the Former Prime Minister, Rt. Hon Raila Odinga. In that Administration, I held the position of Minister for Trade and later as Minister for Finance.
This journey of mixed fortunes taught me that you could serve your country in any capacity because service is not a position; it is action. It also taught me to have empathy for both sides of the parliamentary divide and all shades of political opinions.
Of all the lessons, the enduring one is that Kenya is always greater than any one of us. In times of great political turmoil, patriotic men and women were spurred by the love of their Country to bridge partisan divides and to come together to put Kenya first.
It was not easy but it was necessary. Then, as is now, we were called upon to do all that was necessary to heal Kenya, to build bridges, and to focus on the 99% of shared visions of a better Kenya as a priority to the 1% of differing ideologies.
Personal ambitions were placed aside for the good of Kenya and for the enduring benefit of generations of Kenyans yet unborn. That selfless service, that sacrifice, led to the people of Kenya bestowing on me the high honour and extreme privilege of serving them as President, come 2013.
For the trust and faith that the Great People of Kenya placed in me, I am and will forever be, most grateful and eternally humbled.
Today, I return to Parliament as I am here to fulfill a constitutional imperative introduced into our political tradition and practice by the 2010 constitution.
In fact, I was indeed privileged to be the second President to discharge this constitutional mandate when I made my first State of the Nation Address on 27th March, 2014.
The constitution, at Article 132, mandates the President to report to a Special Joint Sitting of both Houses of Parliament on measures taken and progress made in the realization of our National Values as defined by Article 10 of the Constitution.
I am also constitutionally obliged to report on the status of our fulfilment of the international obligations of the Republic, the state of our national security, and the general State of the Nation.
In line with this constitutional instruction, my address today will lay emphasis on three elements I consider important for our country.
First is the state of our economic development, which is about our national wellbeing; second is the state of our social structure, which looks at the restoration and propagation of the dignity of our people; and third is the state of our nationhood, which speaks to the soul of the nation, including the state of our democracy.
Before I report on these thematic areas, allow me to give a brief account of the state of our national response to emerging disruptions.
Specifically, I want to put on record how the power of choice on the part of My Administration, as supported by Parliament and the County Governments, turned the COVID-19 Pandemic from a national crisis to an intergenerational opportunity.
When the Pandemic hit our country in March of 2020, I was quick to warn the nation that a crisis is twin fold; partly a danger and partly an opportunity, at the same stroke.
I highlighted the inescapable fact that depending on what you focus on in a crisis, you will emerge either triumphant or indecisive, out of fear and despair. In other words, a crisis is all about choices.
Those who chose danger and fear under the COVID scare did not survive. Those who saw the crisis through the lens of opportunity, they developed resilience and were able to ‘build back better’.
For instance, a Kenyan company known as Revital, operating in Kilifi County, became Africa’s largest producer and exporter of vaccine syringes during the COVID Period.
In 2020 alone, Revital exported over 70 million COVID vaccine syringes to over 20 countries globally.
In fact, Revital currently has the capacity to produce 300 million COVID vaccine syringes every year.
The global shortage for COVID vaccine syringes stands at 2 billion syringes a year.
This means that Revital is able to produce 1 out of every 10 COVID vaccine syringes globally. This company saw opportunity in the crisis of COVID, adapted accordingly, and innovated its business processes to optimize on the new opportunity.
Another company in the same league is Hela, a global apparel making company with a foothold in Kenya. In the first months of the pandemic, this company changed its strategy from producing clothes to producing PPE and facemasks.
With the WHO requirements of 80 million facemasks per month at the height of the COVID duress, Hela produced 5 million masks a month between April and May 2020.
This means that through innovation Hela manufactured 1 out of 16 masks required globally per month; contributing immensely to the slowing down of the COVID pandemic. This was a case of seeing opportunity in a disaster and adapting to its challenges.
However, choices are nothing without leadership. I say so because when COVID-19 hit our country, My Administration found itself confronted with a Dilemma of Two Rights.
Opinion was, divided on, whether to lockdown the country or to leave it open. What made the difference was
One side of the divide presented an economic argument. They wanted us to leave the country “open” and save the economy. They argued that COVID was a health crisis that should not trump economic imperatives.
The other side of the divide made a compelling health argument against the economic argument. Led by a brain trust of medical scientists and researchers, they argued that the country had no option but to lockdown.
Their models pointed to a soaring crisis if drastic choices, were not made. According to those experts, a series of irreducible minimums had to, be met, before considering softer health protocols.
