Comparative Case Study Research on Public Participation in National- Level Government Fiscal Policy And

Comparative Case Study Research on Public Participation in National- Level Government Fiscal Policy and

Budget Processes

Outline of Case Study Kenya

Jason Oyugi Nairobi, Kenya

August 2015

Section 1:

Introduction

In the decades just after independence, Kenya had experienced long periods of human rights violations including ethnic divisions, land conflicts, arbitrary arrest, extrajudicial killings, detention without trial, torture, electoral violence, grand corruption and economic crimes under successive regimes. Most of these atrocities in public view, were directly or indirectly attributable to a weak constitutional order that concentrated power in the presidency and emasculated other arms of government and public voice.

The period between 1988 and 1991 in particular, was marked by a long and acrimonious battle with opposition activists and civil society voices over the clamor for large scale reforms and an end to the single party era. As President Moi’s second term drew to a close, the it became clear that a weak constitutional architecture had been a key tool for the country’s previous ills and indeed, many stakeholders held the view that it was a recipe for disaster. The constitution gave unfettered powers to the Presidency, emasculated the legislature, limited individual freedoms and encouraged the plunder of national resources. National Budget allocation in particular had been marked by years of political favoritism, poor prioritization, lack of public participation and under development of regions that were politically hostile to the ruling party.

With every growing election therefore, each ethnic community believed that capturing the presidency would guarantee almost exclusive access to national resources and public sector jobs since the president controlled their distribution. As a result, the stakes at each general election were high and many politicians resorted to pockets of ethnic violence to gain or retain political power in 1992, 1997 and even 2002 General Elections. In 2005, the first draft constitution was prepared and presented and rejected at a national referendum.

The rejection of the first draft constitution immediately created two big crises – first, the country was heading into a general election in 2007 without a new constitution and secondly, the referendum campaigns had brought back old ethnic and political rivalries that were carried into the 2007 general election and which provided fertile ground for the post election violence of 2007/08. In the subsequent National Dialogue and Reconciliation Mediation Process brokered by the former UN Secretary-General Kofi Annan, the need to adopt a new Constitution was marked as an important pillar of Kenya’s transitional process. On August 4, 2010, Kenyans went to a second referendum and voted to adopt a new Constitution to overhaul the previous one. And while the Constitution was the result of a struggle that lasted for at least two decades, the urgency to adopt a new constitution in 2010 had largely been triggered by the post election violence.

Kenya’s promulgation of a new constitution in 2010 marked an important turning point regarding how citizens can participate in public affairs. The Constitution itself had been

built from a rich, long and unprecedented struggle for citizen participation in public process. In re-writing the constitution, provided citizens with the opportunity to reconfigure hitherto skewed power relations and the possibility of extending these democratic practices beyond manipulation by authorities. Constitutionally, the benefit of this history is reflected in Article 10 where The Constitution recognizes public participation as a national value and principle of governance and further mandates parliament, in article 118, to facilitate public participation in the legislative and other business of parliament. Three key issues stand out under The Constitution of Kenya , 2010;

First, The Constitution introduces the concept of rights based approach to development. the devolution of resources and policymaking authority to 47 counties (similar to states or provinces) which means that citizens now have far more numerous opportunities to they participate in policymaking processes. Citizens can now engage these subnational units to develop policy solution and to monitor the actions of government officials.

Second, the national-level legislative branch now plays a much greater role in the budgetary process, which allows citizens, policy experts, and NGOS to directly participate in the budget enactment process. Public deliberation over the executive’s proposed budget is becoming a central part of Kenya’s budgetary process. More importantly, the enactment of The Constitution and the successor PFMA settled the age-long debate in Kenya on the budget process as a tension between the roles of the executive and the legislature - between technicality and democracy. The Constitution recognizes that the executive has a mandate to prepare the Budget, since it possesses the most comprehensive information on which to base revenue and expenditure decisions. However, it elevates the role of the legislature which is to exercise oversight and to authorize the executive to raise revenue and spend money.

Third, there is now a much more specific focus on direct participation in public finance. Kenya took advantage of current knowledge to devise a legislative and policymaking process through which a much wider range of stakeholders and citizens are able to gather information about fiscal and budgetary issues as well as to contribute to the shape and implementation.

Besides the political and constitutional reform process, public participation hin Kenya has also been greatly shaped by experiences of the Country during the development of the World Bank led first generation Poverty Reduction Strategy Papers (PRSPs) in 2002. The PRSPs were prepared through a wide-ranging consultative process of dialogue in order to build consensus on priority actions and activities necessary for economic growth and poverty reduction. The PRSP was preceded by the Interim Poverty Reduction Strategy Paper (IPRSP) released in 2001. Even though the IPRSP only involved limited consultations at the national level, the infrastructure and knowledge built over the period have provided the springboards for successive public participation processes. The PRSP consultations followed a three-tier approach: national, provincial and district levels with the stakeholders in the consultations

including the Private Sector, Civil Society, the Development Partners and local communities. The consultations covered both thematic areas to take care of important issues that are cross cutting as well as inputs from the Sector Working Groups which have become the standard pillars of public consultations for the budget processes since then to date.

Report outline: The purpose of this report is to first provide an institutional mapping of the current Kenya institutional venues and processes that provide opportunities for public participation because many of the Constitutional reforms are very new. Section two provides the broader context for reform. Section three involves an institutional mapping, at national and subnational levels of the formal institutional opportunities for participation. All four stages of the public cycle are covered. There are three case studies at the end of section 3. Section 4 explores the impacts and outcomes of public participation. Given the very recent adoption of the 2010 Constitution, there are few concrete results. Although Kenya has adopted a series of progressive laws and institutions, there are still large gaps between public expectations and outcomes and participatory processes are only sustainable if people feel that their participation matters.

In both the 2010 and the 2012 Open Budget Index Survey, Kenya’s scored 49 out of 100, which was a little higher than the average score of 43 for all the 100 countries surveyed but below the score of its neighbor, Uganda. Kenya’s score indicates that the government provides the public with only some information on the national government’s budget and financial activities during the course of the budget year. Kenya however does moderately well among those in East Africa on budget oversight and engagement scoring between moderate and strong in legislative strength, Supreme Audit Institution Strength and Public Engagement in comparison to its neighbors. Rwanda, Uganda and Tanzania in particular all scored weak in public engagement.

According to the survey, the major areas of weakness in Kenya lay in the failure by treasury to disseminate the mid and end year review reports, inadequacy in the comprehensiveness of the budget and audit reports as well as the absence of a citizen’s budget. Notably however, the adoption of the Public Finance Management Act 2012 now provides for the preparation of and public dissemination of quarterly budget review reports by the Office of the Controller of Budget which has since been fully operationalized after the promulgation of the new constitution.

Country overview and institutional context The Republic of Kenya is a unitary State with a mixed American style presidential system of government where the president is both the head of state and the executive and elected by universal suffrage, and a British style parliamentary system where parliament has powers to remove the president and his government from office

expressly through a parliamentary vote. This mixed system of government was adopted in 2010 when the Kenya enacted a new constitutional order after a long drawn period of clamor for democratic and electoral reforms that date back to the country’s post- independence period in 1963. The new constitutional order among other things also reconfigured the state administrative architecture from a centralized to anchor a strong devolved system of government setting up 47 County governments each with its own powers of administration, representation, and public finance management in local governance.

The country has a multi-party political system whose hallmark is parliamentary democracy and which system has been anchored in the Constitution since 1990. In the current constitutional framework, executive and legislative power is shared both by national and county governments within an agreed constitutional framework that delimits jurisdiction and intergovernmental relations. At the national level, legislative power is vested in a bicameral Parliament – in Senate and National Assembly while the judiciary is independent of the executive and the legislature. The president, speakers of both Senate and National Assembly and the Chief Justice all hold independent constitutional offices. The National Assembly has a total of 350 members while the Senate consists of 68 members.

Parliamentary politics in Kenya is open, free, fair and highly competitive field. Kenya has indeed held all its general elections - presidential, parliamentary, and local authorities every 5 years as required by the Constitution, without fail since the country attained independence in 1963. In 2007 however, the country witnessed widespread ethnic clashes after the disputed presidential elections that also accelerated the need for the adoption of a new constitution. On March 4, 2013, Kenya went to a general election, the first ever under the new constitution, which was promulgated in August 2010.

Currently, the President belongs to the majority coalition of parties in both the senate and the national assembly - the Jubilee Alliance. The Jubilee Alliance consists of The President’s own National Alliance and nine other smaller parties, together, the Jubilee Coalition has a total of 167 members, the Coalition for Reforms in Democracy (CORD) has 147 members, Amani Coalition 24 members while other parties and independent members make up the balance of 17 seats. The ruling coalition however effectively controls 207 out of the 349 seats in the National Assembly. In the Senate, the seats are fairly more balanced with the President’s Jubilee Coalition controlling 30 of the 67 seats, CORD, 28 seats, Amani Coalition, 6 seats and other smaller parties holding 3 seats.

Democracy and Ethnic Diversity The politics of ethnicity has perhaps presented the most complex challenges to democratic governance and the rule of law in Kenya. Ethnicity is appropriated for both good and bad. In some instances, it has been appropriated to prevent enforcement of the law and has therefore, been responsible for a deepening culture of impunity. On the whole however, ethnicity combines with other factors, including Kenya’s legal and institutional weakness for the rule of law, electoral organization, public administration

oversights and the governance system to establish formidable obstacles to the transition to democracy. Ethnicity has been the main fulcrum around which national and local politics in Kenya revolves. The ethnic structure and the quest to control the centralized executive powers accounts for this.

Notably, Kenya comprises many ethnic groups but none of the groups are large enough to dominate another. Estimates show that the country has about 42 groups. On the basis of the 2009 population census, the major groups whose individual share of the national population exceeds 10% are the Kikuyu (17.15%), Luhya (13.82%), Kalenjin (12.86%), Luo (10.47%), and Kamba (10.07%). Their total share of the population is 64.4%. The second largest cluster constitutes 15.07% of the population. These figures also show that over 35 groups comprise only 8% of the population. They include Kenyan Europeans and Asians, as well as minority and marginalised indigenous Kenyan groups. They are all poorly represented in elective bodies and in public service.

The absence of a single numerically large group, the relative equality of the five main groups, as well as the presence of many smaller entities whose combined share of the population is still in the minority, have increased politicization of ethnicity in Kenya. Political elites tend to mobilize support on an ethnic basis and incentive for coalition building in this regard is the first past- the-post electoral system, which makes it possible for the presidency (and parliamentary as well as civic seats) to be won by a small proportion of votes cast. Both the electoral rule and the relative equality of the five ethnic groups have meant that the competing elites form coalitions or obtain substantial support from small but significant groups.

Devolution The centerpiece and pillar of Kenya’s new constitutional architecture however lies in the introduction of a devolved system of government. These changes set up 47 counties under a second tier of government but not subordinate to national government. In defining the system of devolution, the constitution of Kenya clarifies that under this system of government, there will be two distinct levels of government at the national and county levels which are co-ordinate and not subordinate to each. This connotes a measure of equality and autonomy among the two levels at least in the sense of each one of them being created by the constitution as opposed to being created by another level of government. However, as will be noted later, this is not complete autonomy as the two level of government are also inter-dependent.

Distinctness in this sense rules out the concept of hierarchy as a relational principle. In the current set up, each county assembly has its own governor, directly elected through universal suffrage and a county legislative assembly constituted of elected and nominated county assembly representatives in a mixed member proportional system. The governor is the head of the executive and appoints a cabinet just like the national government with approval by the county assembly.

