Treasury seeks direct control of multi-billion State funds

Kilifi County Woman Representative Getrude Mbeyu (right) and Country Executive officer for Gender Maureen Mwangovya (left) flanked with Kilifi South women group during the issuance of the Uwezo Fund cheques at Vipingo Social hall on Thursday ,May ,24,2018.The group received Sh1.7. [Maureen Ongala,Standard]

Treasury now wants direct control of money-spinning State funds that will operate outside the reach of the Auditor General.

The radical proposal by Treasury Cabinet Secretary Henry Rotich is contained in the Finance Bill, 2018 and is likely to target new funds set up for housing, oil revenues and betting in addition to other top existing institutions.

Existing funds that could be affected include National Social Security Fund, National Government Constituency Development Fund, National Hospital Insurance Fund, Youth and Women Development funds.

In the Finance Bill, Treasury wants to change the Public Finance Management Act, proposing a fundamental change in the laws governing the prudent management of cash and allow him to hand over national funds to private interests.

“The Bill seeks to amend section 24 of the Public Finance Management Act (PFM) to empower the Cabinet Secretary for the National Treasury and Planning to, through regulations, designate an incorporated or unincorporated entity as the administrator of a national public fund for efficient and effective management,” said Mr Rotich.

Currently, under the Act, strict guidelines are stipulated to manage funds created under Parliament and the national government, including those controlled by the Parliamentary Service Commission.

Administrator

The commission sets procedures for how the money is used, how the money should be accounted for and managed.

The law allows CS Rotich to appoint an administrator who, however, has to ensure the money is retained in the fund. The money can only be used for the intended purpose.

For purpose of auditing, the administrator is required to submit a report to the Auditor General not later than three months after the end of a financial year and deliver a copy to the Controller of Budget, National Treasury and Commission on Allocation of Revenue.

Institute of Economic Affairs Chief Executive Kwame Owino said it is the ‘unincorporated’ aspect in the amendment that worries the think-tank.

“That means he can give public funds to an individual. We petition this approach to the MPs,” he said.

Rotich did not respond to our calls or messages when we reached him for comments.

The proposed amendment comes especially at a time when the Treasury CS has created a housing fund which will draw direct contributions from every employer and employee.

Rotich has also said he will set up a new fund that will receive monies from taxation of betting and gaming operations.

Petrodollars are also expected to flow into a Sovereign Wealth Fund, which the CS said he plans to institute.

Special instrument

Rotich said he is also in the process of establishing the National Toll Fund as a special instrument to support the development of world-class national trunk roads.

Sources say Treasury will give more details when they get to Parliament to explain which funds will fall under the new regulations.

“The language is huge and you are not very sure whether this will apply to existing funds or new funds. Treasury says they will come up with more clarity,” the source said.  

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