Kenya is at a pivotal moment in its democratic journey, especially regarding public participation in budget-making. With a spotlight on public debt, revenue performance, and the distribution of funds between national and county governments, transparency is more crucial than ever. President Ruto’s recent repeal of the Finance Bill 2024, following three weeks of vigorous protests led by Kenya’s “Gen Z,” underscores the growing demand for accountability in public finance. As the protests continue, the government must quickly find solutions in an inclusive dialogue with its citizens. Guided by the Public Finance Management Act of 2015, which outlines the oversight duties of parliament and county representatives, these measures are critical for Kenya’s financial stability and democratic integrity.
Participatory Budgeting Promotes Good Governance
The government’s commitment to participatory budgeting promotes transparency and accountability in public finances, which in turn promotes democratic governance. Throughout the national budget process, from formulation to auditing, avenues for citizenry and civil society input are well established. These participatory processes democratize resource allocation by allowing stakeholders, including marginalized communities, to influence public spending priorities. In Kenya, CIPE plays an important role in advocating for the private sector by offering budget education and facilitating interaction between the government and the private sector to support good governance, accountability, and social equality.
The Kenyan Constitution (2010) has made significant strides toward incorporating public participation into Kenya’s governance framework, including the national budget. Articles 1, 10, 174, and 201 of the Constitution emphasize public participation by delegating sovereignty to the people, thereby addressing historical issues of non-transparency and resource misallocation. The subsequent Public Finance Management Act of 2012 institutionalized these principles, establishing specific mechanisms for public engagement such as hearings and budget forums. These legal frameworks have democratized Kenya’s budgetary process, allowing civil society groups and everyday citizens to actively shape the nation’s financial priorities.
Private Sector Advocacy and the 2024 Finance Bill
While CIPE has supported the participation of the private sector in county budgets since 2017, the Finance Act of 2023 highlighted the need for increased participation of the private sector in national budget processes. The Act imposed significant tax burdens which had a negative impact on businesses, crippling economic growth, job creation, and investment. To ensure greater private sector engagement and input in this year’s 2024 Finance Bill, CIPE and Expertise Global recently convened a private sector roundtable to assess changes proposed in the 2024 Finance Bill, analyze their implications for the private sector, and develop key recommendations to submit to Parliament.
Through deliberations, the group developed and agreed upon 25 recommendations for changes to the Finance Bill 2024. These recommendations covered issues including:
- Value Added Tax
- Import Declaration Fees
- Excise Duties
- Income Tax
- Motor Vehicle Tax
- Tax Procedures
After finalizing the recommendations, CIPE and Expertise Global presented them before the National Assembly’s Departmental Committee on Finance and National Planning, highlighting how the amendments would be beneficial to the private sector – including entrepreneurs and SMEs. These proposals have implications for businesses operating in Kenya and require careful consideration.
It is important for the public to have a more active role in the budget creation process. The government’s capacity to provide essential services relies on generating revenue to support SMEs as well as sectors such as agriculture; housing; healthcare; digital infrastructure; and the creative economy as part of the Bottom-Up Economic Transformation Agenda (BETA). Nonetheless, in a democracy, citizens have the opportunity to influence priorities through voting and by actively interacting with the three arms of the government – the Executive, the Legislature, and the Judiciary – to ensure that the proposed policies promote economic growth, job creation, education, healthcare, and environmental sustainability.
Published Date: July 17, 2024