In effect, the two levels of government each have the freedom to make decisions in the functional areas assigned to them by the constitution without interference from the other level of government. A key functional area that falls under this category is public finance management and public participation. Broadly, county governments are financed through vertical transfers from national government, taxes from local government and external resources. The National Assembly has the powers of determining the vertical allocation of funds between the two levels of government in consultation with the Senate. The Senate is responsible for making horizontal allocations to various counties with the technical support of a new constitutional body called the Commission of Revenue Allocation. County public funds once allocated to the counties are then expended by the county executive government and with oversight by the county legislative assembly, independent constitutional offices and citizens at the county level with Senate having a minimal role in day-to-day oversight.

The Economy and Public Finance Kenya has a fairly mixed economy. Over the last five years, Kenya’s GDP growth has increased steadily from a low of 1.5% in 2008 to 2.7%, 5.8%, 4.4% and 4.6% in 2012. Steady enough in growth especially in between the election years but not robust enough to reach the 10% growth target necessary to achieve the country’s long term Vision 2030. As a matter of fact, for the last ten years, other than in 2005, Kenya recorded lower annual GDP growth than the average for sub-Saharan Africa, and compared to its neighbors in the East African Community. Kenya’s annual growth rate for the decade averaged 4.6 percent, compared to 6 percent for SSA, 6.9 percent for Tanzania, 7.1 percent for Uganda, and 7.2 percent for Rwanda.

Over this period, all the sectors of the economy have generally posted positive growth with the services sector emerging as the most important source of GDP growth, accounting directly for about 50 per cent of growth as at 2012. In 2012, the leading sub- sectors were wholesale and retail trade, transport and communication, financial intermediation, and education sector services. These four sub-sectors accounted for about 38.2 per cent of overall growth in GDP. However, agriculture sector is still the single largest sector of the economy accounting for about one quarter of GDP. About 18 per cent of growth in GDP in 2012 was from the sector, up from 7.5 per cent recorded in 2011. The industrial sector comprising mining and quarrying, manufacturing, electricity and water supply, and construction, account for about 15 per cent of GDP of which manufacturing was the largest subsector accounting for about 9.2 per cent of GDP in 2012.

In the FY 2013/14, total public expenditure estimates rose to USD.19.3B (Ksh 1,640.9 billion) of which gross recurrent expenditure for the National Government was estimated at USD.11.2B (Ksh955.5 billion) with USD.6.0B (Ksh507.9 billion) representing discretionary recurrent expenditures. In the last three years, public spending priorities have been in social programs (mainly education) and infrastructure. A new challenge that the budget will face over the next three years comes from the devolution process. In line with constitutional obligations, the government has allocated

USD. 2.5B (KES 210 billion) in 2013/14 to the counties. These funds are to cater for devolved functions, such as agriculture, health and infrastructural projects.

Civil Society Participation in Public Affairs Kenya has over five thousand registered NGOs involved in all sectors of national development, notably in education, health, the environment, democracy and governance, and gender empowerment. Civil society plays a key role in Kenya’s poverty alleviation strategy and NGOs are registered with the Registrar of Societies (under Part III of the Non-Governmental Organizations Coordination Act, 1990). Both civil society and media enjoyed a fairly open democratic space to undertake their activities both under the last two governments even though the Moi era was marked with acrimony and routine spats.

In late-October 2012 however, the Kenyan government quietly introduced a bill to amend the Public Benefit Organizations (PBO) Act of 2012. The language was hidden in an omnibus amendment bill that would ordinarily be used for minor statutory cleanups. But these changes were anything but minor. The bill proposed a cap on foreign funding for Kenyan PBOs (a category that includes NGOs) limiting such funds to 15% of their total budget. It would have also required that all funding for PBOs be channeled through a government body, which would alone decide which organization got funding and for what purpose. Notably, the amendments were narrowly defeated on after massive local and international outcry. But the fact that such potentially devastating legislation was introduced is shocking, and it underscores the growing threat to civil society, both in Kenya and in the region.

In late December 2014 however, the government began a huge crackdown on NGOs and other charities under the pre-text of securing national security interest, deregistering over 500 NGOs and at the same time, the ruling Jubilee Coalition muscled its weight in parliament to push through a set of new restrictive new anti-terror laws in acrimony that are set to further curtail freedoms of expression, civil liberties and media freedom. The president quickly signed the raft of new of new laws. Notably, the current regime of leaders has been at loggerheads especially with NGOs who have strongly opposed the government’s position at the International Criminal Court in The Hague.

International Commitments on Open Governance On 11th July 2011, the Kenya government officially launched the Open Government Initiative in Kenya at a high level function presided over by the President with the formal process of joining the partnership beginning in September 2011. The country took the first step of completing the formation of an Open Government Working Group comprising government agencies, development partners (notably the World Bank), civil society organizations, and the private sector. The country also submitted its 1st progress report and is currently implementing the 1st action plan with the development of the 2nd action plan in progress. In its last review, out of a total of nine (9) action plan

commitments under four themes or sectors of; Improving Transparency in Electoral Processes; Promoting Public Participation; Improving Transparency in the Judiciary; and Open Budgets, the IRM review revealed that the country was behind in all but one commitment (improving transparency in the judiciary) where it had made substantial completion on one commitment even though further work was still necessary. In the action plan, the IRM noted the country’s ambitions to meet its commitments as part of the OGP, the country continued several on going initiatives towards open government that have strong potential in the coming years.

In both the 2010 and 2012 Open Budget Surveys, Kenya’s score stood at 49 out of 100, which is a little higher than the average score of 43 for all the 100 countries surveyed but below the score of its neighbor, Uganda. Kenya’s score indicated that the government provides the public with only some information on the national government’s budget and financial activities during the course of the budget year. This makes it challenging for citizens to hold the government accountable for its management of the public’s money.

Section 2: Setting the Stage for Reform

The Context of Reforms The main thrust of Kenya’s current reform initiatives lie in the enactment of a new constitutional architecture in August 2010. The Kenyan Constitution 2010 introduces the concept of rights based approach to development. Development is no longer a gift but a right which all citizens regardless of their status are entitled. The Constitution also recognizes the fact that there are certain vulnerable members of the society who need specific attention and protection. To activate this, the Constitution makes provisions for affirmative action to remedy the injustices meted on the marginalized groups and communities. But the constitution itself is a product of Kenya’s longest reform agenda that dates back to the post independence period with the first clamor for political pluralism as early as 1966, just three years after independence.

In the subsequent years, participation in the country’s history, the processes of participation shifted from the political space to local governance and other development spaces. Initiatives on participatory development began with and was for a long time confined to community development projects (Wakwabubi and Shiverenje, 2003). Kenya attempted to institutionalize decentralized planning and implementation of its programmes as early as the 1960s through Sessional Papers. Eventually, the most elaborate was the District Focus for Rural Development (DFRD) Strategy which became operational in 1983. However, the Strategy emphasized more, the involvement of central government field workers in planning and implementation of programmes with little elements that made public participation a condition for the implementation of the programs. This process was also not anchored in any legal framework.

In 1996, the Physical Planning Act provided for community participation in the preparation and implementation of physical and development plans. However, its major shortfall was the lack of the critical element of community sensitization on their roles. Physical planning was also centralized in major towns and thus communities residing in remote areas remained marginalized in participatory planning (Okello et al, 2008). This would be followed later by the adoption of the Local Authority Service Delivery Planning (LASDAP) process introduced through a ministerial decree in 2001 for the implementation of the Local Authority Transfer Funds (LATF).

The Role of Civil Society in the broader reform agenda From the 1990s however, greater political awareness and increased pressures on the central government from civil society groups, opposition activists and development partners exposed the increasingly centralized state. The very attempts to increase citizen participation exposed the gaps between government local programs and public expectations. Evidence of bad governance became more clear-cut. Widespread corruption, ethnic conflicts, political uncertainty and poverty among others became rallying points for greater civic mobilization. The more poor governance resulted in negative outcomes, the greater larger portions of the society became alienated from the mainstream economy.

Civic groups then began to draw from their greater political awareness and experience to reconfigure hitherto skewed power relations. In 1992, the Moi regime gave in to the first major demand for pluralism – changing the constitution to allow for multi-partysm as well accepting term limits. Upon the expiry of his second term, the best opportunity to foster the reform momentum arose when more than 14 opposition parties, as well as leaders from different ethno-regional communities and various prominent civil society representatives, came together in the National Rainbow Coalition (NARC). In Kenya’s first truly democratic elections in 2002, NARC secured a comfortable parliamentary majority and its popular presidential candidate Mwai Kibaki defeated KANU’s Uhuru Kenyatta. The Kibaki regime would go on to tap onto this reform momentum to deliver the 2010 constitution after a long drawn process of negotiation and one failed attempt to pass an unpopular draft constitution earlier in 2005.

A New Constitutional Order As the constitution reform agenda bore fruit, citizens began to explore the possibility of extending their democratic spaces beyond manipulation by authorities. In the Constitution, the manifestation of this claim and single mindedness is self evident from Article 1(1) and (2) that proclaims the sovereignty of the people and clarifies the delegation of this power to elected representatives viz;

Sovereignty of the people 1. (1) All sovereign power belongs to the people of Kenya and shall be exercised

only in accordance with this Constitution. (2) The people may exercise their sovereign power either directly or through their democratically elected representatives.

In Article 10, public participation is enshrined as a cardinal national value and principle of governance. The National Values and Principles of Governance articulated in Article 10 bind all state organs, state officers and public officers. The constitution then proceeds in various articles to enshrine public participation;

• As a Right; With the expansion of the Bill of Rights, as one of the transformative pillars of the new Constitution and the attendant deepening of the reach of people’s sovereignty beyond cosmetic limits, • As a Function of Transparency in Democratic Governance; with the right of access to information and the transparency that comes with it. Within this framework, the Constitution provides for the participation of the public in the exercise of the powers of the state and in making decisions through indirect and direct involvement of the people in the process of policy making (Article 232. (d) and participation in the legislative business of the National Assembly, Senate and County Assemblies. (Article 118 (1) (a) (b), 124.(1) (b), 124. (4) (c), 196. (1) (a) (b). The point is to fortify the entailed Constitutional gains through practically consistent legislations. • As a condition for accountability • As a normative basis of equity – placing emphasis on ensuring the voices of every section of society, but more particularly from the marginalized in society are present and heard in all decision making spaces.

Obviously, because the struggle for constitutional reforms has its roots in the desire to correct the deficiencies in the governance framework of the country, a central objective of the struggle has been the restoration of power to local communities to manage their affairs particularly in matters of local development. Under the Constitution of Kenya 2010, Article 6 (1) and (2) provide for some of the early principles and structure for the establishment of the devolved government ensuring that none of the levels of government is a mere agent of the other. Each is created and protected by the constitution. The functions each performs are set out and defined by the constitution. The resources each uses to discharge these functions are also provided for in accordance with constitutional provisions.

The system combines self-governance and shared governance at the local and national levels respectively. The essence of this is that at the local level the people are allowed a certain flexibility within which they can make decisions that are unique to themselves and their locality. The laws they make are only applicable to their county and do not apply and are not enforceable in other counties. They are allowed a measure of self- governance at this level but at the national level, decision-making is shared. This is precisely the premise of this task.

Public Participation in Public Finance Management In Kenya, the adoption of a new constitutional order in 2010 fundamentally redefined the budget process by placing emphasis on both Parliament’s “power of the purse” as a fundamental feature of democracy as well as the place and process of public participation in budget making. Article 221 (1) specifically stipulates that ‘At least two months before the end of each financial year, the Cabinet Secretary responsible for finance shall submit to the National Assembly estimates of the revenue and expenditure of the national government for the next financial year to be tabled in the National Assembly’.

