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The Sh210b back story largely ignored in this year's budget

Ex-Treasury CS Ukur Yatani displays the budget briefcase at Parliament Buildings, Nairobi, on April 7, 2022. [Elvis Ogina, Standard]

A progressive constitutional design in which the National Treasury leads in crafting the National Budget, but Parliament actually makes it, takes nothing away from the bureaucratic symbolism of Budget Day.

It isn't quite the Budget Speech common to parliamentary systems of government but Thursday's Budget Statement is still a statement of policy as set out by Parliament and articulated by Treasury. Over a decade into the 2010 Constitution, we must internalise Parliament's strengthened role as an independent law-maker in a context of party loyalties.

Most Budget 2023 debate has happened over the past three to four weeks. Mostly, Kenyans at large have been more energised towards budget matters than ever. Intriguingly, we narrowed down the entire budget discourse to a Finance Bill containing almost 90 clauses, and then one clause on especially, the matter of the Housing Fund.

In reality, Budget 2023 has run for 217 days, or 31 weeks, since the process was launched by the Treasury CS on Thursday, November 10, 2022.

Budget Day is 310 days (44 weeks) since the 2022 election, 275 days (39 weeks) since presidential inauguration, 231 days (33 weeks) since Cabinet Secretaries were sworn in and 195 days (28 weeks) since the same happened for Principal Secretaries. The Hustler Fund is 197 days old, and there are still 1,517 days (217 weeks) to our next General Election on Tuesday, August 10, 2027.

Back to the budget process. As members of the public, we had opportunities to interact via written submissions with the 69-page Budget Review and Outlook Paper (BROP) issued in December 2022 (which offered a recent economic and budgetary review and forward outlook as well as indicative sector budget aggregates).

Ditto the 87-page draft Budget Policy Statement (BPS) issued in January 2023 (setting out the 2023/24 budget framework and sector ceilings - effectively the budget). Sadly, these budget steps are technocratic, with public views documented for record rather than reflected in policy choices. The 159-page final BPS is the case that proves the point.

In between BROP and BPS, however, the public had a further opportunity to interact with the budget process through the Public Sector Budget Hearings held in January 2023 (before the BPS). During these hearings, the public had opportunity to listen to, and respond to, the programmatic priorities and resource needs of each of our ten MTEF sectors based on sector-specific reports circulated in advance.

Of course, for all sectors, it would have asked the everyday Kenyan to navigate 2,789 pages, or roughly 300 pages per sector of stories, tables and graphics of data and information per sector. Part of the expansion to the BPS mentioned above includes the capture of public views offered during plenary hearings, as well as written submissions to the Treasury.

We are now at the tail end of the 2023/24 budget preparation process. Ministries, departments and agencies (MDAs), plus Judiciary and Parliament, translated the BPS ceilings into budget estimates which were presented to the National Assembly.

This task was delegated to the Budget and Appropriations Committee which made several changes to the estimates received, while conducting further public participation. Meanwhile, a draft of the Finance Bill was developed for the Finance and Planning Committee. This is the Bill that has made all the headlines this month.

National Treasury Cabinet Secretary Njuguna Ndung'u. [Elvis Ogina, Standard]

To be clear, Parliament's budget-making task is to pass the Appropriations Bill, as the basis for spending, and the Finance Bill, as trigger for new revenue-raising measures. These bills must be enacted into law by June 30, 2023, before the new fiscal year begins.

Public participation

Why have I spent time here elaborating on the process? Because the extent of animation (and animosity) around the Finance Bill possibly leads us to an important back story of Budget 2023. Given that the budget process is clearly laid out, how do we improve public participation and civic engagement to the point where it is systematic, rather than episodic; interactive and not procedural?

Without preaching the virtues of civic education, the Kenya Kwanza administration seems to have within its grasp a useful civic engagement moment to "have conversations" as it delivers on its agenda. And it doesn't have to be about budget preparation alone.

A citizen-inclusive approach to public finances would harness two other elements of the "three-in-one" calendar - to add conversations about implementation (current year) and accountability (previous year) to the ones about preparation (next year).

