Structure

 

Most of these funds under the old constitution were generally weak in administrative structures, planning, accountability and audit. In particular, the CDF and the ESP, remained shackled by the political elite who shared them out using weak policy frameworks for political expediency rather than equitable fiscal decentralisation desired by the people of Kenya for decades. For example, CDF's very formula, which relied largely on a weakly-computed poverty index function, failed to address more important considerations that devolution ought to consider like size, population, equity and marginalisation of people, etc.

Furthermore, the area member of parliament or MP, was the implementer-in-chief of the Fund, a function, clearly not intended for law makers; meaning huge challenges of transparency and accountability dogged the Fund every year.  Indeed, the yearly audit reports of the CDF made (and continue to make) for very sad and depressing reading.

Equally, the ESP also failed to 'treat unequals equally': "For example, in the 2010/11 Budget, funds for the Economic Stimulus Programme (ESP) were shared equally among the constituencies, irrespective of variations in population and poverty levels, which would be open to questions under the principle of equity. Money for employment of teachers was similarly allocated equally to each constituency. In both cases, no attempt appears to have been made to assess the actual needs on the ground, for example, the number of schools per constituency. In the case of teachers, some constituencies have fewer than ten secondary schools in total while others have more than 50" (Kirira, N 2011). 

For reasons quite at odds, in my view, with the new constitutional dispensation, the (Jubilee) Government that was formed after the first General Elections of 2013 under the New Constitution, maintained a spirited campaign against the abolition of these funds with the well-sounding promise to revamp their reach, function, and administration. In fact, it established yet another 'national' fund in September 2013 under the Ministry of Devolution and Planning known as the Uwezo Fund, and arguing that the fund goes beyond merely lending money to its target groups, it emphasised that it (the Fund) offers entrepreneurship training, business skills, business incubation, industrial promotion, and catalyses innovation amongst its borrowers.

These funds have not, however, lacked public support especially given that the Jubilee Government promised that 30% of government tenders must be given to women, youth and persons living with disability - the target group of Uwezo. Similar funds as the Uwezo include the Youth Enterprise Development Fund YEDF - described as a revolving fund, and the Women Enterprise Fund, WEF.

However, the new structures of Public Finance closely follow the devolution model. This means that Public Finance has both a National and a County component. The following table presents a summarised layout of the new constitutional structures mandated to manage Public Finances:

 

Table 1: Structure of Public Funds Under the New Constitution

 

National Revenue
County Revenue

Consolidated Fund

Equalisation Fund

Contingencies Fund

Revenue Fund 

Judiciary Fund

Political Parties Fund

 

 

 

 

Thus, every resource categorised as Public Finance will be in either of two Funds i.e., in either a national Revenue Fund or a county Revenue Fund, collectively known as Public Funds.

It is in this light that most experts, led by no less than the Commission for the Implementation of the Constitution CIC from the get go consistently voiced their opposition to the enactment of the Constituency Development Fund Act 2013 advising that it contravenes the Constitution. They contended that the Act purports to create a 'third' Fund for use in the Counties, contrary to the spirit and letter of the Constitution of Kenya with respect to devolution. 

Indeed, on the 20th of February 2015, the High Court ruled that the CDF Act 2013 was "unconstitutional and therefore invalid". The ruling followed an application by a civil rights organisation - The Institute for Social Accountability (TISA) - "........ and sought to address four main issues; whether process of the enactment of the CDF was constitutional, whether it violated the principles of finance and division of revenue, whether it violated the division of powers and functions and whether the CDF Act 2003 offends the principle of separation of powers." (Capital News, 2015).

It has been the view of this author that the drafters of the Constitution were careful enough to create a healthy balance between centralised and devolved structures of administration of Public Funds by providing for the establishment of additional (vertical) Public Funds through legislation. To this end, the Public Finance Management Act 2012 and the Contingencies and Emergency Fund Act 2011 provides for the following expanded structures of Public Funds:

 

Table 2: Expanded Structure of Public Funds Established by Legislation as at 2015

 

National Revenue
County Revenue

Consolidated Fund

Equalisation Fund

Contingencies Fund

Revenue Fund

Emergency Fund 

Judiciary Fund

Political Parties Fund

Parliamentary Fund

Uwezo Fund

Youth Enterprise Development Fund

Women Enterprise Fund

 

 

   

 

The Cabinet Secretary for Finance is empowered by legislation to establish additional national Funds. Section 24 of the Public Finance Management Act 2012, excerpts:

24. (4) The Cabinet Secretary may establish a national government public fund with the approval of the National Assembly.

Similarly, Counties are permitted notably by the Constitution itself, to establish specialised County Funds. Chapter 12 - Public Finance, Part 2 - Other Public Funds:

207. (4) An Act of Parliament may— (b) provide for the establishment of other funds by counties and the management of those funds.

Indeed, Section 116 of the Public Finance Management Act 2012 empowers the County's Executive Committee member for finance to establish other local (specialised) public funds:

116. (1) A County Executive Committee member for finance may establish other public funds with the approval of the County Executive Committee and the county assembly.

Within the framework of devolved structures of Public Funds it is possible to demand strict accountability and transparency, as well as inclusivity in their allocation and management, more so when their target is the marginalsised and minorities at the local level. Part 1 - Principals of Public Finance, Article 201:

201. (a) there shall be openness and accountability, including public participation in financial matters;

Every Fund, State Organ and government will be structured such that there is a designated accounting officer - with whom the buck stops on matters of Public Finance. Excerpts from Article 225 in Part 6 - Control of Public Money:

226. (1) An Act of Parliament shall provide for— (b) the designation of an accounting officer in every public entity at the national and county level of government.

Thus whether it is a member of the public, or a committee of a County Assembly, or the Controller of Budget, or the Auditor General, or Parliament, or a Commission asking the hard questions, a specific accounting officer of the Fund in question is obligated to provide answers. The constitutional provisions on the structure of both National and County Funds and on the people to manage them, are expounded in the lengthy Public Finance Management Act 2012 which came to effect upon the conclusion of the first General Elections under the New Constitution in March 2013.

 

Find Us On FaceBook - Image

Follow me