Why the President should lead management of public finances

President William Ruto during the inspection of Ol Kalou Affordable Housing Project at Ol Kalou town in Nyandarua County on January 11, 2024. [Kipsang Joseph, Standard]

Defining his programme for the year, indefatigable Busia Senator Okoiti Okiya Omtatah declared this was the year of electoral and public finance management reforms.

To the Senator, fixing the electoral process and the Treasury would finally set Kenya on the right path towards democratic and economic growth. Not much can be said on electoral reforms.

In the last four election cycles, Kenya has over-legislated on elections. In 2016, the entire electoral infrastructure was changed, in a process overseen by the bipartisan Orengo-Kiraitu Parliamentary Committee.

The opposition still cried foul, got the election nullified and demanded more reforms. These were instituted prior to the 2022 elections. The losing team still cried foul and now wants more reforms.

I believe the law has taken as far as it can on electoral reforms. No amount of restructuring will fix what are essentially political problems. For instance, creating a Leader of the Official Opposition office may do more to stabilise our elections than further electoral changes. The proposal to review the public finance management infrastructure is however the focus of this week’s column. Senator Omtatah is convinced that at the heart of our public finance challenge is the failure to separate the National Treasury from the Executive. He argues that this intermixing allows the president to inter alia bypass the budget process and discretionary allocate revenue. This position has been articulated quite eloquently by erudite devolution scholar Dr Mutakha Kangu on a related argument that the Treasury as currently existing, runs counter to the devolved system and that the Treasury should be a shared office between two levels of government.

When the Public Finance Management Act was being drafted in 2012, a process I had the privilege of chairing, this position was articulated quite strongly. It failed to carry the day. The same constitutional, practical and political headwinds that it faced would meet any proposed changes today. Constitutionally, the challenge arises from the designation and allocation of roles to a Cabinet Secretary responsible for finance by the Constitution. While the Constitution does not make this Cabinet Secretary in charge of the Treasury, it grants them responsibilities that are traditionally the role of the Treasury.

For instance, in Article 221 this Cabinet Secretary presents the budget estimates to Parliament. This is not just a formal role. Under Article 225, this Cabinet Secretary can stop funds from being transferred to any government organ, including county governments. This presumes they have the levers to effect such stoppages, which the Treasury traditionally holds. Money bills cannot be considered without considering the opinion of this Cabinet Secretary. Given these constitutional allocations, it was difficult to envisage a Treasury that was functionally separated from the Finance Cabinet Secretary. On the practical side, having been granted substantial constitutional roles relating to finance, there were difficulties in envisaging a “shared” or “independent” Treasury that was not answerable to the Cabinet Secretary.

Possible practical difficulties included managing differences of opinion between the person constitutionally responsible for significant elements of finance and an “independent office” on such delicate issues as the management of the economy.

This could easily lead to gridlock with harmful consequences to the economy. Politically, the problem arises from democratic theory and why we elect governments. Elections are won, at least theoretically, based on economic platforms that the voters endorse through the ballot.

Much of this agenda can only be implemented if the elected government has some control over the public finance institutional infrastructure. Without the latter, there would be consistent complaints that the government was being hamstrung by an unruly Treasury, similar to what we are currently hearing about the courts.

I hold the view that if we elect a government, we must give it tools to execute its promised agenda. If it fails, we have an opportunity to send it home in the next election. But to grant a government power and deny it the instruments to exercise the power is inconsistent with the basic tenets of democratic government. I say this knowing the Treasury has been a disappointment in many respects but separating it from the Executive would only create dysfunction without curing of our deeper challenges including theft and waste of public funds and fiscal indiscipline.  

Writer is an advocate of the High Court