In a 2003 report, the Institute of Democracy in South Africa (IDASA) notes that legislation in Kenya, specifically the Constitution, does not allocate a fiscal policy oversight role to parliament, and a variety of other factors contribute to a lack of accountability and transparency in Kenyan fiscal policy. According to IDASA, these factors include inadequate staffing, insufficient training of existing staff, a lack of modern technological resources, and a bureaucratic culture that encourages the use of inherited practice over compliance with existing legislation. Kenya receives an overall score of 48%, or "some," openness on the Open Budget Index (OBI) report for the International Budget Project. This score reflects the fact that Kenya provides five out of the seven budget documents that the OBI tracks in determining the transparency and accountability of government budgetary reporting processes, but the degree of detail offered in the documents has substantial room for improvement.

General Overview

According to Bonfas Kennedy Oduor-Owinga, writing for the 2006 Open Budget Index (OBI) of the International Budget Project, Kenya scored 48%, or "some," openness for its budget process, as a result of its performance in providing seven key budget documents tracked by the project. According to Oduor Owinga, Kenya does produce a pre-budget document, an Executive's Budget Proposal, some in-year reports, a year-end report, and an auditor's report, and makes all of these documents available to the public. It does not produce a citizen's budget or a mid-year report. However, the Oduor-Owinga report notes that the amount of detail contained in the budget documents that are produced could stand substantial improvement. For instance, with regard to the Executive's Budget Proposal, the report scores Kenya's document at 42% in terms of the information it provides to the public. The in-year reports are described as "extensive," but a comprehensive mid-year report is lacking. The executive produces a year-end report that the OBI report finds timely and adequate to permit a comparison between intended and actual outcomes. Overall, however, the OBI found that both public access to information and participation in the budget process could be significantly improved. Kenya is not a subscriber to the International Monetary Fund's (IMF) Special Data Dissemination Standard (SDDS), but has been a subscriber to the less prescriptive General Data Dissemination System (GDDS) since October 29, 2002, according to the IMF's SDDS and GDDS websites.

In 2003, the Institute of Democracy in South Africa (IDASA), commissioned a report on the budget system in Kenya. Its main conclusion were that inadequate legislation, "archaic" budget practices, and a societal incapacity to assert its right to public information combine to render Kenya's budget process nontransparent and to hinder accountability. The Constitution does devote a section to the government's fiscal management, but it does not provide for parliamentary oversight. Section 48 of the Constitution goes so far as to prohibit the parliament from legislating in the area of government finance. According to the 2003 IDASA report, an attempt in 2002 to create a new Parliament Budget Office that would insert parliamentary influence in the budget process was unsuccessful.

The Kenyan Constitution is the core legislation governing Kenya's fiscal policy, supported by a variety of statutes, regulations, and established procedures. Although the Constitution does go into detail regarding the raising of government revenue, the allocation of that revenue, and other permissible uses of public resources, the 2003 IDASA report notes that bureaucratic behavior is largely responsible for a continued lack of transparency in all these areas. This is largely attributed to the simple lack of awareness, on the part of bureaucrats, of the laws dealing with fiscal transparency. Rather, the IDASA study found, bureaucrats tend to follow inherited practices. In the words of the IDASA report, "the problem of lack of transparency is not only from the less than enabling laws, but is mainly from an ingrained culture of not applying the laws and regulations" (p. 1).

The 2003 IDASA study notes a number of areas in which the legal framework could be improved. First, it discloses that there is no requirement that budget information be released prior to its introduction in the parliament. This means that there is little opportunity for interested parties to become involved in the budget process. In addition, while the Medium-Term Expenditure Framework (MTEF) used in the budget process is mandated by Treasury Circulars that enjoy legislative status, the MTEF does not, itself, have legal standing as a part of the budget process. For the MTEF to effectively constitute a requirement of the budget process, the IDASA study suggests that it be elevated to legal standing. The study also found that the current financial management provisions allow for "too many loopholes" (p. 1). In addition, it found reporting requirements to be inadequate in scope and frequency, and insufficiently user-friendly. The lack of in-year reporting, combined with the Ministry of Finance's (MoF) freedom to borrow domestically results in a growing, and unchecked, variance between the budgeted figures on spending and borrowing and the actual situation. (The need for in-year reports appears to have been at least somewhat addressed, given the findings of the OBI report of 2006 by Oduor-Owinga). Similarly, the IDASA study found inadequate control over extra-budgetary funding and appropriations in kind, rendering formal budgetary controls ineffective. The IDASA report suggested that there should be publicly available reports of budget audits as well as audits of government agencies, and that legislation should be introduced that would expand participation in the budget process to include not only civil servants but also the public at large. The report found the system in place to be inadequately staffed, its staff to be inadequately trained, and its technology insufficiently modern.