After much reflection, My Administration opted for the public health argument over the economic argument. Our rationale was that we can always revive an ailing economy; but we cannot bring to life those who die from COVID19. And with this logic informing our choices, we set out to build the irreducible minimums recommended by the experts to forestall a COVID disaster.
Although the health argument won, we did not dismiss the economic argument in toto. We made fiscal choices to cushion the economy through a number of economic stimuli. And today I am happy to go on record in this August House as having succeeded in the choices My Administration made.
Because of our fiscal stimuli, today I can report that the impact of COVID on our economy was 14 times lesser than that on the global economy.
As part of the First Stimulus Package we announced interventions that that warranted the National Exchequer to forgo taxes amounting to exchequer Ksh. 176 Billion. These tax measures included:
The immediate reduction of VAT from 16% to 14%;
100% Tax Relief of all persons earning up to Ksh. 24,000.00
Reduction of Pay as You Earn from 30% to 25%;
Reduction of Corporation Tax from 30% to 25%;
We caused the lowering of the Central Bank Rate (CBR) to 25% from 8.25% so as to prompt commercial banks to lower interest rates applicable to their borrowers, and thereby availing much needed affordable credit to MSMEs across the Country;
We Lowered the Cash Reserve Ratio (CRR) to 25% from 5.25% so as to provide additional liquidity of Ksh. 35 Billion to commercial banks in order to directly support borrowers that were distressed as a result of the economic effects of the COVID-19 pandemic;
Central Bank of Kenya provided flexibility to banks with regard to the requirements applicable to loan classification and provision of loans that were performing as at 2nd March 2020;
We further engaged banks and all financial institutions to support all enterprises and families that sought to restructure their commercial banking families through debt moratoriums and review of tenure of the facilities.
There was a temporary suspension of the listing with Credit Reference Bureaus (CRB) of any person, Micro, Small and Medium Enterprises (MSMES) and corporate entities whose loan account had fallen overdue or was in arrears;
The Kenya Revenue Authority was directed to expedite the payment of all verified VAT refund claims amounting to Ksh.10 Billion; or in the alternative, allow for the offsetting of Withholding VAT, in order to improve cash flows for businesses;
6.0 billion from the Universal Health Coverage kitty was immediately appropriated strictly towards supporting counties in the recruitment of additional health workers to support in the management of the spread of COVID-19;
Subsequently, My Administration rolled out the Second Stimulus Package with the Support of Parliament, whose tenet was an 8-Point Economic Stimulus Programme amounting to 56.6 Billion.
The first element of the 8-point programme focused on the “Buy Kenya Build Kenya” Policy. On local infrastructure development, we allocated Ksh. 10 Billion towards The National Hygiene Program (NHP), dubbed the Kazi Mtaani initiative.
The Programme was conceptualized as an extended public works project aimed at utilizing labor intensive approaches to create sustainable public good in the urban development sector.
The Programme has so far secured gainful engagement to over 750,000 youths engaged in improvements to the environment and hygiene and in rehabilitation of access roads, footbridges and other public infrastructure through local labour.
Second was on Education with an additional KSh. 6.5 Billion to the Ministry of Education. To hire 10,000 teachers and 1,000 ICT interns to support digital learning and acquisition of 250,000 locally fabricated desks.
The third element of the programme targeted Small and Medium Enterprises, through an injection of Ksh 5 Billion as seed capital for the SME Credit Guarantee Scheme. The intention here is to provide affordable credit to small and micro enterprises.
The fourth focused on Universal Health Coverage through acquisition of locally made beds. The fifth element of the stimulus programme focused on agriculture.
My Administration prioritized Ksh. 3 billion for the supply of farm inputs through e-vouchers, targeting 200,000 small scale farmers and a further Ksh. 1.5 billion to assist flower and horticultural producers to access international markets, in a period where we had a shortage of flights into and out of the country.
Tourism was the sixth area of target for the stimulus programme. To jumpstart this important sector, and protect its players from heavy financial losses, my Administration provided soft loans to hotels and related establishments through the Tourism Finance Corporation (TFC), and A total of Ksh. 2 Billion was applied towards renovation of facilities and the restructuring of business operations by actors in this industry.
To mitigate the impact of deforestation and climate change, and to enhance the provision of water facilities, my Administration rehabilitated wells, water pans and underground tanks in the Arid and Semi-Arid areas. We applied Ksh. 2.5 Billion for flood control measures and our Greening Kenya Campaign.
The Eighth and final element of the stimulus programme was As a strategy, we enforced the policy on “Buy Kenya Build Kenya”, we set aside an initial investment of Ksh. 600 million to purchase locally manufactured vehicles. This was expected to sustain the operations of local motor vehicle manufacturers, and the attendant employment of workers.
