Initiatives to establish County Aggregation and Industrial Parks (CAIPs) across the country are faltering amid funding cuts, hampering one of President William Ruto’s key strategies to transform the agricultural and manufacturing sectors.
The latest details show that while the government has planned to establish CAIP in every district by the end of June next year, only 18 districts have district centers that are important for value addition.
The government considers CAIP as an important link between the agricultural and manufacturing sectors, as it will address input and quality costs for farmers and provide them with working capital to achieve the necessary value addition.
The initial plan is to implement it in all districts within two years from July 2023, with the national government funding half of the Sh500 million cost of each CAIP.
While the national government plans to inject Sh9 billion into the project in the 2023/24 and 2024/25 fiscal years, a report from Parliament today shows that only Sh3.25 billion will be funded.
“If the allocation for CAIP is reduced to Sh2 billion from the initial allocation of Sh4.5 billion for the financial year 2024/25. Furthermore, the allocation for the financial year 2023/24 which amounts to Sh4.5 billion will only be disbursed Sh1.25 billion with each project receiving Sh62. 5 million,” noted the budget committee of the National Assembly.
In its report on the County Government Supplementary Allocation Bill (CGAA), 2024, the committee said the Treasury blamed the lack of funding after rejecting the Finance Bill, 2024, but did not provide details on the unfunded CAIP in the last fiscal year.
In the first supplementary budget for the current financial year, the Treasury reduced the supplementary allocation for counties from Sh61.9 billion to Sh46.6 billion. Funding for CAIP was cut by 56 percent.
“Thus, there is a need to improve the implementation framework of the program and consider focusing on completing the first 18 CAIPs in the financial year 2024/25,” the committee observed.
In a report tabled in Parliament last month, the Ndindi Nyoro-led committee recommended approving Treasury’s proposed budget cuts for CAIP in the year to June 2025 from Sh4.5 billion to Sh2 billion and “revised allocations for CAIP to prioritize the completion of ongoing projects in the first 18 districts.
The initiative will be funded by the national government through the CGAA Bill, 2024. The Senate passed the bill on June 11 with a total of Sh61.9 billion (conditional and unconditional) as additional funds for counties.
The Senate has considered that after funding in the fiscal year 2023/24 is 72 percent less, 11 districts must implement the project in the year until June 2026, as predicted by the Budget Policy Statement (BPS) 2024.
But with further funding cuts approved by a parliamentary committee in the supplementary budget, at least 29 districts will not implement the initiative by the end of the 2024/25 fiscal year, meaning President Ruto will not be able to meet his target by the end of the year. His first term, must continue funding shortfalls in the coming fiscal year.
The Ministry of Trade and Industry has outlined that through the implementation of CAIP, the government will not only improve productivity in the agricultural and manufacturing sectors but also promote forward and backward linkages with other sectors of the economy.
The project is implemented by the national and district governments in partnership with private sector players, development partners, and the United Nations Industrial Development Organization.
“The main objective of CAIP is to develop manufacturing and investment through agro-industry and improve the productivity of the agricultural sector in a sustainable way, thereby creating inclusive employment, increasing the income of farmers; increasing foreign exchange, providing a platform where farmers, processors, exporters, research institutes, industrial bodies, and the government can participate in the development of agro-industry,” said the Ministry.