Public participation is particularly embedded in Article 221 (5) which states as follows, ‘In discussing and reviewing the estimates, the committee shall seek representations from the public and the recommendations shall be taken into account when the committee makes its recommendations to the National Assembly.’ Key changes in PFM under the new constitution; Prior to this, the requirement that appropriations and taxation measures • Granting parliament budget formulation powers, needed to be approved by parliament in in addition to approval and oversight and the order to become effective had merely removal of the dominance of Treasury in budget- become a routine function. Over time, this making; routine system would only allow • Creation of County Revenue Fund parliament to sign on the dotted line, • Decoupling of the Controller and Auditor essentially by approving huge sums of General’s Office into the separate Controller of resources to be spent by the Executive Budget (Article 228) and Auditor General (Article without having time to scrutinize the 229); and both have powers over operations of details. The Executive on the other hand the County Revenue Fund. had found a comfort zone as they • Revision of Article 48 of the old Constitution that presented voluminous budget documents made the initiation of Money Bills the preserve of the Executive (Article 114); with complicated details quite often aware • Establishment of the Commission for Revenue that parliament did not have time or Allocation (CRA) ( Article 215) to determine how capacity to analyze their proposals. revenue is to be shared. • the conferment of taxation powers to the County Under the new constitution, Public Governments ( Article 209 (4)); Finance has been one of the most progressive chapters in under this Constitutional regime. Found in Chapter Twelve the Constitution, it attempts to deal with some of the gaps and weaknesses that have bedeviled public finance management over the years. In Article 201, the constitution sets out various public finance principles most of which are an integral part of any Fiscal Transparency legislation. The principles include openness, accountability, and equity in tax burden and expenditure benefit, prudence and public participation. Article 228(1) in particular creates the office of the Controller of Budget while Article 229(1) creates the office of the Auditor General as constitutional offices.

In July 2012, parliament passed The Public Financial Management Act 2012 to bring into effect most of this progressive constitutional provisions such as the provision of various public participation windows in the budget cycle. In addition, Article 35(1) of the

constitution states that every citizen has the right to access information held by the State. Article 35(3) states that the State shall publish and publicize any important information affecting the nation. The County Governments Act also provides for the provision of civic education among citizens as prerequisite for their effective participation in public affairs. By and large, these provision of the constitution have provided important windows of engagement for deepening effective citizen participation in the budget processes both at national and county government level.

A key body established by the PFMA to facilitate public particpation in the budget process is the County Budget and Economic Forum (CBEF). The CBEF comprises of the county governor (who is the chair), members of the county executive committee and equivalent number of representatives who are members of the public. The Forum provides means for consultation on County Government Plans, Budgets, the County economy, financial management at the County and related matters. Section 207 PFM Act provides for public participation that is to be conducted in line with the provisions of Part 8 of the County Government Act. Public Participation is mandatory and a prerequisite for any law to be considered legal. As such the county executive and assembly needs to make the information available and facilitate the public to participate by amomg other measures providing (a) structures for participation; (b) mechanisms, processes and procedures for participation; (c) receipt, processing and consideration of petitions, and complaints lodged by members of the community; (d) notification and public comment procedures; (e) public meetings and hearings; (f) special needs of people who cannot read or write, people with disabilities, women and other disadvantaged groups; (g) matters with regard to which community participation is encouraged; (h) the rights and duties of members of community; and (i) any other matter that enhances community participation.

Chronology of Public Participation in Kenya Era Key highlights Early Public participation in national governance was largely focused in the 1960s struggle for independence and the fight for equal rights through political pressure groups, freedom movements and labour. Erstwhile political leaders particularly relied on the organization skills of the labour movement to organize mass protests to oppose colonial rule and white domination. 1963 In 1963, Kenya attained independence with a negotiated agreement on the first Prime Minister and later on President as well as legislative representatives.

1960s 1965 The government introduces Sessional Paper 10 that outlines Kenya’s broad long and medium term development roadmap that was aimed at entrenching African Socialism and its application to policy planning in Kenya. In this paper, there is little detail on processes of public participation but rather the philosophy and approach to realizing development outcomes of a newly independent country.. 1966 In 1966, the ruling party split in the first major political disagreement leading to the formation of an opposition party, Kenya People’s Union that

would later be banned and the fault lines between single party stalwarts and multi-party advocates drawn. The political pluralists were expelled from the ruling party and a mini general election held to fill their seats. 1969 Opposition parties are banned allowing the ruing independence KANU party the beginning of a long period of unchecked de facto single party rule. 1975 The ruling party is reconstituted as a number of political leaders with different view points are forced out of the ruling party while some very vocal political leaders at the forefront of freedom of expression, transparency and open governance are assassinated. By this time, mass protests had become a common feature of the fight for political rights. The

centre of this form of organization was largely the university students Unions, Labour Organizations and Political Activists. 1978 In 1978, the first President Jomo Kenya dies in office and a smooth 1970s constitutional transition follows with the rise of Vice President Daniel arap Moi into power. 1979 Kenya holds the first general election after the death of the first president. A key election for the new president aimed largely aimed at consolidation of the new presidency and reinforcement of the single party rule and centraliza 1982 Parliament changes the constitution to make Kenya a de jure one party state. 1983 An early general election is held to further consolidate power for the Moi government and crackdown on intolerant opposition elements takes a higher priority targeting oppositionists and university student leaders. In policy planning, the Government also introduces the District for Strategies for Rural Development (DFRD) aimed at fostering local

1980s governance but very much driven and dominated by central government. Civil Society groups paly a minimal and token role in the planning processes. 1988 A fourth and thoroughly flawed fourth general election is held leading to mass disagreements even within the ruling party itself and reformers begin to gain new traction in pressing for better political reforms. 1992 Massive civic action from NGOs, political groups and international development partners force the ruling KANU part to open up space for democratic change. The constitution is altered to make provisions for a return to multi-party democracy. A number of other draconian laws that limit freedoms of movement and participation are also repealed to allow greater participation in public processes. A general election is held later that year and the president wins the first

term under a revised constitution that also offers term limits. 1996 Government enacts the Physical Planning Act, the first such law that directly requires community participation in national planning. Both government and citizens however lack both the skills and capacities necessary to make this a reality. 1997 A second general election under the multi party constitution is held. The election is partially free and fair but the incumbent wins a second and last term in office. 2000 In large scale policy reforms for the development of the PRSPs largely

s driven by The World Bank and International Development partners, Civil 2000 Society and other Non State Actors make the first comprehensive

framework for public participation in national policy development and planning in national budgeting and development of the National PRSP strategy. A new approach to budgeting – The Medium Term expenditure Framework is introduced. In 2001, the Local Authority Transfer Funds and Local Authority Service Delivery Planning Processes commence through policy and statutory legislation. 2002 The third general election is held. Civil society and political parties unite in a rare show of unity to defeat the independence ruling party out of office. This marks the beginning a long stage of reforms in public participation and local governance initiatives 2003 Parliament introduces the Constituency Development Fund. A 2.5% national budget allocation to constituencies managed by the member of parliament after years of frustration with inequitable sharing of revenue and inequitable budget allocation. 2005 The clamor for a complete constitutional overhaul takes shape culminating in the creation of a National Constitutional Assembly that organizes the first ever post independence Constitutional Conference to write a new constitution, which would later be presented at a national referendum. The process meets stiff resistance from political elites and divisions, manipulation of the constitution draft and ethnic rivalry lead to the defeat of the firs draft constitution at the referendum 2007 A fourth general election is held – the parliamentary election is successful but the presidential election fails and leads to widespread election violence that is finally resolved through the creation of a government of national unity in the form of a coalition government. 2010 A second attempt at major constitutional reforms succeeds and in August to 2010, a new constitutional order is established. The constitution codifies date public participation, devolution, expanded bill of rights and people’s Post Post 2010 representation s some of the key promises of the new order.

Section 3: Institutional Platforms for Public Participation in the budget process

Budget Formulation and Enactment The Financial Year for Kenya’s budget runs from 1st July to 30th June. Strictly speaking, the cyclic nature of Kenya’s budget process makes it challenging to isolate the point at which the budget formulation begins. Process wise, budget formulation happens throughout the budget cycle as continuous monitoring, implementation and feedback from one budget informs the next budget process one after the other. However, according to the PFMA, Section 35. (1) defines this phase as follows; The budget process for the national government in any financial year shall comprise the following stages—

(a) integrated development planning process which shall include both long term and medium term planning; (b) planning and determining financial and economic policies and priorities at the national level over the medium term;

Technically speaking however, the budget formulation process originates from a series of technical meetings in the Ministry of Finance where three fundamental tenets are taken into consideration during the preparation of the national Budget. The first is the macroeconomic context within which the Budget for each year is formulated and this includes the internal and external contexts. The second tenet is the pursuit of the provisions of Section 35 above of the PFMA – creating an interface of the Budget to the medium to long term development priorities, in this case, the national medium term development goals and Vision 2030. Lastly, the balance between Recurrent and Development Budget Expenditures in the National Budget is another important aspect during Budget Formulation. All these three are explicitly linked within the Medium Term Expenditure Framework (MTEF) Budget Cycle and Kenya’s Program Based Budgeting (PBB) approach adopted in 2013/2014.

The transition to PBB is itself very significant because has a greater potential to engender transparency by providing better quality information in terms of who is spending money, why and whether spending is in line with goals of the country. As such, citizens, parliament, media and the general public would be able to better engage with budget information.

In the context of the PFMA, the new budgeting process at both national and county level is highly demanding and potentially controversial, requiring a great deal of strategy and effort to get it right. Putting the right structures in place and having a timeline of events sets the ball rolling, and is a major milestone towards having a functional budget in place. Typically, the process begins within two months after the expiry of one FY (August 30) with the presentation of the Budget Circular which is presented to parliament and the public as a notice. The circular ordinarily provides the schedule for

the preparation of the next budget indicating dates1 by which various key milestones will be met, the procedures for review and Legal Basis for the Publication of the projection of revenues and expenditures, Budget Review and Outlook Paper key policy areas and issues that will be taken into account, procedures in which The Treasury shall prepare and submit to Cabinet for approval, by the 30th September the members of the public will participate in each financial year, a Budget Review and in the budget process and the format in Outlook Paper which shall include- which the budget information and documents shall be prepared and (a) actual fiscal performance in the previous submitted. financial year compared to the budget appropriation for that year;

The budget circular will then be followed (b) updated macro-economic and financial by the preparation of the Budget Review forecasts with sufficient information to show and Outlook Paper (BROP) and submitted changes from the forecasts in the most to parliament by the 21st October. The recent Budget Policy Statement; BROP presents the fiscal performance for (c) information on how actual financial the previous FY and how this compares to performance for the previous financial year the appropriations for the year, may have affected compliance with the fiscal the updated macro-economic and fiscal responsibility principles or the financial forecasts therein also provides the basis objectives in the latest Budget Policy Statement; and to revise the current budget in the context of Supplementary Estimates, information (d) the reasons for any deviation from the on how actual fiscal performance for the financial objectives together with proposals previous FY may have affected to address the deviation and the time compliance as well as reasons for any estimated to do so. deviations from the financial objectives (2) Cabinet shall consider the Budget and how these will be addressed and Review and Outlook Paper with a view to implications for the budget of the approving it, with or without amendments, subsequent FY and the medium term. not later than fourteen days after its submission. The period after the presentation of the (3) Not later than seven days after the BROP to the next budget milestone (the Budget Review and Outlook Paper has been presentation of the Budget Policy approved by Cabinet, the National Treasury Statement or BPS by February 15) is one shall— (a) submit the Paper to the Budget of the most demanding for public Committee of the National Assembly to be participation. During this period, the laid before each House of Parliament ; and ministry of Finance will normally begin The Public Finance Management Act, 2012 sector discussions first, internally across (b) publish and publicize the Paper not later sectors after which sector discussion are than fifteen days after laying the Paper open to the public in sector hearings. The before Parliament. government has typically held public

1 The various dates and deadlines within which key processes of the budget have to be undertaken are typically spelt out in the Public Finance Management Act. However, these represent the maximum timelines and treasury may vary these dates provided they fall within the ambit of the law.

hearings by sector2 (like health, or education) before the BPS is released. At these hearings, the public civil society and the public are invited to ask questions and make suggestions. Typically, the hearings happen during the month of November sometimes late and in a hurry in different towns countrywide, in addition to the main national sector hearings that are normally held in the capital city - Nairobi. The Judiciary has also started to call public hearings before they submit their budget request.

