alexa Dispute over how to fund counties not over: Harmonise the two Bills - Daily Nation

Dispute over how to fund counties not over: Harmonise the two Bills

Tuesday August 23 2011



With the term of the task force on devolution having been supposed to end on Monday, their opponents over the vexed issue of the appropriate public financial management for a devolved system had hoped they would have their way.

During a meeting with the press last Thursday, Treasury permanent secretary Joseph Kinyua and his team were brimming with confidence, promising that the adoption of the Bill which the Treasury had prepared was a foregone conclusion.

They even displayed a copy of the ‘harmonised Bill’ to the press, implying that the dispute with the task force had been settled.

But things did not go according to plan. Apparently, the ‘harmonised Bill’ was presented to the relevant Cabinet committee for approval with the understanding that it would subsequently be relayed to the full Cabinet at a meeting scheduled for the weekend.

It was shot down at the sub-committee level on the grounds that the Constitution Implementation Committee and the Commissioner for Revenue Allocation had not been consulted. The upshot is that we are back where we started before the intervention by the Principals.

Complicating the situation is the fact that Mr Mudavadi has extended the task force’s term by three weeks.

On Tuesday, members of the task force were planning to travel to Mombasa for a retreat to do the final touches on the bills they had prepared. The stage is thus set for the second phase of a controversy that is increasingly degenerating into the dialogue of the deaf.

Which side of the divide is to blame for this unfortunate situation? I had a chat with the chair of the task force, Mr Mutakha Kangu. I must say I was impressed by his mastery of the relevant issues. The task force consulted widely before coming up with the bills.

Mr Kangu’s team held workshops for MPs, permanent secretaries, and members of civil society, culminating in an international conference where scholars of international repute on devolution and experts from countries with devolved systems were invited to ventilate on the Kenyan process.

Indeed, the work done by the task force is by far the most comprehensive exercise at understanding how devolution can be implemented in Kenya.

In preparing the Public Financial Management Bills, the task force borrowed from jurisdictions as far-flung as Australia, Canada and South Africa.

The team at the Treasury has also done a splendid job. What we have not appreciated is that the Treasury had been working on reforming the country’s financial management long before the new Constitution was passed.

As a matter of fact, the first major reform of public financial management law was made as far back as 2004. It culminated in the Fiscal Management Act of 2009.

Thus, with the advent of the new Constitution, the Treasury’s inclination was to treat the whole thing as an opportunity to continue with the work they had been doing before by deepening public financial management reforms.

The new dispensation was going to demand even greater accountability and transparency in the running of public finances.

In October last year, the Treasury set up a draft committee, including staff from the Auditor-General’s Office and the parliamentary budget office.

The Treasury also sought technical assistance from the International Monetary Fund to advise on how to draft the legal framework for a public financial management law under the new Constitution.

With the Treasury team under former Economic Secretary Kamau Thugge and the devolution task force under Mr Kangu working separately, the stage was set for the current impasse.

Mutual suspicions set in. Mr Kangu’s team believes the Treasury wants a law to allow them to control and starve counties of funds. The team also believes that the IMF is using the Treasury to impose a system of its choice.

On the other hand, Dr Thugge’s team believes that Mr Kangu’s task force has no business delving into an area where its competence is doubtful, and accuse it of doing a cut-and-paste job of South African laws.

The two groups must be brought to the table to agree on a compromise document.