The foregoing interventions helped to reinforce the resilience of our economy, whilst cushioning millions of households against the effect of the economy. In that regard, while most economies in the world shrunk, Kenya’s economy grew at 0.3% during 2020 despite of the COVID challenge. Although this positive growth was minimal, the second quarter of 2021 registered the most impressive growth ever recorded in our nation’s real GDP.
During the second quarter of 2021, real GDP recorded a phenomenal 1% growth. This is the highest growth ever recorded in a one quarter in Kenya’s history. It is also the first time Kenya has hit a double-digit growth. The last time Kenya’s economy got close to this kind of performance was in 2010 during the Grand Coalition Government, when the economy hit an 8.4% growth rate.
And it was this impressive trajectory that led me to announce the 13-point interventions unveiled on Mashujaa Day this year to cushion the economy with a further 25 Billion as our Third Stimulus Package, pushing the aggregate of our stimuli to over Ksh. 257 Billion.
The Third Stimulus Package focused on the key productive and service sectors that covered: agriculture, health, education, drought response, policy, infrastructure, financial inclusion, energy, environmental conservation. Those Thirteen Interventions were as follows:
The First Intervention was in the Tea Sub-Sector: I am pleased to confirm that we have supported the Tea Sub-Sector with 1 Billion in support of fertilizer subsidy for our Tea Farmers, securing our nation’s top agricultural export;
The Second Intervention was in the Sugar Sub-Sector: I note with satisfaction that smoke is billowing again in our public sugar mills, following the allocation of 1.5 Billion in aid of the sugar sector, that is being applied towards factory maintenance and payment of farmers’ arrears;
The Third Intervention was in the Coffee Sub-Sector: I confirm that 1 Billion was released in support of the ongoing reforms in the sub-sector that is being applied towards completion of the ongoing targeted interventions in the Coffee Sub-Sector;
The Fourth Intervention was in the Livestock Sub-Sector: The 1.5 Billion national Livestock offtake Programme is on course, in support of the communities adversely affected by the ongoing draught in the ASAL counties;
The Fifth Intervention was also in the Livestock Sub-Sector: I confirm that the interventions geared towards the reduction of the cost of animal feeds are well on course.
The Sixth Intervention was in Education: Noting the success of My Administration’s policy on 100% transition from primary to secondary school, I directed the National Treasury to allocate a further 8 Billion to the Ministry of Education for the CBC Infrastructure Expansion Programme, targeting the construction of 10,000 Classrooms; I am most pleased to confirm to the nation that in all the counties works in construction of the classrooms should commence by early December, 2021.
The Seventh Intervention was in Health: To enhance access to medical coverage across our nation, and as part of our Universal Health Coverage Programme, I directed the Ministry of Health to establish an additional 50 new Level 3 Hospitals, to be situated in both non-covered areas as well as densely populated areas across our nation; and I also directed the National Treasury to allocate the sum of 3.2 Billion for immediate construction of those new medical facilities;
The Eighth Intervention was in the National Sanitation Programme: We started this programme to harness the energy of our young people and to give them a buffer against COVID-19 related unemployment. Noting the success of Kazi Mtaani Programme and its effect in enhancing opportunities for the youth across the country, I directed the National Treasury to allocate 10 Billion for the third phase of the Kazi Mtaani Programme. The programme covering over 200,000 youths will be rolled out to all Counties, with priority given to densely populated areas;
The Ninth Intervention was on Energy and Petroleum. Being fully aware of the positive strides being made in our economic recovery, and cognizant that those gains stand the risk of being eroded by high-energy prices. I am pleased to confirm that we are on course to institutionalize the sought reforms.
The Tenth Intervention was on Access to Credit: Critically, I asked the National Treasury and the Central Bank of Kenya to consider suspending the blacklisting of creditors with loans below 5 million at the Credit Reference Bureau (CRB), in a move that targeted retaining the bounce-back potential of the foundation of our economy.
As the Eleventh Intent, I also asked the National Treasury and Central Bank of Kenya to consider revising the maximum amount an individual or enterprise can withdraw or deposit from a bank. Previously, it stood at one million shillings, which was not supportive of our current business environment.
I am glad to report to Parliament that as of 8th November 2021 the Central Bank of Kenya issued a notice suspending the listing of negative credit information for borrowers with loans below Ksh.5million that fell into arrears from October 1st 2021 to September 30th 2022.
This will give the MSMEs 12 months to re-organize themselves and adapt to the new economic normal.