For most civil society organizations who are involved in budget work, the most common form of participation and influencing this process is through advanced anticipation and preparation for this window. With funding from external development agencies, The Institute of Economic Affairs (IEA), a local CSO involved in budget advocacy work in Kenya for example undertakes routine public consultations at the end of every calendar year (September/October) to collect and collate public views with the objective of preparing a shadow Citizen’s Alternative Budget (CAB) which is an advocacy tool for engaging the treasury in the national budget process. The Citizens Alternative Budget contains proposals by members of the public and sector stakeholders who attend IEA annual pre-budget hearings that take place countrywide. It is the collation of these views that are presented by the IEA to treasury when the formal window of participation is open during the public hearings which inform the preparation of the Budget Policy Statement.

Section 25 of the Public Finance EXTRACT OF PRESS RELEASE Management Act, 2012, requires the National Treasury to submit the Budget Policy We have now finalized a Draft 2015 Budget Statement to Cabinet for approval Policy Statement for the MTEF FY 2015/16 - and subsequently submit the Approved 2017/18 which is available at the National Budget Policy Statement to Parliament by the Treasury website www.treasury.go.ke. 15th February in each year. This provides a The purpose of this press release is to invite two-week maximum window (ordinarily the general and specific comments on the Draft notice is shorter and in the range of one week 2015 Budget Policy Statement to enable us since Treasury can only give a public notice finalize the document and seek Cabinet and solicit comments on the policy statement Approval. Please share with the National after approval by the cabinet) within which Treasury your comments by close of civil society and other stakeholders especially business 4th February, 2015. private sector formally have to make an input on the policy statement. Once this is done, Dr. Kamau Thugge, EBS the public participation window is re-opened Principal Secretary/National Treasury once again after the BPS is tabled in 28th January 2015 Parliament.

Section 25 (5) of the PFM Act, 2012, requires the National Treasury in preparing the

2 There are ten (10) MTEF sector working groups at the national level that include Public Administration and International Relations Sector; Health Sector; Governance, Justice, Law and Order Sector (GJLOS), General Economic and Commercial Affairs (GECA) Sector; Environmental Protection, Water and Natural Resources Sector; Agriculture; Rural and Urban Development Sector; Education Sector; Energy, Infrastructure and Information, Communications Technology Sector; National Security and lastly, Social Protection, Culture and Recreation Sector.

Budget Policy Statement to seek views of the following: • The Commission on Revenue Allocation; • County Governments; • Controller of Budget; • The Parliamentary Service Commission; • The Judicial Service Commission; • The Public; and • Any other interested persons or groups

In practice, the limits of participation of the Illustration of Civil Society Memo on the public and civil society organizations has not Budget Policy Statement been legal but rather technical. Limited public awareness and low budget literacy has In February 2015, The Institute for Social meant that only a few institutions such as IEA Accountability (TISA) a local NGO presented to have the capacity to engage with the Treasury and Parliament a memorandum on the government on the key issues especially at Budget Policy Statement (BPS) for the 2015/16 the budget formulation stage. Over the full FY. It its memo TISA raised concern on nine specific areas and further noted that despite its length of the budget cycle, the inability to noble intentions, the BPS is unfortunately participate in the budget formulation and centrist and was likely in breach of Articles 6(2), planning process and resource allocation 187 and schedule 4 of the constitution. reduces the capacity of citizens to monitor resource utilization and hold public TISA noted that the BPS had failed to approach institutions and leaders to account. shared development from an intergovernmental perspective and this would most likely continue Other civil society organizations who have to escalate the cost of delivering services as made regular contributions in the budget Kenyans shoulder the burden of supporting formulation include The International Budget parallel structures of government. It also noted Partnership (IBP) who have also provided that the BPS creates an unhealthy competition between national and county government for much of the technical support to Civil Society resources. TISA also noted that there is a risk Organizations on public participation in that the large infrastructure spending of national budget processes both at the National and government is contributing towards County Government levels, The Institute for underfunding of service delivery and would Social Accountability (TISA), Haki Jamii, diminish access to quality services for Kenyans Africa Centre for Open Governance and unequal development. (AFRICOG), National Tax Payers Association (NTA), CLARION, MUHURI, Transparency International (TI) Mars Group, The Health Rights Advicacy Forum (HERAF) and The Constitution and Reform Education (CRECO) among others at the national level.

At the ministry of Finance, there currently does not exist a database on the number and type of submissions made to treasury during the sector working groups and data does not exist either on how these views or public views are captured, integrated or rejected. There also doesn’t exist any formal mechanisms upon which this can be done. From the

history of the public participation modalities in the past however, much of the consultations have been done merely in compliance with the law and CSOs have an onerous responsibility to track whether or not their views have been included in the budget. This is also the opportunity presented by the transition of the process from the executive to the legislation once the budget estimates are presented to parliament typically by April 30 for debate and approval.

The Legislature and Public Participation in Budget Formulation and Enactment The enactment of The Constitution of Kenya 2010 and the successor PFMA settled the age-long debate in Kenya on the budget process as a tension between the roles of the executive and the legislature - between technicality and democracy. The Constitution recognizes that the executive has a mandate to prepare the Budget, since it possesses the most comprehensive information on which to base revenue and expenditure decisions. However, it elevates the role of the legislature which is to exercise oversight and to authorize the executive to raise revenue and spend money. For advocates of legislature power, the argument that effective oversight requires amendment powers carried the day. It was therefore expected that the legislature because of its stronger contact with citizens and interest groups, Parliament is the most appropriate place to ensure that the Budget best matches the nation's needs with the available resources. This is in contrast to the executive drafting process, which takes place behind closed doors, will provide more leverage for public inputs and influence on the budget. Advocates of weaker legislative powers continue to however that amendment powers will be in the long term detrimental to long-term planning and macroeconomic management if the Budget is altered on the basis of populism and short term point scoring3.

This background highlights the history and rationale of this new and enhanced role of Parliament and civil society in the budget process in Kenya. The Constitution grants Parliament an active role, which is significant because the Budget is the government's most important economic policy tool and provides a comprehensive statement of the nation's priorities.

From the time that the legislature receives the BPS until the time that parliament receives the BPS (February 15) to the time of passage of the budget estimates on June 30, parliament has about four dedicated months when it may make amends either in the budget policy statement or in the budget estimates in accordance with the law. The PFM Act however restricts Parliament in one major sense. If Parliament is not happy with the overall level of spending, revenues or the deficit, it can try to adjust these issues when it debates and amends the Budget Policy Statement. By the time of the presentation of the budget estimates however, if Parliament wants to spend more on a particular area, say education, it must cut an equal amount of funding from another

3 Warren Krafchik and Joachim Wehner, Institute for Democracy in South Africa: Budget Information Service

area. This is designed to avoid changes to the budget that increase the deficit. Parliament is at this stage therefore only allowed to cut spending without limit to decrease the deficit. (Source: The Commission for the Implementation of the Constitution (CIC) and the International Budget Partnership (IBP), 2013).

The modifications made to the budget in parliament are guided by two key inputs – deliberations from the Budget Estimates and Appropriations committee stage including the views gathered fro the public during this period and technical analysis form the Parliamentary Budget Office (PBO). The committee stage of the deliberations of the budget estimates therefore provides the most significant and last window of opportunity for the public and civil society to voice its preferences and influence the budget.

Subsequently, the de facto amendment power of parliament depends on a set of factors relating to the effective role of the budget committee in the Budget process. This role has traditionally been determined by a combination of the following factors:

• The location of amendment powers, i.e. currently, the budget committee has the power to suggest actual amendments to the whole House; • Time allocated to committee debate relative to the total time available for consideration in the whole House. In Kenya, there exists a sufficiently long period of time (four months) to undertake adequate analysis, which strengthens the power/ability to make amendments. • Committee involvement whereby the budget and appropriations committees can and does consult other committees as it may deem fit in the budgetary process and the relationship between them. A strong co-ordinating role of the Finance and Budget Committee, combined with other specialist input, supports Parliament's ability to affect substantial amendments. This was never possible in the previous constitutional dispensation. • Access to independent research capacity; The ability to affect amendments depends on detailed scrutiny, requiring analysis by specialized research staff. Currently, the parliament of Kenya has this capacity within the Parliamentary Budget Office and also the power to invite other independent policy and research think tanks including NGOs, universities, civil society and others.

• Access to departmental information, i.e. timely access to executive information; Information on the implementation and impact of the current Budget and the development of next year's Budget are Role of The Budget and Appropriations Committee of vital to provide a the National Assembly background for The Budget and Appropriations Committee is established necessary changes. In pursuant to the provisions of the National Assembly Kenya, all this Standing Order No. 207. It consists of a chairperson, and information is provided in not more than fifty other Members. February when the Budget Outlook Paper is (3) The functions of the Committee shall be to- presented for debate in • Investigate, inquire into and report on all matters the House. related to coordination, control and monitoring of the of the national budget, In parliament, the Budget and • Discuss and review the estimates and make Appropriations Committee recommendations to the House; generally has most time and • Examine the Budget Policy Statement presented to resources to devote to the often the House; complex budget proposals and • Examine Bills related to the national budget, research staff can focus better including Appropriations Bills; and when they have defined duties • Evaluate tax estimates, economic and budgetary and only a handful of members policies and programs with direct budget outlays. to respond to before the proposals go to the house. The Committee shall invite chairpersons of all Departmental Committees to make presentations during Over time, the committee the consideration of the budget. members have also built substantive knowledge on budget issues, or one portion of the budget making it the best forums for two-way dialogue with the executive and the public. Within the context of the PFMA, perhaps the most important moment for public participation in the budget formulation process is when the Estimates are tabled in the National Assembly, and the National Assembly has two months to debate and amend them between April 30-June 30. This is the main opportunity for the public to have a voice.

The National Assembly is required by the Constitution to “seek representations from the public” – typically this happens during the month of May for a period of about four (4) weeks. During this period, civil society organizations have a last chance to influence the budget and many of them make submissions to the budget committee using memoranda, in public hearings in town hall meetings, through email and even special presentations to the committee for select sectors – private sector, research institutions, faith based organizations and other special interest groups. In order to make representations, however, the public needs to be able to see the Budget Estimates – a key omission of the PFM the Act which fails to provide an explicit deadline for making the Estimates available to the public. In fact, it only says that these shall be “publicize[d]” by Treasury “as soon as practicable” (Article 37:8). Thus total discretion is

left to the Cabinet Secretary as to when to share the single most important budget document with the public. In 2013 for example, the public had not received the estimates over five weeks after they were tabled, and several weeks after they were requested to make “representations.” In fact, they were not made available until after the budget was approved. In subsequent years, there has been a slight improvement in meeting this deadline and the 2013 experience could be attributed to transition challenges. (Source: Laikin J, International Budget Partnership, Budget Brief, Number 15, August 2012).

In 2011 however, MARS Group, a local CSO went before the national assembly budget estimates committee during the public hearings and made a submission on the 2011- 2012 where they used the budget estimates of Revenue and Expenditure for State Corporations for the financial year 2011-2012 as an example to illustrate erroneous figures presented by treasury to parliament. In their submissions, the NGO exposed a staggering Kshs 251,106,241,000 (USD. 2.78B) deficit. Treasury would later make a national public apology that the budget presented in parliament indeed had serious errors that were only corrected later in the submissions to the budget committee.

