50 Things Every Kenyan Needs to Know About Public Finance Under The Constitution.

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46. I have heard people say that cities and urban areas also have certain procedures to follow for budgeting. Is this covered in the PFM Act?

Yes. One of the last sections of the Act lays out a budget process for cities and urban areas. The budget process is different because the status of cities is different. 42 Cities are not a distinct level of government like counties, so the city budget process is linked to the county budget.

For example, cities are only allowed to charge fees for services they provide, but they cannot raise their own revenue through taxes. They are, however, to be allocated revenues from the county in which they sit. The law says that the counties must use some form of “objective criteria” to determine the level of demand for services in urban areas when allocating funds to them 71. These criteria may include population, poverty, physical area, and so on. The criteria should also ensure a minimum amount of money to provide for effective delivery of essential services.

Otherwise, the urban areas and cities are to develop plans and budgets in a manner that is similar to the national and county governments. They are also to observe a similar set of fiscal responsibility principles. One difference is that the plan and budget must be approved by the urban area or city Board. If you want to know more about this, you should look at the Urban Areas and Cities Act 2011.

The accounting officers for the urban areas and cities are responsible for ensuring that the public can participate in the development of the strategic plan and the budget. The accounting officer of an urban area or city is appointed by the County Executive Member for finance of the respective county.

Urban areas and cities are restricted from borrowing on capital markets. They may only take loans from or through the county, or directly from a bank in the form of a bank overdraft. They may, however, receive grants or donations with the approval of the County Executive Member for finance.

47. Is there anything else we should know about the PFM Act that might affect our access to services, such as education, health or water?

Yes. Much of the work to figure out how these services will be provided has yet to be determined, and the PFM Act really doesn’t clarify it. You need to keep an eye on what the Transition Authority is doing, and how the government decides to split up functions that have not been fully detailed in the Constitution.?

However, one area that the PFM Act could affect is water. The reason is that water is now generally provided by independent, corporate boards. The PFM Act has some provisions that would allow a county to take control of providers in their jurisdiction and convert them into county entities, managed by the county government. This could include water service providers. In a way, this is no different from other county services, except that water services were specifically taken away from local authorities in the past and converted into corporations because they were mismanaged.

48. A lot of services are actually not delivered directly by government, but have to be contracted from private providers. This has been an area where there has been mismanagement in the past. Does the PFM Act say anything about procurement?

The PFM Act has little to say about procurement, but procurement is mentioned in the Constitution. The Constitution calls for separate legislation on procurement, and requires that the procurement of services be done in a way that is “fair, equitable, transparent, competitive and cost-effective.” The Constitution prescribes sanctions for contractors that have not performed and for those involved in corruption, failure to pay taxes, or violations of fair employment law.

Procurement is currently regulated by the Public Procurement and Disposal Act (last revised in 2010), which created the Public Procurement Oversight Authority to manage procurement processes in Kenya. The Act has not been revised since the passage of the Constitution.

49. Is that everything that is in the Act? How come it is so long and this FAQ is so short?

No, of course we have not covered everything. We have only focused on what we think are the most important areas for the wananchi. But the Act has more to say about a number of financial issues, such as loan guarantees, derivatives, and so on. If you are interested in these areas, you should refer to the Act itself. You can also read more at: https://internationalbudget.org/wp-content/uploads/brief15.pdf or at www.cickenya.org

You should also consult the Act directly for more details in areas that are discussed in this FAQ. For example, the Act provides details about what should be contained in government reports. You should confer with the Act when these reports are released to see if they are really providing the information required by law, especially if you do not see information you think is important.

Finally, remember that there are also regulations being drafted to support this Act, and those regulations will contain more detail still about a number of issues, possibly including public participation and access to information.

50. Documents are helpful, but is there anyone I can speak to if I have further questions?

A number of organizations work on issues related to budgeting in Kenya. The place to start is the Parliamentary Budget Office. You can access their website here: https://www.parliament.go.ke/index.php?option=com_content&view=article &id=201:parliamentary-budget-office-pbo&catid=77:parliamentary-budgetoffice-pbo

Get the full FAQ HERE