A public finance discussion cannot be said to be complete if it fails to examine the budget-making process. In this section we will not only highlight the provisions in the Constitution of Kenya that govern the processes and time-lines of budge-making, but identify the key players involved in its administration and management as shown in the figure below.
Figure 3. National Budget-Making Process
figure 3 is a work in progress. it will give a pictorial schematic of the various stages involved in the process of the making of the national budget as provided for in the constitution.
The details of the Kenyan budget-making process has historically been hidden deep within the confines of the Executive's Ministry of Finance. Parliament and the public remained in the dark as the technocrats in the Ministry went about preparing the budget estimates, and only got round to knowing the full details of their government's budget at the last minute when the Minister presented the estimates in Parliament! Mixed reactions and divided opinions on the pros and cons in the estimates would quickly follow, ranging from accusations of political marginalisation of sections of the society, to being elitist or otherwise, ad infinitum. The professionals would, on the other hand, accuse the Minister of having ignored certain 'key' departments such as health, education, etc. Naturally, these reactions had no effect, as the unpleasant truth was that the people of Kenya and their elected representatives had been over-looked in the budget-making process.
Under the Constitution of Kenya 2010, the process is more transparent and inclusive, allowing for the full participation of Government, Parliament and Commissions. In fact, the National Budget is actually made up of three separate budgets, each of which is prepared by a team representing the respective arm of government. The three teams are the Ministry of Finance which prepares the estimates of the executive, the Parliamentary Service Commission PSC, whose estimates concern Parliament, and the Chief Registrar at the Judiciary, whose budget covers the operations of the Judiciary. Indeed, the New Constitution has appropriately demarcated the budget-process by assigning it into the respective arms of government, obviously to allow for independence and devolution of the exercise, among other considerations. Various Articles capture this new requirement of the budget process:
221. (1) ........ 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 ........
Chapter 8 - The Legislature, Part 6 - Miscellaneous:
127. (1) There is established the Parliamentary Service Commission.
(6) The Commission is responsible for— (c) preparing annual estimates of expenditure of the parliamentary service and submitting them to the National Assembly for approval ........
Chapter 10 - Judiciary, Part 4 - The Judicial Service Commission:
173. (3) Each financial year, the Chief Registrar shall prepare estimates of expenditure for the following year, and submit them to the National Assembly ........
By devolving the budget-making process, the Constitution expanded the space for participation. Therefore, departments, offices and organs within the respective arms of government will be better represented in the process as they will be discussing their proposals with people of like-mind. The public process kicks in when the three accounting officers of the three arms of government i.e. the Secretary for Finance, the Secretary of the PSC, and the Chief Registrar, submit separately, their respective estimates to (a Committee of) the National Assembly as captured in Clauses 221. (1), 127. (6) (c) and 173. (3), above:
221. (4) Before the National Assembly considers the estimates of revenue and expenditure, a committee of the Assembly shall discuss and review the estimates and make recommendations to the Assembly.
These estimates will be publicised to enable the public consider them, make their contributions and present their input as they so wish. The public engagement will be at the committee stage of the budget process. This committee is obligated to factor-in the public's views:
(5) 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.
(3) The National Assembly shall consider the estimates submitted (by the Secretary for Finance) ........ with the estimates submitted by the Parliamentary Service Commission and the Chief Registrar of the Judiciary under Articles 127 and 173 respectively.
What follows after the three estimates have been approved, is the introduction of an Appropriation Bill in the National Assembly which once enacted, will authorise any transfers of funds.
(6) When the estimates of national government expenditure, and the estimates of expenditure for the Judiciary and Parliament Budget estimates and have been approved by the National Assembly, they shall be included in an Appropriation Bill, which shall be introduced into the National Assembly to authorise the withdrawal from the Consolidated Fund of the money needed for the expenditure, and for the appropriation of that money for the purposes mentioned in the Bill.