In addition, a key element of the budget process during the enactment phase is the introduction of the Finance Bill - both under both the old and new constitution in Kenya, taxes are actually dealt with separately from the budget proposal in the Finance Bill. The Finance Bill authorizes the government to collect taxes, is introduced into the national Parliament in June. Typically during the presentation of the budget speech - which is normally on a date in June that is commonly agreed across the East African Community. According to the Act, the Finance Bill must be approved by Parliament within 90 days of the budget approval (that is, 90 days after the Appropriation Act is passed).

Another significantly new feature of the budget process in Kenya has been that the estimates for the National Assembly and the Judiciary are no longer submitted by Treasury, instead they are prepared independently by each branch. They are also, according to the PFM Act, submitted by April 30 while Treasury is to submit its comments on these independent submissions by May 15. Together with the budget estimates from Treasury, The National Assembly must pass the estimates with amendments where necessary by June 30. Once the budget is approved, Treasury has 21 days to make the approved budget available to the public. (Source: Laikin J, International Budget Partnership, Budget Brief, Number 15, August 2012).

The only limitation with this requirement of the law however is that the PFM Act does not require the production of a Citizens Budget, a simplified, readily accessible presentation that highlights key revenue and expenditure elements of the new budget for average citizens even though Treasury produced such a document for the first time in 2013 even without the requirement of the law. In the 2015/16 FY, treasury again produced a second citizen’s budget. The Citizen’s Budget was a graphical summary of some of the key revenue sources, expenditure sectors and inter-governmental transfers.

Budget Implementation Upon the enactment of the budget in parliament, the PFM Act provides that the final budget is supposed to be published 21 days after it is approved by Parliament. Following the enactment of the budget, the role of implementation naturally reverts to the executive arm of government with an oversight role for parliament and civil society organizations (CSOs) in analyzing and assessing how funds are actually spent to implement the policies, programs, and projects outlined in the budget. The budget execution process generally follows the traditional five steps (Vivek Kumar, 2008): • Monies are released to various line ministries (or departments/agencies) as per the approved budget • Agencies initiate expenditures directly or by procuring goods and services • Payments are made for these expenditures • Expenditure transactions are recorded in accounting books • Execution reports (In-Year and Mid-Year) are produced throughout the year, culminating in the closure of the accounting books and the production of Year- End Reports (the final execution report of a given budget year)

In practice, the national budget is rarely implemented exactly as approved. This can be for legitimate reasons, such as adjustments in policies in response to changes in economic conditions, or for negative reasons, including mismanagement, unauthorized expenditures, inefficiency, or fraud. CSOs use various pieces of information and analysis during and after budgets are implemented to identify problems in execution and use this information to strengthen their advocacy efforts to increase accountability, improve programs, and inform future budget debates. In Kenya, besides using public expenditure review reports and quarterly progress reports from government, a common source of monitoring budget implementation is the use of the public expenditure tracking surveys as well as public expenditure through public procurement processes.

The Public Expenditure Tracking Survey (PETS) tracks the flow of public funds and material resources from the central government level, through the administrative hierarchy, and out to the frontline service providers. The aim is to improve the quality of service delivery at the lower level, and the key question that a PETS sets out to answer is: Do public funds and material resources end up where they are supposed to? If they don’t, the survey aim is to establish whether the funds are being diverted. In 2012, The Health Policy Project in partnership with the Kenya Institute for Public Policy Research and Analysis (KIPPRA) implemented the PETS-Plus project which combines a public expenditure tracking survey (PETS) and a service delivery indicator (SDI) survey. The PETS-Plus was conducted to assess the overall service delivery performance of primary health facilities and hospitals and also the impact of some key policy reforms aimed at improving the delivery of essential health services. Consequently, the survey collected facility-based and other data on service delivery performance at dispensaries, health centers, and hospitals (i.e., health facilities at levels two through four).

Sample Summary of Quarter III Sectoral Development Budget Estimates and Exchequer Releases for the period July 2013-March 2014 (KSh.Billions)

PETS-Plus focused on analyzing the effectiveness of key policies that resulted from previous PETS studies: the Health Services Sector Fund (HSSF) transfer grant to primary health facilities; the Hospital Management Service Fund (HMSF), which makes direct transfers to public hospitals; performance of the 10/20 Policy, which replaced user fees with registration fees of Kenya shillings (Ksh) 10 at dispensaries and Ksh 20 at health centers; and a new drug distribution system.

The survey data was used to analyze and report on the following issues: • Current status of service quality performance using standard assessment tools • Implementation of key policy reforms to improve service delivery • Extent to which the allocated resources are being used for intended purposes (as per the quarterly implementation plans and authority to incur expenditure) • Compliance of the program with procedures established under the reform initiatives • The contribution (if any) made by the reform in improving service quality

The data was collected in November and December 2012 from 294 sampled health facilities in 15 counties.

In monitoring public expenditure through public procurements, evidence shows that an effective procurement system in Kenya could save the government approximately 25% of its expenditure. This is a significant amount considering the fact that public procurement accounts for 11% of the GDP. Public procurement in Kenya is guided by several laws enacted to weed out inefficiencies in the procurement process, remove patterns of abuse, and the failure of the public purchaser to obtain adequate value in return for the expenditure of public funds. Despite the positive transformation in the review of the Public Procurement and Disposal the Act 2009, the new law does not allow for individuals who did not take part in procurement proceedings to lodge a complaint with the Public Procurement Administrative Review Board. Section 934 of the Act provides for the requirements for an application for review which are pegged on the requirement that “one has to be a candidate as defined under Section 3 of the Act,” under which a candidate is defined as a person who has submitted a tender to a procuring entity. As such, the law does not contemplate the application for review from a public interest perspective. However, this does not limit members of the public from filing a case in the High Court for judicial review of the decisions of the Public Procurement and Oversight Authority (PPOA.

For example in June 2014, two independent citizens challenged a public tender deal of Ksh.13B (USD.144M) awarded to telecoms firm Safaricom to provide the police with intelligence platforms. In a bid to protect Kenyan taxpayers from the risk of losing billions of shillings, activists Okiya Omtata and Nyakina Gisebe who filed the suit asked the court to revoke the single sourced tender award contract signed between the government of Kenya and Safaricom Limited to supply and install the Integrated Public Safety Communication and Surveillance System.

In May 2014, the Kisumu County Government lost a case in which it was sued by a local resident for breach of tender laws and irregularly awarding an Sh18 billion waste management tender to a German investor. The High Court ruled that proper procedure was not followed in the identification of the contractor to handle the waste in the county and in his judgement, Mr. Justice Aggrey Muchelule said there was conflict of interest in the award of the contract and it therefore did not meet the expectation of residents. He also said the county government did not engage residents before making the decision as required by law. The judge “There is no evidence to also directed the county government and the German show how the project was Investor to meet the cost of the petition. conceived; allowing the In 2011, MARS Group a local advocacy and anti-corruption county to continue the organization in Kenya appeared before the Parliamentary engagement with Madam Accounts Committee to expose flaws in the procurement R Enterprises is in processes which resulted in the purchase of 120 VW essence illegal,” said Passat saloon cars by the Ministry of Finance for Cabinet Justice Muchelule. Ministers, Assistant Ministers and Permanent Secretaries.

4 93.(1) Subject to the provisions of this Part, any candidate who claims to have suffered or to risk suffering, loss or damage due to the breach of a duty imposed on a procuring entity by this Act or the regulations, may seek administrative review as in such manner as may be prescribed.

A key lesson form the experience in public procurement monitoring however is that public participation can only be effective when the public has access to relevant information in order to objectively evaluate procurement. Currently in Kenya, the tenders website http://www.tenders.go.ke/ provides such information and besides, the government regularly publishes all government tenders in leading local dailies in fulfillment of the law together with progress in award of previous tenders in key sectors such as roads, health and other physical infrastructure.

The Role of the Legislature in Monitoring Budget Implementation The parliamentary oversight function is one of the cornerstones of Kenya’s new found democracy. Oversight is a means for holding the executive accountable for its actions and for ensuring that it implements policies in accordance with the laws and budget passed by the parliament. The robust monitoring of the executive by the parliament is also an indicator of good governance. Besides the parliament’s legislative function, it is through oversight that the parliament can ensure a balance of power and assert its role as the defender of people’s interests.

In performing this oversight function, parliament employs a number of tools and mechanisms. Typically, these tools and mechanisms are outlined in the constitution as well as in the standing orders of parliament. For example, a good practice that Parliament in Kenya ahs adopted is the establishment of dedicated house committees assigned different government ministries together with the Public Accounts Committee (PAC) – a standing committee which undertakes the overall parliamentary oversight on the national budget as a whole.

Mandate of Departmental Committees

The Departmental Committees are established under the provisions of S.O. No. 216. Its members are nominated by the House Business Committee in consultation with parliamentary parties at the commencement of every Parliament. The mandate of Departmental Committees in respect of the subject matter assigned under the Second Schedule of these Standing Orders shall only be exercised within the limits contemplated under Part 1 of the Fourth Schedule to the Constitution. The functions of a Departmental Committee shall be to- • Investigate, inquire into, and report on all matters relating to the mandate, management, activities, administration, operations and estimates of the assigned Ministries and departments; • Study the programme and policy objectives of Ministries and departments and the effectiveness of the implementation; • Study and review all legislation referred to it; • Study, assess and analyze the relative success of the Ministries and departments as measured by the results obtained as compared with their stated objectives; • Investigate and inquire into all matters relating to the assigned Ministries and departments as they may deem necessary, and as may be referred to them by the House; • To vet and report on all appointments where the Constitution or any law requires the National Assembly to approve, except those under Standing Order 204 (Committee on Appointments) ; and 27 • Make reports and recommendations to the House as often as possible, including recommendation of proposed legislation.

In undertaking this oversight function, parliament has an array of tools at its disposal for conducting oversight. The most common tools used in Kenya include: questions to cabinet secretaries (oral and written previous asked to Ministers who were members of the house but currently directed at departmental committee chairs who liaise with the relevant ministries to get answers and table these on the floor), and votes of no confidence. Other tools include mechanisms related to budgetary oversight, impeachment, and the possibility for the parliament to establish ad-hoc committees, commissions of inquiry or using the ombudsman’s office. Several of these tools are described below:

Hearings, either in plenary or committee meetings, these are the primary tools of parliament for obtaining information related to specific policies or issues. In Kenya, parliament has a marked degree of legal capacity to compel individuals to give testimony since a summons equivalent to the summon of a high court.

The vote of no confidence, or motion of censure, is a motion presented by parliamentarians that results in either the withdrawal or the confirmation of the Parliament’s confidence in the government or one of its Cabinet Secretaries. In Kenya, the rules allow for parliament to withdraw its confidence in a single Cabinet Secretary, and that individual typically resigns.

Committees of inquiry are usually ad-hoc parliamentary committees or commissions formed to carry out in-depth investigations on specific issues of public importance. These commissions usually benefit from a greater degree of access to information than normal committees. Their powers may include summoning witnesses to testify under oath, confronting one witness with another, requesting or seizing documents, ordering searches, organizing field visits, and more. In some countries, these commissions may possess the same powers as a magistrate making a judicial inquiry. Committees of inquiry are a commonly used oversight instrument in parliament especially to investigate important cases of corruption or abuse of power.

Over the last few years, parliament has increasingly been at the forefront of suspending and in some few cases reversing public tender awards on grounds of lack of sufficient demonstration of value for money, improprieties in procurement processes or just conflict of interest. For example, in December 2014, citing improprieties in the procurement of the KSh.447 (USD. 4.9B) Standard Gauge Railway Project project, the Public Investment Committee (PIC) directed the investigation of Kenya Railways Managing Director and the firm’s tender committee by the anti-graft agency in what the Public Investments Committee (PIC) called ‘disregard of a parliament directive.’ They also directed the cancellation of the contract. The tender had been won by Chinese firm Third Railway Survey and Design Institute (TSDI) Group but the PIC argued it was overpriced and involved underhand deals.

