Prof. Njuguna Ndung’u the Cabinet Secretary, National Treasury & Economic Planning, read the first Kenya Kwanza budget. The ICT Sector featured in the budget getting an allocation of KSH 15.1 billion. Notably, this is a slight drop,the ICT sector got Ksh 15.6 billion in the budget for FY 2022/23.

In total, the FY2023/24 budget is projected at Ksh 3.7 trillion equivalent to 22.6 percent of GDP.  

Hence, we look at how the ICT sector budget allocation has been spread out. Additionally, we highlight government digitalisation plans and tax proposals that touch the ICT sector.

ICT Sector Digital Superhighway

The government has prioritised its Digital Economic Plan and digitalisation of services. According to the CS, digitization and automation will increase productivity and competitiveness through providing ease of access to the market.

Moreover, it will improve the information flow as well as improve risk management. So far, the government has digitized and automated 3,570 of Government services through the e-Citizen platform to ease access to government services. This means the ICT sector will play a key role in Kenya Kwanza’s plans.

Of the allocation, the Konza city project took the lion’s share.

Konza Horizontal Infrastructure Phase I

Ksh 4.8 billion has been allocated for the Horizontal Infrastructure Phase I. This project entails the construction of streetscapes and drainage works, paves way for the vertical construction works.

The project will also see the construction of electrical power supply systems, public facilities like police stations, and landscaping. Furthermore, water distribution and waste management systems will be developed.

Konza Data Centre

The data centre received an allocation of Ksh 1.2 billion. This is said to be the East Africa’s biggest data centre with a capacity of 1.6 petabytes. Currently phase one and two of the project have been completed.

The data centre is fully equipped with smart city facilities and services to support the Technopolis as well as developers and small enterprises.

KAIST

Kenya Advanced Institute of Science and Technology (KAIST) received Ksh 5.7 billion. This is a Smart university located in the Technopolis. Based on Treasury documents, this will be the first time the institution receives funding from the government of Kenya.

Originally, the initial phases of the project had been funded by South Korea. The development of KAIST is part of the Kenya National Digital Master Plan 2022-2032.

This masterplan was unveiled by former ICT CS Joe Mucheru in 2022.

Konza Complex Phase 1 B

The Konza Complex is one of the mega infrastructure projects at Konza Technopolis. This phase of the project includes construction of residential and commercial buildings. Furthermore, the phase entails construction of a transit hub, as well as parks and recreation areas. For the FY 2023/24 Ksh 475 million is set aside.

Ksh 1.3 Billion for NoFBI Phase II

The National Optic Fibre Backbone (NoFBI) is implemented by the Ministry of ICT. The network purposes to provide affordable and quality broadband infrastructure, promote and facilitate open access to underserved areas for delivery of education public safety, and healthcare.

An additional 2,500KM has been added to the fibre network since 2007. Thus, the network has reached 290 sub county headquarters.

The Ksh 1.3 billion allocated in this years budget is for maintenance and expansion of the cable.

Last Mile County Connectivity Network.

The Last Mile Connectivity Program (LMCP), focuses on rural areas and slums where connectivity is poor. The project aims to ensure everyone has access to electricity.

In the FY 2023/24 budget, the government has allocated Ksh 583 million.

Other Budget Allocations

In line with digitalisation, treasury allocated funds for land registries. This year Ksh 893 million will work towards digitization and construction of Land Registries.

Education and research were not left out, Ksh 400 million is allocated for Digital Literacy Programme and ICT Integration in Secondary Schools.

Additionally, treasury has set aside Ksh 749 million for research, science, technology and innovation.

As part of the government continued plans to phase out the old driving licenses, Ksh.500 million has been allocated for the Smart Driving Licenses.

Taxation proposals touching ICT Sector

The new tax proposed for digital content creators remains. However, they will pay a five per cent withholding tax on their revenue as outlined in the Finance Bill 2023. This is a change from Treasury’s earlier proposal of 15 percent.

Bitcoin and Non-Fungible Tokens (NFTs) are now defined as digital assets. The government proposes to introduce a digital assets tax, a 3% levy on the transfer charges applied during the exchange of the assets which cover cryptocurrencies, digital currencies, and non-fungible tokens (NFTs).

Excise Duty

The government has proposed the reduction of excise duty on fees charged for money transfer services by banks, money transfer agencies and other financial service providers. Hence, the tax rate will drop from 20% to 15%.

Additionally, the excise duty of fees charged on mobile money transfer will be reduced. The new tax rate will be 10 per cent of the excisable value. This a slight reduction from the previous rate of 12 per cent.

Betting, gaming and lotteries are generally accessed via digital platforms in Kenya. Treasury is proposing an increase excise duty on betting, gaming, lottery and prize competition from 7.5% to 12.5%.

The government claims this is due to their negative externalities in the society.

Hustler Fund

The Financial Inclusion Fund dubbled Hustler Fund will receive Ksh 10 billion. So far, Ksh30.8B has been borrowed .

The fund has had 7.1M as repeat borrowers. 

Digitisation of Processes by Treasury

In order to carry out procurement reforms, the government is introducing an End-to-end e-Government Procurement system (e-GP). This is to be rolled out by December 2023 to both the National and County/Governments. The system will enhance efficiency and transparency in the procurement functions.

In addition, the National Treasury has re-engineered the Access to Government Procurement Opportunities (AGPO) portal. This will enable real-time registration and transparent monitoring of the implementation of the scheme to promote enterprises owned by women, youth and persons living with hi disabilities.

From Central Bank of Kenya (CBK), the institution is working to protect consumers. The CBK is working with the Office of the Data Protection Commissioner to ensure all Digital Credit Providers are brought into the regulatory perimeter.

Furthermore, CBK will launch the upgraded Central Securities Depository code named “DhowCSD”. The upgraded Central Securities Depository will scale up services to the public, market participants. Also, it will support investors from the diaspora.