The IMF reports in its 2005 "Kenya: Poverty Reduction Strategy Paper" that the Kenyan government published an Economic Recovery Strategy that "will guide major reforms to be undertaken over the period 2003 - 2007" (p. 13). In particular, focus would be placed on the development of a stable, sustainable macroeconomic framework. The specific goals of the strategy would be to keep inflation low, reduce fiscal imbalances and domestic borrowing, and establish a "healthy balance of payments" (p. 13). This would be done by encouraging an increase in domestic savings and investment and by improving accountability in the use of public resources. Another part of the strategy is to restructure and refocus public spending priorities. Fiscal policy is seen as a key part of this overall strategy, particularly through consolidation in order to reduce domestic debt. It is also hoped that private investment will be encouraged by increasing the availability of credit for the private sector.

The 2005 "Poverty Reduction Strategy Paper" also reports that Kenya's fiscal strategy has as its primary objectives the establishment of fiscal sustainability, the restructuring of expenditures to enhance growth and reduce poverty, and the improvement of delivery of public-sector services. This means finding a way to fund the current level of government expenditures without increasing the deficit, either internally or externally. It also means that a greater share of expenditures channeled toward development will be concentrated on investment, health and education, and poverty reduction initiatives. Finally, it will require the institution of an internal Public Expenditure Review, and a reform of current management practices in the area of public expenditures. According to the IMF report, this will permit the government to develop a more realistic medium term framework for government finance that will appropriately handle government revenues, expenditures, and financing.

The Principles

Clarity of roles and responsibilities.

NC

The IDASA's 2003 report on the Kenyan budgetary system noted that the country's adoption of an MTEF, as well as subsidiary reforms, have helped to improve the "clarity of roles and responsibilities" called for in this principle. The report does, however, note that legislation is only part of the picture. Many officials are unaware of the terms of the legislation covering their activities, and rely instead upon inherited procedures and practices. In addition, there is no clear statement of the rights and responsibilities of the public or of donor organizations. In practice, this means that the executive branch of the government has exceptional freedom to work around the law. Contributing to the problem is the fact that, although parliament's role in the budget process is established in the Constitution, this formal statement of responsibility does not explicitly include oversight. In addition, the IDASA report concedes that, in practice, parliament has insufficient authority to challenge the executive branch and thus hold it accountable for fiscal mismanagement. The IDASA report cited "an ingrained culture of not applying the laws and regulations" as a key element in the lack of transparency and accountability in Kenyan fiscal policy process and practice. The IDASA report also laments the reliance on extra-budgetary activities, both in terms of expenditures and levies, which are not subject to adequate public disclosure.

Open budget processes

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According to Bonfas Kennedy Oduor-Owinga, writing for the 2006 OBI of the International Budget Project, Kenya scored 48%, or "some," openness for its budget process, as a result of its performance in providing seven key budget documents tracked by the project. According to Oduor Owinga, Kenya does produce a pre-budget document, an Executive's Budget Proposal, some in-year reports, a year-end report, and an auditor's report, and makes all of these documents available to the public. It does not produce a citizen's budget or a mid-year report. However, the Oduor-Owinga report notes that the amount of detail contained in the budget documents that are produced could stand substantial improvement. For instance, with regard to the Executive's Budget Proposal, the report score's Kenya's document at 42% in terms of the information it provides to the public. The in-year reports are described as "extensive," but a comprehensive mid-year report is lacking. The executive produces a year-end report that the OBI report finds timely and adequate to permit a comparison between intended and actual outcomes. Overall, however, the OBI found that both public access to information and participation in the budget process could be significantly improved.