Public Participation in Budget Making at the Sub National Level The county governments are a fairly new but already robust level of government in the context of Kenya’s current constitutional framework. As a result of the constitutional framework of devolution, the evolution of experiences and capabilities at this level of government is a mix of both the past and the future. Building on the experience of the now defunct Local Authority Service Delivery Action Plans, and the diminishing Constituency Development Fund Framework, county governments inherited a strong tradition of public participation in budget matters.

In sum, the value added for county governments under the new constitutional dispensation is the guarantee of independence from the national government on how counties conduct their budget processes and secondly, the enactment of various public participation clauses in both the constitution and statutory laws of the County Government Act as well as Public Finance Management Act. The County Government Act for instance places an obligation on the County Governments to create an enabling environment for citizens’ involvement in running the affairs of the Counties. Chapter VIII of the Act is devoted to citizen participation therefore giving a demonstrative emphasis of the importance of this right in the eyes of the law. In Chapter VIII, Section 87 provides for citizen participation at the county level based on the following principles: • Timely access to information, data, documents and information relevant to policy formulation and implementation • Reasonable access to the process of formulating and implementing policies, laws and regulations • Protection and promotion of the interest and rights of minorities, marginalized groups and communities • Avenues for legal redress to interested or affected persons or organizations • Shared responsibilities and partnership between county governments and non- state actors in decision making • Promotion of public private partnerships

In the same Chapter, Section 88 provides that citizens have a right to petition the county government on matters under the responsibility of the county government while Section 89 provides that county government authorities are under obligation to respond expeditiously to petitions and challenges from citizens with even provisions for referenda.

Section 91 of the Act goes further to demand particular minimum Structures for Participation are set up by the county Governments. It provides the following structures to be established and used to reach out to the public as an invitation to engage:- • County hall meetings • Use of notice boards for vacancy announcements, job appointments, tenders and procurement awards • Development project sites • Establishment of citizen forums at county and decentralized units

Most counties have expanded these to make use of websites, national newspapers and national media for public information.

When it comes to county budgeting under the PFMA, the budget cycle is exactly like the national budget cycle with the same timelines and milestones for the county as in the national level cycle. However, a major deviation in the law is the provision of a more robust public participation mechanism set out in the act which notably provides guidelines for the formation of County Budget Economic Forum (CBEF) - the most all inclusive platform at the county level whose main function and responsibility is to facilitate broad public engagement in the budgetary process, from formulation to implementation. The guidelines provide for the composition of CBEFs, including the size of representation of state and non-state actors, with the governor as the chairman. Other state officials, up to a maximum of 11, include the county executive committee members. An equal number of non-state state actors is also provided for to represent interest groups such as professionals, businesses, labor issues, women, persons with disabilities, the elderly and faith based organizations.

The forum is also supposed to give citizens an opportunity to make their views known during the preparation of all county plans e.g. integrated development plan and budget documents such as The County Fiscal Strategy Paper, and the Budget Review and Outlook Paper.

County-Level Impacts: Over the last two years however, the budget process in the county governments has had mixed results. In newly published guidelines on consultation during preparation of county government budgets, the Commission on Revenue Allocation has insisted that the public must be given a notice of at least two weeks before convening the meeting to debate the spending proposals in accordance to the law. The commission also set out a set of ten (10 ) principles that will be used Sample of Public Budget Review Questions for to guide public consultations in the budget Nairobi County Budget Monitoring and Report process. Forum

During the FY 2013/2014, public Do you as a mwananchi (citizen) know about the demonstartions were witnessed in at least progress of the projects that should have been three counties -Nakuru, Kiambu, implemented by the county? What are some of Machakos and Kakamega Counties were the questions you as a mwananchi (citizen) forced to review some of the contentious should ask about the Nairobi City County budget during these hearings? proposals for taxation following protests from furious traders who took to the 1. What is the progress of the new training facility streets claiming they were not involved in construction in Dagoretti? Where exactly is it in drafting of the Bill as required by law. In Dagoretti? Kiambu County, the County Government 2. What is the progress of the construction of the was taken to court for failing to undertake rehabilitation of the country bus offices? adequate public participation by a local 3. Given the rising fire incidences, were the 3 water NGO which case the County Government boozers purchased? What about the three fire lost and the Finance Act was suspended. engines? And where were the three fire houses constructed? 4. At the cost of 50 million, what is the progress of the rehabilitation of Nairobi Dam? 30 5. Which informal settlements were the Kshs. 20 million worth of garbage collection containers put?

The experience of this case is highlighted in the case study in section 3.6.2 of this paper.

In most counties civil society organizations are beginning to make progress in supporting citizens watch groups and forums to support public participation in the budget process. However, with 47 different counties all undertaking their budget processes at about the same time, the scope of public oversight necessary to capture all the experiences and necessary inform for effective public participation is immense. At the same time, Civil Society lacks a strong grass root presence in all the counties which means there are still huge oversight gaps.

In large cosmopolitan counties such as Nairobi however, string advocacy groups have made great impact. During the public hearings on the budget outlook paper for the 2015/16 for instance, TISA organized county wide civic education forums disseminating budget information in ways and means that ordinary citizens could use to engage the county government. The IEC materials contained simplified questions around the previous budget such as those shown in the text box alongside.

The Ten (10) Key Principles and Guidelines for County Government Budget Processes (Source: The Commission of Revenue Allocation, 2015)

1. Public consultations should be open to the widest spectrum of citizens and taxpayers, without discrimination. The “public” refers to citizens, residents and taxpayers who are not government officials. 2. Safeguards should be established to prevent consultative forums from being dominated by any one political group, organized interest, or politician. These safeguards should include open and transparent proceedings and competitively selected technical staff empowered to manage procedures. Where appropriate, there may be a need for vetting of participants. 3. Public consultations must have clear and specific purposes, and these purposes should generally be to seek feedback on government plans, budgets and budget implementation, to seek specific preferences over a defined set of priorities, such as prioritizing a list of capital investments, and to present and seek feedback on audit reports and queries raised by auditors. The purpose of the consultation should be made known in advance to the public, along with relevant documentation, so that members of the public can prepare. 4. The timeline and venues for public consultations should be made known at least two weeks in advance of the consultation to ensure that people can prepare themselves to participate. The venue for consultations should be consistent, wherever possible, so people know where they need to be in advance. The venue selection should take into consideration citizen preferences for where they feel most comfortable expressing their views. A calendar of events must be released at the start of every financial year. 5. Public consultations must set aside dedicated time for public feedback and questions. A meeting at which officials simply present to the public without receiving any feedback or questions does not constitute public participation. 6. Public consultation in the planning and budget process should occur at all stages in this process, including formulation, enactment, implementation, and oversight/evaluation. This means that there must be consultations on at least a quarterly basis for any ongoing financial management processes. 7. The public must have access to all relevant plan and budget documents in a timely fashion, meaning at least two weeks before any decisions are taken about draft plans or budgets. Relevant documents include all strategic plans, budget proposals, enacted budgets, quarterly or monthly implementation reports, audit reports, supplementary budgets, project plans and implementation reports, and contract and tender documents. 8. All plan and budget documents should contain an executive summary and a narrative explanation of tables and figures. All of these documents should be written in a user-friendly, simple format, or should be accompanied by simplified versions that are readily accessible. 9. Citizens should be able to provide input into public consultations through direct participation, through representatives, and through written comments. It is not possible for every citizen to participate in every forum, and there must be other ways to provide input. 10. Where the public is asked for input, there should be a feedback mechanism so that citizens know whether or not their inputs were received, and whether and why they were or were not incorporated into the relevant plans or budgets. This mechanism should take the form of a written document and, where possible a, public forum. The feedback must also be made available in a timely fashion so that citizens know before decisions are taken whether they have been heard or not.

Supreme Audit Institutions and Public Participation in Kenya Although the functions of SAIs and CSOs are different in nature, the oversight actions they perform make it possible to establish spaces for cooperation. This section briefly presents some of the experiences of both types of actors that have contributed to inform a set of complementary exercises of control functions both within formal and informal settings under the current constitutional dispensation in Kenya.

The Office of the Controller of Budget (OCoB) was established by the Constitution of Kenya 2010, under Article 228(1) and became operational upon the appointment of the Controller of budget on 27th August 2011. Under the former constitutional regime, some of the functions of the Office of the Controller of Budget were performed by the Controller and Auditor General and the Treasury. Others did not exist. Two new independent constitutional offices were therefore created by splitting the control function of the Controller and Auditor General into the Office of the Controller of Budget and the Auditor General under Articles 228 and 229. The role of the Controller of Budget has further been extended to include monitoring budget execution and reporting to Parliament every four months.

The rationale for the creation of the Office of the Controller of Budget as an independent office under the Constitution of Kenya was to address the demand by the public for separation of financial management functions, that is; controlling and reporting on budget implementation from the auditing function. The OCoB seeks among other issues, to promote fiscal discipline and equitable allocation of available resources and improve transparency and accountability in the budget implementation process, particularly with the inception of the devolved system of government, which introduces an urgent need for strong expenditure control.

Under the previous constitution, the authority granted to Parliament to scrutinize and approve the national budget, was effectively ineffectual as it relied on the same Executive to provide audit reports of government expenditure. By the time of promulgating of the new Constitution in August 2010, the original independence Constitution had been amended over 30 times, in the process grossly eroding the powers of the National Assembly in public financial management.

The other challenge that the office faced routinely was the transfer of key officers of the Controller and Auditor General’s Office. This undermined the capacity to perform essential functions and led to accumulated audit arrears. The situation deteriorated so much that at one time, Parliament was more than five years behind in the examination of annual public accounts. This meant that by the time the audit was being discussed in Parliament, many of the key witnesses were not available for questioning to validate information necessary for decision-making. In addition the Controller and Auditor General concentrated on auditing expenditures of MDAs and could not monitor public expenditures from sector ministries effectively due to conflict of interest.

The multiplicity of oversight institutions has meant greater leverage for civil society organizations to complement SAIs and CSOs in oversight. While SAIs have the obligation of auditing, CSOs take it upon themselves as a voluntary action. Compared to CSOs therefore, SAIs have a number of specific characteristics that indicate that they are well placed to paly their audit functions. On their part, CSOs also have distinct characteristics very different from those of SAIs that have enabled them to strengthen the execution of external oversight. These include:

• Their capacity to go beyond the time and procedural limits (predefined types of audit) that govern the more structured and formal work of SAIs; and The possibility of using the information resulting from monitoring efforts for concrete advocacy actions; • Greater closeness to service delivery and, hence, to the users; • Sensitivity to the implementation of government programs in practice; • A lower degree of bureaucracy.

In practice, SAIs have strengthened public participation in oversight mainly through the timely dissemination and access to public information as well the disclosure of institutional information related to public finance management. Currently, the OCoB and the CRA separately publish all their reports online and in some cases with simplified summaries for public education. CSOs on the other hand take it upon themselves to train and educate citizens on how to use this information to hold government to account. An example of such an institution that uses reports from the OCoB for advocacy is provided in the case study in section 3.7.3 of this report.

Most recently, The National Taxpayers Association (NTA) formally wrote to the Office of the Auditor General asking for a formal partnership between the NGO and the Office of the Auditor General (OAG). In their deliberations, the OAG and the NTA agreed on the following areas of collaboration;

• Request from NTA to forge partnership with OAG in the audit of public accounts (CDF & County funds) aimed at promoting transparency and accountability • Proposal from NTA to be included in OAGs mailing list and to be involved in other relevant activities • Request to have a designated liaison officer linked with NTA • To share information like audit reports with NTA and enhance information in the course of the implementation of NTA projects and programmes • To leverage the strengths and capacities of NTA and OAG so as to integrate ICT (development-check App) in promoting transparency and accountability • Request to sign an MOU with OAG for a stronger partnership

This is the first such partnership in Kenya and its experiences will be a key learning point for stronger collaboration between CSOs and SAIs.