This is one of those Bills that must be passed and enacted into law in good time because the Constitution is categorical that the budget-making process is incomplete unless the Bill becomes an Act of Parliament. Hence the very last step in the making of the National Budget is the enactment of this Bill:
206. (2) Money may be withdrawn from the Consolidated Fund only— (a) in accordance with an appropriation by an Act of Parliament;
109. (1) Parliament shall exercise its legislative power through Bills passed by Parliament and assented to by the President.
An Appropriation Act is really the Act that will allow for Public Funds to be transferred from the Consolidated Fund to the Judiciary Fund. At the moment, no special Fund exists to receive the expenditures of the Parliamentary Service Commission. Hence it is assumed, the PSC and the National Government will be making direct access to the Consolidated Fund.
For purposes of checks and balances even with the coming to force of the Appropriation Act, the Controller of Budget must give the green light before any withdrawals (or transfers) in the Appropriation Act can go ahead. The Controller must therefore be conversant with the Appropriation Act and other laws. This makes the Controller an integral player in the budget process because s/he will be expected "...... to protect the peoples sovereignty and promote constitutionalism".
206. (4) Money shall not be withdrawn from the Consolidated Fund unless the Controller of Budget has approved the withdrawal.
228. (5) The Controller shall not approve any withdrawal from a public fund unless satisfied that the withdrawal is authorised by law.
The public process of budget-making begins at the very latest, two months before the end of the financial year when the National Assembly receives the budget estimates from the Secretary of Finance:
221. (1) 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.
It is safe to assume that the Chief Registrar and the Secretary of the PSC will submit their respective proposals at that same time. Thereafter, a lot needs to happen before the start of the next financial year. The processes described in the previous subsection must be completed. This is to say, that enactment and publishing in the Kenya Gazette, of the Appropriation Bill, must take place at the very latest, 2 weeks before the start of the next financial year:
116. (1) A Bill passed by Parliament and assented to by the President shall be published in the Gazette as an Act of Parliament within seven days after assent. (2) ........, an Act of Parliament comes into force on the fourteenth day after its publication in the Gazette, unless the Act stipulates a different date on or time at which it will come into force.
The above description on time-lines is based on the ideal situation. What if the Appropriation Bill is time-barred; perhaps because the President has declined to assent to it, or an application in Court has blocked the enactment? The Constitution of Kenya has addressed itself to such scenarios by giving the National Assembly the authority to make way for limited transfers and withdrawals in Article 222:
222. (1) If the Appropriation Act for a financial year has not been assented to, or is not likely to be assented to, by the beginning of that financial year, the National Assembly may authorise the withdrawal of money from the Consolidated Fund.
(2) Money withdrawn under clause (1) shall— (a) be for the purpose of meeting expenditure necessary to carry on the services of the national government during that year until such time as the Appropriation Act is assented to; (b) not exceed in total one-half of the amount included in the estimates of expenditure for that year that have been tabled in the National Assembly; and (c) be included, under separate votes for the several services in respect of which they were withdrawn, in the Appropriation Act.
Article 223 goes on to provide further details on the circumstances under which the authority to order withdrawals will be exercised by the National Assembly; essentially to legalise those circumstances and to avert a budgetary and legal crisis:
223. (1) Subject to clauses (2) to (4), the national government may spend money that has not been appropriated if— (a) the amount appropriated for any purpose under the Appropriation Act is insufficient or a need has arisen for expenditure for a purpose for which no amount has been appropriated by that Act; or (b) money has been withdrawn from the Contingencies Fund.
(2) The approval of Parliament for any spending under this Article shall be sought within two months after the first withdrawal of the money, subject to clause (3).
(3) If Parliament is not sitting during the time contemplated in clause (2), or is sitting but adjourns before the approval has been sought, the approval shall be sought within two weeks after it next sits.
(4) When the National Assembly has approved spending under clause (2), an appropriation Bill shall be introduced for the appropriation of the money spent.
(5) In any particular financial year, the national government may not spend under this Article more than ten per cent of the sum appropriated by Parliament for that financial year unless, in special circumstances, Parliament has approved a higher percentage.
Public Finance is obviously a key component of the New Constitution and must be handled well by all concerned to avoid frivolous protestations given that the process of budgeting, allocation, administration etc., will be an open one.