How to make the budget benefit Kenyans

Treasury secretary Henry Rotich. Budgets should be more closely monitored and reporting should be on a monthly basis. PHOTO | DIANA NGILA 

By BENSON OKUNDI

A nation’s budget is a policy implementation tool that should drive growth and citizens have a right to expect that it is implemented effectively and transparently.

As Kenyans listened to the Treasury secretary’s 2016/2017 budget speech on June 8, 2016, they heard a clear statement of intent to allocate resources to specific economic sectors to drive growth.

What they didn’t hear was a clear articulation of how the government will ensure the budget’s implementation. After all, a Sh2.3 trillion budget is only as good as its actual implementation.

In the past, Kenya has experienced budget implementation challenges including insufficient and delayed release of funds to implementation units, low and poor absorption of funds, lack of value for money on implemented activities and outright misappropriation.

Appropriate measures can facilitate budget implementation by enhancing the adequacy and timeliness of funds, accelerate the funds’ absorption rate and improve accountability.

Adequate and timely budget funding is necessary for implementation to occur as planned. The exchequer releases funds and its ability to do so adequately and efficiently directly impacts implementation.

Meeting steep targets

The Treasury expects to derive significant budgetary funding from domestic revenue, the bulk of which is from taxes. The Kenya Revenue Authority (KRA) is the main revenue collection agent and it has the difficult task of meeting steep targets.

KRA will deploy a raft of measures to meet this challenge and enhance its tax collection ability. The i-Tax platform now aims to integrate taxpayer information from tax returns with their businesses and banks.

This alignment will allow KRA to ensure that all taxable persons and businesses pay their fair share and consequently broaden the tax base and collect more revenue.

Additionally, several legal reforms currently in the pipeline intend to modernise tax administration and collection. One of these, an effort to overhaul the current Income Tax Act, is long overdue.

Budget absorption is the rate at which budgeted funds are utilised and absorbed during the year. Low absorption means that planned development activities aren’t undertaken, thus frustrating development.

In Kenya, budget implementation units have sometimes experienced low budget absorption for development expenditure while recurrent expenditure has remained on budget or even ran ahead of budget.

Recurrent expenditures keep the budget implementation units running day-to-day but they don’t necessarily result in development unless they are aligned to tangible capital projects.

In my view, there are three ways to accelerate the absorption rate of budgeted funds. First, focus on advance procurement planning and timelines that will mitigate any delays.

Second, improve the timeliness of budgeted funds’ release to budget units. Third, align budget absorption and the completion of development projects to budget units and the performance contracts of employees who are responsible for implementation.

The Constitution bestows responsibility for accountability on institutions like the Kenya National Audit Office (KENAO), Office of the Controller of Budget (OCOB) and the Ethics and Anti-Corruption Commission (EACC).

The OCOB is responsible for monitoring budgets at the national and county levels and reporting on a quarterly basis.

However, budgets should be more closely monitored and reporting should be on a monthly basis to ensure appropriate corrective actions are taken when performance is poor.

To ensure value for money, monitoring should encompass both the use of budgeted funds and an evaluation of actual progress on targeted activities. Budget units should take responsibility for monitoring as a key management function.

KENAO should discharge its constitutional mandate with diligence knowing that citizens rely on its work as a key accountability institution.

KENAO audits, in collaboration with efforts of internal auditors, should be carried out on a continuous basis using a risk based approach to ensure issues are dealt with appropriately and on a timely basis.

In addition to financial audits, KENAO should expand its audits to include value for moneys. Implementation of audit recommendations should be a key performance indicator for employees.

On the other hand, citizens expect to see collaboration among these constitutional offices to ensure recommendations are actioned upon and punitive measures are taken against those who misuse public funds.

Citizens should also get involved in monitoring public projects because successful implementation will benefit them. Furthermore, a significant portion of the national budget is funded by citizens through taxes, levies and fines and citizens have the right to expect accountability.

Citizens can enhance transparency by holding their leaders accountable and reporting misappropriation of funds to the appropriate constitutional offices.

The Constitution encourages sharing of information with citizens. They should be updated on the status of projects as well as provided opportunities to scrutinise projects, seek clarification and ask questions.

Openness will also enhance the transparency and accountability of our leaders.

Transparency and accountability should be embedded as a key performance indicator in budget implementation units’ employ contracts.

The management of budget implementation units should ensure that funds are used for intended purposes, value for money is achieved and appropriate reporting is carried out and communicated to relevant stakeholders

Senior managers must also set an appropriate tone at the top to encourage a culture of transparency and accountability in the unit.

I call upon all those concerned to ensure that the budget is implemented effectively and the desired outcomes are achieved for the benefit of all. Kenyans have a responsibility to be vigilant and care about the prosperity and development of the country.

Mr Okundi is a public sector practitioner and the head of PwC Africa’s public sector business.