Oversight of Public Finance and Citizen Participation As mentioned earlier in this section, the introduction, access to public information and transparency in SAIs are has been the key driver to facilitating public participation of various non-state actors in the external oversight system. But, at the same time, the participation in these public spheres contributes to the justification of access to information. As transparency and access to information are broadened, public participation mechanisms are easier to promote. Two key planks of Kenya’s experience stand out in this regard;

i) The citizen complaints mechanism to the SAIs The Commission on Administrative Justice (CAJ), also known as the Office of the Ombudsman is the most active public complaints office in Kenya. The CAJ is an independent commission established by the Commission on Administrative Justice Act, 2011 pursuant to Article 59 (4) of the Constitution of Kenya.

The CAJ is mandated to address all forms of maladministration, promote good governance and efficient service delivery in the public sector by enforcing the right to fair administrative action. The CAJ investigates abuse of power, manifest injustice and unlawful, oppressive, unfair or unresponsive official conduct. As such, the Commission on Administrative Justice (office of the Ombudsman) is the foremost Constitutional Commission whose primary function is to ensure public officers and public institutions respect sovereignty of the people of Kenya.

The public complaints system of the CAJ encompasses ability to file complaints in writing (either through a letter or email), by phone, in person or by using the online complaint form (one must however first register with CAJ before they can use the online complaint form). The CAJ investigates allegations of misuse of office, unethical conduct, and breach of integrity, maladministration, delay, injustice, discourtesy, inattention, incompetence, misbehavior, inefficiency or ineptitude. Complaints can only be lodged against Public Officers, Public Institutions, State Officers and State Institutions which include ministries, state corporations, county governments and local authorities, state corporations and tertiary institutions. In the year 2013 for example, the CAJ handled a total of 18,257 complaints – lodged directly with the Commission and those handled under the Commission’s performance contracting obligation.

ii) Citizen Oversight Committees and Audits

In the past, a number of CSOs have increasingly supported the processes of citizen social audits for various public finance projects in Kenya. One such organization that continues to do this is The Institute of Social Accountability (TISA) that also builds the capacity of citizens in a social audits using a set of public information and monitoring tools aimed at tracking public expenditure under the Constituency Development Fund (CDF). The CDF Social Audit Tools are used in the training of groups as well as individuals with an interest in monitoring CDF expenditure in their community. The tools assist communities understand the way CDF works, and how they can participate

effectively in the various stages of the CDF project cycle. It also discusses how members of the public can effectively monitor CDF expenditure through a social audit.

In the first part of the tool, the manual gives a detailed introduction to the CDF, including a brief outline of the concept of the Social Audit, including the objectives of a Social Audit and what a Social Audit aims to achieve. This section also discusses how CDF money is allocated and takes a detailed look at the key institutions involved in CDF administration and their roles and responsibilities. The next section deals with the CDF process and goes into detail about how the CDF works from inception up to the completion of a project. It looks at the key stages of the CDF project cycle and explains key documents and institutions involved at every stage. The next section discusses the aspect of monitoring and evaluation, and specifically the social audit in detail, including the stages involved. It also introduces some practical CDF social audit tools. The last section deals with the numerous advocacy issues raised in CDF implementation and gives recommendations. It also briefly examines some principles of best practice in CDF management including the introduction of a CDF accountability charter, a tool that is gaining increased popularity amongst CSOs engaged in monitoring local development funds in the country.

Development of Public Participation Case Studies This section of the paper will specifically focus on the emerging shifts in law, spending priorities and transparency initiatives reflecting the shifting ground and results of public participation over the last few years in Kenya.

MARS Group Exposes Budget Errors in Kenya’s National Budget

In June 2008, Mars Group shocked the Kenyan public with revelations that there were variances “A review of the two debts in June 2009 between the revisions contained in the first and the showed that a total of second versions of the Supplementary Budget by Kshs.2,371,887,138.05 made up of upto Ksh.10B (USD.111M). In a swift response, the Minister for Finance, Hon. Uhuru Kenyatta provided principal and interest amounts of a public apology to parliament and explained that Kshs.1,639,409,203.95 and these were computer “errors” and treasury would be Kshs.732,477,934.10 respectively, had more careful in the preparation of the estimates next time. been paid as at 30 June 2009. However, and as observed in the preceding Hon. Uhuru then told Parliament that the earlier paragraphs, no fertilizer factory had been estimates had been withdrawn and that what he was presenting would supersede the estimates table in constructed, thus making the entire the House on April 22. But Mati said expenditure of Kshs.2,371,887,138.05 recommendations made by the Joint Committee of nugatory.” – MARS Group the Budget Committee and the Finance Committee

had not been followed. The joint committee recommended an independent forensic audit, and the estimates withdrawn from the House and the Fiscal Management Bill be approved and enacted as a matter of urgency.

In the subsequent FY, MARS Group exposed that the Ministry of Finance had made provisions to pay Ksh 1.3B (USD.14M) for a non-existent factory in the budget. That the factory was non-existent was well established by the local MP for the area where the factory was supposed to be situated provided a statement in Parliament to confirm this position. In the submission, MARS Group noted that Kenya had paid huge sums for this undelivered project in the past. Between 2003 and 2009 the Controller and Auditor General report showed that the country had paid Ksh 2.3 billion (USD.25M) for this non existent factory.

During that year however, Parliament passed the Supplementary Estimates, giving the Government a go ahead to spend the money. The Speaker Hon. Kenneth Marende directed that the motion for consideration of the of the estimates for the year 2008/2009 approved by the House on April 29 pursuant to Standing Order No.156 stood valid and that the House could proceed to transact the Supplementary Appropriation Bill 2009.

In June 2011, a scrutiny of tax proposals tabled by Finance Minister Uhuru Kenyatta in his Budget speech in Parliament exposed glaring mathematical errors of a variance of Sh251 billion (USD.2.7B). During a presentation to the Parliamentary Budget Committee, Mars Group exposed the discrepancies that existed on the expenditure and revenue for state corporations. The estimates tabled by the minister indicated a surplus of Sh87.3 billion (USD.0.98B), however, computation of the same figures by Mars Group showed there was a deficit of Sh163.7 billion (USD.1.8B).

Case Study 2: High Court nullifies The Kiambu County Government Finance Act

This sub section will highlight the High Court Case Petition No.532 of 2013 which was a first in Kenya where public law was nullified on the basis of inadequate public participation. Pursuant to the provisions of Articles 185 and 209 (3) of the Constitution the County Assembly of Kiambu County Government (the 1st applicant) enacted the Finance Act, 2013 which imposed a wide range of tax measures. Several business people drawn from the county together with some residents (the respondents) who felt affected by the new tax regime variously moved the High Court by Constitutional Petition Nos. 532 of 2013, 12 of 2014, 35 of 2014, 36 of 2014, 42 of 2014 and 72 of 2014 as well as through Judicial Review Miscellaneous Application No. 61 of 2014. Because they raised similar issues against the applicants, the actions were consolidated and determined in Petition No. 532 of 2013. In short, the County Government of Kiambu Finance Act, 2013 was being challenged by the respondents on the grounds that it was introduced and passed without their

participation; that certain provisions of the Act imposing levies and taxes which the 1st applicant had no powers to impose were therefore in violation of the Constitution. The applicants on their part maintained that there was full participation by the population within Kiambu County in the form of representation of the population by Members of the County Assembly (MCAs) in the Assembly, an advertisement in the Daily Nation newspaper of 17th August 2013, in the county website and a notice circulated to churches in the county drawing the attention of the public to the content of the Bill before its enactment and inviting their input. This, in the applicants’ view, constituted sufficient public participation. In any case, they argued, the County Assembly considered the first Bill and rejected it with specific recommendations which were taken into account in the enactment of the Finance Act, 2013. Secondly, the Constitution, the County Government Act, 2012 and the Public Finance Management Act, 2012 authorized the applicant to impose permit fees, license fees and rent fees to finance its operations and to provide other services in the county. The Judge understood the respondents’ grievance to raise the following issues which he embarked on resolving. • Whether the Kiambu Finance Act of 2013 was passed with sufficient public participation as required by the Constitution of Kenya, 2010. • Whether the County Government of Kiambu is entitled to publish and/or raise new or existing taxes. • Whether the levies and charges under the Kiambu Finance Act are within the meaning of the 4th Schedule of the Constitution of Kenya.” In the learned Judge’s opinion, the nature and extent of public participation may vary depending on the nature of what is at hand. On the question of public participation and quoting extensively from South African cases of Doctors for Life International V. Speaker of the National Assembly & others [CCT 12/05] ZACC 11/2006 (12) BCLR 1399 SA 416 and Merafong Demarcation Forum & Others v. President of the Republic of South African & Others [CCT 41/07] (2008) ZA CC10, he expressed the following opinion: “67. It must be made clear that not all persons must be heard orally. Therefore, even in cases where there are oral public hearings, the mere fact that a particular person has not been so heard does not necessarily warrant the whole process being nullified..... In my view, where a Bill has been rejected by the Assembly and a fresh Bill introduced as opposed to mere amendments, the principle of public participation must equally apply. Unless this is so, the principle may be defeated by the Assembly simply rejecting a Bill in which the public has had an input with its own Bill disregarding the input by the public and not subjecting it to public participation. That in my view would defeat the very principle of public participation...... 75. In my view, public participation ought to be real and not illusory and ought not to be treated as a mere formality for the purpose of fulfillment of the Constitutional dictates. It is my view that it behoves the County

Assemblies in enacting legislation to ensure that the spirit of public participation is attained both quantitatively and qualitatively. It is not just enough in my view to simply “tweet” messages as it were and leave it to those who care to scavenge for it. The County Assemblies ought to do whatever is reasonable to ensure that as many of their constituents in particular and the Kenyans in general are aware of the intention to pass legislation and where the legislation in question involves such important aspect as payment of taxes and levies, the duty is even more onerous. I hold that it is the duty of the County Assembly in such circumstances to exhort its constituents to participate in the process of the enactment of such legislation by making use of as many forum as possible such as churches, mosques, temples, public barazas, national and vernacular radio broadcasting stations and other avenues where the public are known to converge to disseminate information with respect to the intended action.” From the foregoing, the Judge concluded that the people of Kiambu were not expected to participate in the pre-enactment process of the Act through their elected representatives in the Assembly; that the newspaper advertisement and meetings held in hotels were not sufficient, hence there was no public participation. On whether the Act contravened the Constitution, the learned Judge found that whereas the County Government could impose property rates and entertainment taxes, it had no powers to levy charges on the quarry stones. With that, he declared the County Government of Kiambu Finance Act, 2013 unconstitutional, null and void.

Case Study 3: Broadening Convergence between Civil Society and SAIs

The Office of Controller of Budget (OCoB) of Kenya is Key Issues identified by AFRICOG an Independent Office established under Article 228 of for County Budget Improvement The Constitution of Kenya 2010 with the core mandate • Low understanding of the being to oversee implementation of the budgets of the Constitution in public finance National and County Governments by authorizing across all levels of government withdrawal from public funds. It its oversight role and by • Weak support for transition virtue of its constitutional independence, the Controller • Poor understanding by county of Budget is an agent of the legislature. This oversight governors on the the role involves overseeing the implementation of the constitutional and legal roadmap for devolution, budgets of both national and county governments. The Weak capacity building initiatives Controller of Budget in this role therefore monitors the • • Inaugural county budgets have use of public funds in-year and reports to Parliament on been unrealistic how the funds have been utilized. • Weak county government capacity to generate their own Every four (4) months, the Controller of Budget (CoB) revenue has to prepare a Budget Implementation and Review • Weak budget implementation Report (BIRR) in line with Article 228(6) of the performance leading to low absorption rates.