The IDASA 2003 report noted that Kenya's legislation imposes upon the government no obligation to involve the public in the budget process. The failure to provide adequately detailed or timely information further contributes to the exclusion of the public from participation in the process. However, the IDASA report does acknowledge that the adoption of the MTEF has enabled some public interaction with the legislature through the involvement of consultancies, think tanks, and media reporting (p. 3).

The Kenyan Constitution does deal with the fiscal management responsibilities of the government, but it does not address the question of parliamentary oversight. In fact, it explicitly (Section 48) bars the parliament from regulating the financial activities of the government. According to the IDASA's 2003 report, an attempt was made in 2002 to create a parliamentary Budget Office, but the effort was unsuccessful. The report also notes that Kenyan government's extra-budgetary activities, involving both revenues and expenditures, further contributes to a lack of budgetary transparency. Funds raised by such initiatives as the Rural Electrification Levy and the Harambee Fund are unreported, and the results of their expenditure are unreported. Contributing to the problem is the fact that Kenya's governmental agencies and the parliament lack adequate staffing, training, and technical resources. Finally, the IDASA report notes that "transparency and accountability are further weakened by inadequate systems for commitment control, accounting information management, procurement, as well as debt and liability management (p. 3).

Public availability of information.

NC

In its 2005 Report on the Observance of Standards and Codes (ROSC), Data Module, the IMF reported that compiling and disseminating fiscal statistics is handled by three distinct government agencies: the Ministry of Finance (MoF), Ministry of Planning and National Development (MPND), and the Central Bank of Kenya (CBK). The activities of these agencies are not, however, legislatively assigned, but are allocated by Presidential Decree. The MoF handles budget execution and external debt data, while the CBK compiles data on domestic financing and debt. The MPND works through Kenya's Central Bureau of Statistics (CBS), and compiles central and local budgetary statistics and public debt data. While the IMF ROSC notes that these agencies, in practice, work collaboratively, this is not legislatively mandated. With regards to public disclosure of information, although the Statistics Act of 1961 gives the CBS the authority to collect, analyze, and publish data, it assigns no responsibility to disseminate the fiscal statistics it collects. Kenya is not a subscriber to the International Monetary Fund's (IMF) Special Data Dissemination Standard (SDDS), but has been a subscriber to the less prescriptive General Data Dissemination System (GDDS) since October 29, 2002, according to the IMF's SDDS and GDDS websites.

The 2006 assessment by Oduor-Owinga for the International Budget Project's Open Budget Index notes that Kenya scored 48%, or "some," openness for its budget process. According to this report, Kenya does produce five of the seven documents the OBI routinely tracks, but these reports are not as detailed as they could be. For instance, with regard to the Executive's Budget Proposal, the report score's Kenya's document at 42% in terms of the information it provides to the public. The in-year reports are described as "extensive," but a comprehensive mid-year report is lacking. The executive produces a year-end report that the OBI report finds timely and adequate to permit a comparison between intended and actual outcomes. Overall, however, the OBI found that both public access to information and participation in the budget process could be significantly improved.

The IDASA's 2003 report further notes that actual expenditures are not made regularly available during the implementation of the budget, and terms the reporting of budget outcomes as "grossly inadequate" (p. 2). It adds that there is inadequate reporting of the donor fund expenditure or outcomes. While audit reports are made available to the public, the IDASA report notes that their relevance is undermined by the fact that they are often too technical or are published too long after the fact.

Independent assurances of integrity.

II

Kenya is not a subscriber to the International Monetary Fund's (IMF) Special Data Dissemination Standard (SDDS), but has been a subscriber to the less prescriptive General Data Dissemination System (GDDS) since October 29, 2002, according to the IMF's SDDS and GDDS websites. IDASA's 2003 report on Kenya's budget system concluded that the government departments involved in the budget process are inadequately staffed, inadequately trained, and insufficiently supported by the necessary technology to effectively carry out their tasks. Parliament is not legally assigned an oversight mandate. More to the point "the problem of lack of transparency is not only from the less than enabling laws, but is mainly from an ingrained culture of not applying the laws and regulations" (p. 1). Other than this, however, there is no publicly available information that directly addresses this principle.