Single story

This is my process back story for Kenya Kwanza going forward. It needs all of us to stop permanent electioneering and apply a governance lens to Kenya.

But Budget Day isn't about process, it's about content, you say! This is absolutely correct, even though we know that process and content are inexorably linked. Recall our ongoing Finance Bill discussion in the context of what Nigerian writer Chimamanda Ngozi Adichie once called the danger of the single story. So the Finance Bill is all about the Housing Levy, Fund, whatever it is.

But here's where we have gone. Media reports, and some sections of media, have reduced all discussions about the 2023/24 budget to the Finance Bill. Debt is not the issue, overtaxed Kenyans are. Neither is expenditure, despite endless pontifications about our real spending problem.

Here's where content is going. The transformation agenda is reduced to an emergency 2023/24 budget. To repeat, it beggars belief that the Kenya Kwanza administration is yet to publish its policy and strategy direction (BETA - the Bottom-Up Economic Transformation Agenda) as part of the fourth medium-term plan under our Vision 2030 long-term development blueprint.

On content, the danger of the single story is the hidden Budget 2023 back story. The front story that is the Budget Statement is straightforward. An opening stanza on the global, regional and domestic economic policy context that informs the budget.

Then a statement on the big policy priorities across sectors and policy domains. Then a fiscal framework that speaks to revenue and expenditure projections, the deficit (fiscal balance) and its financing, ongoing debt management and maybe public-private partnerships, privatisation and public investment management.

The National Treasury. [Denish Ochieng, Standard]

The meat of the statement comes in its final two parts. First, a narration on spending which sets out the big ticket priorities to be pursued in the forthcoming year. This is where we hear about the big spending allocations on projects, initiatives and interventions which are a little more difficult to trace in the actual budget books. Call this the supporting narrative to Parliament's Appropriations Bill.

Second, highlights of the main tax and other revenue-raising measures necessary to balance the budget. Yes, think of this as an explanation of the Finance Bill 2023.

I am betting on a 1 to 2 hour statement, running at anything from 90 to 150 pages (coincidentally or not, Jubilee's 2021 and 2022 Budget Statements were both exactly 106 pages). And I am also betting that we can pretty much predict - under those five headings described above - what the 2023 statement will cover. But this is what I call the front story, one for the papers.

So, I will be searching just as hard for more backstory content in Budget Day 2023. To repeat for the umpteenth time, there are four back stories that should interest all of us, but we shall focus on three in our post-budget analysis. Start with debt.

The truth is we went into the 2023/24 budget on a debt treadmill. The past is interesting, but focus now must be the present and the future. Debt must be serviced. Debt must be rolled over and/or refinanced. We don't want to reschedule debt. We need debt to sustain current government operations. That's the first back story.

Since we've been kicking and screaming about the Finance bill, let's just say that revenue is the second back story. Public participation notwithstanding, its presentation as policy and law has been untidy at best, as have responses therein.

Missing frameworks

Two words - negotiation and consensus, not hubris and bravado. Here's a real back story to consider. The 2022 Finance Bill (last year) aimed for Sh50 billion in additional revenue, while its 2021 predecessor targeted "only" Sh9 billion.

Yet we are told the Finance Bill 2023 targeted Sh210 billion in new revenue in its original form, but now targets Sh311 billion in its revised form after public participation. That's a real back story!

For reasons unknown, expenditure is largely off the table in our current debt and revenue debate. It is impossible in this space to describe the back story of expenditure questions unlikely to surface in the Budget Statement.

Many will speak to the maladministration, waste and graft in our budgets, but the bigger back story for me speaks to missing or incompatible expenditure frameworks around general government (sum of national and county governments plus extra-budgetary funds) and wider public sector (including parastatals by whatever state enterprise or ownership definition).

At bottom, let's follow Budget Day's front story as the Budget Statement, as we explore the back stories. There is much more to discover, beginning with our forthcoming post-budget viewpoint.

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