Constitution, a report to each House of Parliament on the implementation of the budgets of the national and county governments. The overall objective of the report is to give an account on how the public funds released to Ministries, Departments and Agencies (MDAs) have been utilized, highlight any key challenges in budget implementation, and make recommendations to address the challenges. The report is also intended to inform Parliament, the Executive and other stakeholders including the public on revenue and expenditure performance by public institutions. Among Civil Society, the relationship between CSOs and the OCoB is one of convergence. Since the OCoB has both the legal and technical resources for deeper and detailed oversight, Civil Society Organizations largely sue OCoB reports to undertake budget advocacy and other governance campaigns especially aimed at holding the executive, legislature, and judiciary to account. In 2012/13 for example, Civil Society Organizations prepared a technical report on the state of county budget processes solely with information and data from the Public Finance Management Act (PFMA), the 2013/2014 Budget Implementation Review and reports from the Office of the Controller of Budget (OCOB), the ‘Learning by Doing’. The report aimed at evaluating the extent of adherence of county governments to the legal and institutional framework of public financial management. More specifically the evaluation comprised: • An audit of the financial year (FY) 2013/2014 county budgets with reference to county governments’ development, capital and recurrent expenditure allocations • Identification and analysis of any shortcomings in the 2013/2014 county budgeting processes, specifically principles of transparency, accountability, openness and public participation • Identification and analysis of good practices employed in the 2013/2014 county budgeting processes.

From this study, Civil Society Organizations made feasible recommendations to improve county budgeting in Kenya based on the challenges identified in county budget audits.

Case Study 4: Mass public participation in Kenya’s Second Medium Term Planning (MTP II) The preparation of the second MTP 2013-17 commenced in August 2012 upon the expiry of the First Medium Term Plan 2008-2012, which together form the platform for the launch of the Vision 2030 planning process under the two successive governments of President Mwai Kibaki and Uhuru Kenyatta.

The preparation process for the MTP II was In a process that involved the identification of participatory. Stakeholders participated in national development priorities in through thematic group meetings. Furthermore, a country, the process involved the design and dedicated website for the preparation of the execution of public consultation forums MTP-2 was created where the meetings countrywide, consultations with private were made public. County consultative sector, professionals and other stakeholder forums were held in all the 47 counties forums. In total, the national government held including targeted focused group at least 47 county consultations together with discussions and submission of written up to 290 sub county consultations each of memoranda. These forums were public but which was attended by about 100-150 there were also invitations to various interest participants at the sub-county level making a groups. The draft MTP-2 was circulated to total of close to 29,000-43,000 citizens various stakeholders for comments that countrywide through town hall meetings were extensive. A major public forum was organized in each constituency/sub county. held at which, following the presentation of The ultimate outcomes of the MTP II the draft, thematic sessions were held to consultations was the identification of up to solicit comments. – Source: Joint IDA-IMF 129 flagship projects across the three pillars Staff Advisory Note on the VISION 2030 and enablers of the Vision 2030 which Second Medium Term Plan 2013- continue to receive prioritization for 2017(Report No.85054-KE) implementation at both county and national government level.

During the first budgeting year in 2013/2014, the MTP II provided the first basic information to county governments in preparing their County Integrated Development Plans (CIDPs) as required under the Constitution and under the Public Finance Management Act (2012). Under the law, county budgeting is to be guided by the CIDPs.

At the national level, government ministries prepared five-year strategic plans to guide budgeting and plan implementation in their areas of responsibility under the Medium Term Expenditure Framework and annual budgets.

Section 4: Impacts and Outcomes

The main import of Kenya’s big focus on the promise of greater and better public participation in governance lies in the history and content of The Constitution of Kenya, 2010. The Constitution itself is built from a rich, long and unprecedented struggle for citizen participation in public process. In many cases, this history has been a chequered one. From the 1990s and largely drawing on their experience to claim great political space early on, the unmistakable pursuit for engagement in autonomous spaces of participation has largely been used by citizens to attempt to reconfigure hitherto skewed power relations and the possibility of extending these democratic practices beyond manipulation by authorities. Constitutionally, the benefit of this history is reflected in Article 10 where The Constitution recognizes public participation as a national value and principle of governance and further mandates parliament, in article 118, to facilitate public participation in the legislative and other business of parliament.

Legislative and Institutional Outcomes of Public Participation The clarity of The Constitution of Kenya on the place of public participation as a national value and principle together with the requirement of parliament to put in place legislation to facilitate public participation has been a key influence on the numerous public participation clauses in legislation over the last five years. Under the new constitution public participation is mandatory in the following:

• Parliament and County Assemblies – they are required to facilitate public participation, including committee hearings, by not only ensuring that the public is able to participate, but also safeguarding the public’s right to attend, (except in special circumstances determined by the Speaker). • Public finance, which is meant to be transparent and participatory • The public service – in decision making and information provision • The management of natural resources • Access to information such as land tenure, procurement etc.

i) New Laws and Institutions Notably, the provisions of the County Governments Act 2012, The Urban Areas and Cities Act 2012, The Public Finance Management Management Act 2012 and other provisions in a number of statutory legislation make a good attempt at clarifying these mechanisms, provisions and participation platforms. From 1963 and throughout the post-colonial era, Kenya has generally taken legislative steps to provide ways for citizens to be active participants in governance. Most of these ways, however, were limited to token provisions particularly in local authorities and the implementation of laws incorporating citizen participation did not reach their full potential because citizens did not fully understand their rights or embrace the opportunity. In the 2000s, local authorities struggled more intensely to promote local funding and planning processes to citizens, like the Local Authority Service Delivery Action Plan (LASDAP) and the

Constituencies Development Fund (CDF). The experience gained from this long journey are what have provided the current elaborate mechanisms in Public Finance processes in the Public Finance Management Act where citizens have an opportunity to share decision making platforms with local leaders in developing priorities in the county budgets, in fiscal planning and interacting with the legislature.

Increased Transparency and Public Information Systems On July 8 2011, President Mwai Kibaki launched the Kenya Open Data Initiative, making key government data freely available to the public through a single online portal. The website is a user-friendly platform that allows for visualizations and downloads of the data and easy access for software developers. Indeed, tools and applications have already been built to take this data and make it more useful than it originally was.

Kenya has an open government data portal, which has been widely acclaimed globally as one of the most significant steps Kenya has made to improve governance and implement the new Constitution’s provisions on access to information. As of November 2011, there are close to 390 datasets that have been uploaded to the site, with a plan currently in place to upload more data over the next year. There have been over 17,000 page views and over 2,500 dataset downloaded and embedded to various websites and portals. There are now over a hundred request from the public for new datasets and there is a clear demand for more data to be made available. Kenya's information is a national asset, and this site is about sharing it. The goal of opendata.go.ke is to make core government development, demographic, statistical and expenditure data available in a useful digital format for researchers, policymakers, ICT developers and the general public.

Challenges and Limitations Low capacity among civil society organizations Over the last 5-10 years, the Civil Society has made tremendous progress in participating in budget oversight as a whole and public expenditure tracking in particular. Increasingly however, the lack of capacity to be involved in implementation processes of the budget continue to undermine this objective. In many cases, the complexity of expenditure tracking has prevented many CSOs from engaging in a rigorous review of financial records and analysis of leakages – especially at the scale of desired to create a lasting impact for parliamentary and executive committee level action. An understanding of budget processes and, specifically, the expenditure chain is a precursor to undertaking effective budget advocacy but this is still short.

The deficits of public demand At the level of the County governments, a key challenge in enabling citizen participation in the county processes has been that any approach to realize effective participation requires people to be informed, but generally also to be mobilized. In many cases, counties have relied on a simple advertisement in the paper, or even public notices

more widely distributed but these are often not enough to get people to attend or participate in forums, especially in contexts with a long history of exclusion. In part, this has been limited because participation has not received substantial resources allocated but in many other instances, people have simply shown disinterest in participating in budget processes because of distrust of the process, poor management of participation processes and the fact that quite often citizens do no see or connect their inputs to specific development interventions as a result of their participation.

Government has varied acceptance of public audit mechanisms Across the federal government, there is a significant difference in the understanding and accommodation of many frontline officers on the role and place of transparency and public oversight mechanisms in the budget process. In the county governments in particular, there is consistently significant pushback from government officials. In many counties, Civil Society Organizations continue to report frustration and restriction of the dissemination of budget monitoring reports which impedes civil society oversight. Quite often, where CSOs implement their own budget monitoring reports, most government officials are reluctant to accept and embrace the findings until legal bodies have picked up the issues.

Section 5: Conclusion

The main thrust of Kenya’s current reform initiatives lie in the enactment of a new constitutional architecture in August 2010. The Kenyan Constitution 2010 introduces the concept of rights based approach to development. Development is no longer a gift but a right which all citizens regardless of their status are entitled. The Constitution also recognizes the fact that there are certain vulnerable members of the society who need specific attention and protection. To activate this, the Constitution makes provisions for affirmative action to remedy the injustices meted on the marginalized groups and communities. But the constitution itself is a product of Kenya’s longest reform agenda that dates back to the post independence period with the first clamor for political pluralism as early as 1966, just three years after independence.

Even from a political and historical perspective, because the struggle for constitutional reforms always had its roots in the desire to correct the deficiencies in the governance framework of the country, a central objective of the struggle had always been the restoration of power to local communities to manage their affairs particularly in matters of local development. Under the Constitution of Kenya 2010, Article 6 (1) and (2) provide for some of the early principles and structure for the establishment of the devolved government ensuring that none of the levels of government is a mere agent of the other. The system combines self-governance and shared governance at the local and national levels respectively. The essence of this is that at the local level the people are allowed a certain flexibility within which they can make decisions that are unique to

themselves and their locality. The laws they make are only applicable to their county and do not apply and are not enforceable in other counties. They are allowed a measure of self-governance at this level but at the national level, decision-making is shared.

Even still with all these progressive laws and institutions and mechanisms, a number of grey areas still dot the public participation arena. For example, there are still large gaps between public expectations and outcomes. Participatory processes are only sustainable if people feel that their participation matters. If there is no evidence that participation has any impact on what government does or how it does it, people will stop participating. This was a problem with the previous LASDAP process and is a burden inherited by the county governments. In the LASDAP, people’s negative attitudes towards participation in LASDAP meetings were attributed to past experiences where projects that were selected and prioritized by community members were never implemented. This problem is not only one of implementation but can also plague consultation processes where there is no clearly defined outcome. Broader consultations sometimes fall short of people’s expectations because it is not clear how their input was taken into account. This problem has sipped into the current system. For county government officials however, their biggest challenge has been that the public quite often provide proposals that are financially and technically not feasible, inconsistent with CIDPS or even in many cases not under the jurisdiction of the county government. This can however be attributed to low civic education.

A more practical challenge faced by county government officials is also the fact they do not know whether it’s their duty to engage legislators to ensure public preferences are accepted in final budgets. This may seem obvious, but in most cases, legislators have a say over what is approved in local budgets. In the County Assembly, members are particularly powerful and can amend the county budget with few constraints. Under the previous LASDAP, local leaders also had the power to make changes to projects approved through the participatory planning process just like with the current County Government system. Both these processes envisioned involving local leaders in the consultative/consensus meetings so that they would/can be part of the process and would be likely to approve projects selected by the public. In essence however, county representatives still veto a number of projects in the county assembly. In other places, the opposite problems emerged: county assembly representatives who are involved in the process can dominate meetings while others organize their supporters to manipulate decisions until its difficult to have a sound process of consultation. It is therefore still generally difficult to find a balance where legislators engage in the process and understand that they gain from the information that participation yields about their constituents’ preferences. ( Laikin J., International Budget Partnership, Budget Brief No.21.)

Otherwise, they can potentially block implementation of priorities generated by the participatory process and generate cynicism about the value of participation in which case, the cynicism could trigger a wide scale loss of confidence and trust in the mechanisms and purpose of public participation.

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