Call for Participation in Pre- Budget Forums: Pointers to Note
Category: Economic Growth
By: Raphael Muya,
The budget is the most important economic policy instrument for the government as it reflects what the government’s economic and social priorities are at any given fiscal year. Therefore, understanding the government budget cycle is important for effective and meaningful participation by all the stakeholders. Citizen engagement and participation in public affairs is a constitutional requirement. In particular, Article 201(a) of the Constitution of Kenya provides that there shall be openness and accountability including public participation in the budget process. Equally, the Public Finance Management Act, 2012 in section 35(2) states that the Cabinet Secretary of Finance shall ensure public participation in the budget process.
During the budget formulation stage, stakeholders can participate in the sector working groups by a way of sharing their views on the sector reports, the budget policy statement as well as sharing budget proposals with the National Treasury during the call for budget submission from stakeholders. With the onset of COVID-19, most of the engagements have been held virtually, particularly sector working group discussions for the year 2020. Likewise, the Institute of Economic Affairs’ upcoming pre-budget hearings forum(explained in the subsequent section) for the fiscal year 2021/2022 will be held virtually.
Sector Working Groups
The Cabinet Secretary, National Treasury launches a medium-term budget preparation process in the month of September every year. The sector working group (SWG) is composed of Chairperson who is the Permanent Secretary in the sector, Convener the Ministry of Finance and Co-Convener Planning ministry, representatives from line Ministries making up the sector, Private sector, Civil Society, and Development Partners. Kenya has Ten sector working groups which include health, Rural and Urban Development (ARUD), education, Social Protection among others. The Government works through the sector working groups to engage stakeholders during the budget preparation. Inputs from various stakeholders help in enriching, identifying, and prioritization of programmes and subsequent resource allocations. SWGs produce sector reports which contain sector achievement and spending performance which are latter shared during organized public sector hearing at the National level. The public sector hearings present an opportunity to validate the sector reports issues and subject the issues for consultation with citizenry at large and this in itself is opportune for the citizens to share and contribute to the budget process in Kenya.
Documents to looks for during the pre-budget period
The National and County Government produce some key budget documents during the budget formulation stage. These budget documents provide the public with a way of understanding the link between the policies and budget. These completed documents include the sector reports, annual development (Counties), budget review and outlook papers for both counties and national level government, Budget policy statement (National Government) and county fiscal strategy paper County Government). Publishing and publicizing these documents is important for effective engagement between the citizens and the governments. An example of a link to the sector report for the fiscal year 2021/22 can be found here.
The IEA-Kenya and SNV Netherlands collaborated and developed some budget process guides and animations to understand more about the budget formulation stage. Sector working group concept features more in both the animations and the budget guide.
Guidelines for pre- Budget Forum proposals
When making a budget proposal submitted to the National Treasury, it’s important to follow the public call for submission of the budget from Treasury posted at https://www.treasury.go.ke/.To make a compelling case for consideration of submissions, they do not only require that they are evidence-based but should also speak to the guidelines provided by the National Treasury. Although by the time of writing of this blog piece the National Treasury was yet to post the guidelines for the fiscal year 2021/2022, it is expected to be similar to the previous year’s guideline. On this point, that budget proposals should speak to the promotion of Kenya’s economic growth, which is now more pronounced due to the adverse effects of the onset of COVID-19. Other important things to note are that budget proposals should be aligned to national priorities and focused on the completion of on-going projects. Generally, it is important to note is that budgeting is about trade-offs and the submissions should not only be tax or expenditure oriented but could also be regulatory-related or even reform-oriented.
IEA Kenya Pre- Budget Forum
The IEA – Kenya pre-budget forum is a platform that seeks to influence government decisions and help civil society develop viable alternatives to government policy. Equally, it provides a complementary avenue for deepening participatory budgeting, given the legal basis for public participation in government planning and budgeting processes. This year’s pre-budget forum will be held Virtually on 27th and 28th January 2021. This is the time to share views and proposals for consideration by the National and County Treasuries either expenditure or tax oriented.
Over the years, IEA-Kenya has attributed some budget proposals contained in the Estimates of Expenditure and Finance Bill with respect to policy reform and taxation measures to the Citizen Alternative budget memo shared with the National Treasury. For example, In the year 2015, IEA-Kenya shared taxation proposals on the reduction of Import Declaration Fee (IDF) to ensure that Kenyan manufacturing and pharmaceutical products are competitive. The Finance Bill for that financial year 2015 contained a proposal on the reduction of IDF fees with the aim of harmonizing the fee within the East African Regions and making it competitive to conduct business. Another more recent example is a proposal shared on cleaning cooking in the year 2018 on the reduction of import duty of efficient stove and VAT exemption of locally manufactured efficient stoves. This proposal found its way into the Finance Bill for the year 2018. The proposal gave 100 percent imported duty remission on inputs and raw materials to ramp up the assembly of clean energy cooking stoves for the local manufacturers and make them more affordable. The proposal did not only get into the finance bill but was passed and enacted by the members of the Assembly.
Conclusion
The above pointers are therefore important for effective public participation during the budget formulation stage. Having an understanding of why budgeting, when the budget process kicks off, the entry points in the budget formulation stage, and key budget documents make citizens more comfortable even when they share views on the budget with the government. However, there are challenges regarding the capacity of the public to engage in the formulation of the budget. This is often exacerbated by gaps in timely access to budget information. Secondly, lack of comprehensive feedback by the National Treasury on what was incorporated into the budget estimates and reasons for this out of all the submissions received is another gap worth noting. Addressing this issue of improving feedback mechanism is one of the key antidotes to the emerging concern of citizen participation fatigue.
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Call for Participation in Pre- Budget Forums: Pointers to Note
| Post date: Wed, Jan 27, 2021 |
| Category: Economic Growth |
| By: Raphael Muya, |
The budget is the most important economic policy instrument for the government as it reflects what the government’s economic and social priorities are at any given fiscal year. Therefore, understanding the government budget cycle is important for effective and meaningful participation by all the stakeholders. Citizen engagement and participation in public affairs is a constitutional requirement. In particular, Article 201(a) of the Constitution of Kenya provides that there shall be openness and accountability including public participation in the budget process. Equally, the Public Finance Management Act, 2012 in section 35(2) states that the Cabinet Secretary of Finance shall ensure public participation in the budget process.
During the budget formulation stage, stakeholders can participate in the sector working groups by a way of sharing their views on the sector reports, the budget policy statement as well as sharing budget proposals with the National Treasury during the call for budget submission from stakeholders. With the onset of COVID-19, most of the engagements have been held virtually, particularly sector working group discussions for the year 2020. Likewise, the Institute of Economic Affairs’ upcoming pre-budget hearings forum(explained in the subsequent section) for the fiscal year 2021/2022 will be held virtually.
Sector Working Groups
The Cabinet Secretary, National Treasury launches a medium-term budget preparation process in the month of September every year. The sector working group (SWG) is composed of Chairperson who is the Permanent Secretary in the sector, Convener the Ministry of Finance and Co-Convener Planning ministry, representatives from line Ministries making up the sector, Private sector, Civil Society, and Development Partners. Kenya has Ten sector working groups which include health, Rural and Urban Development (ARUD), education, Social Protection among others. The Government works through the sector working groups to engage stakeholders during the budget preparation. Inputs from various stakeholders help in enriching, identifying, and prioritization of programmes and subsequent resource allocations. SWGs produce sector reports which contain sector achievement and spending performance which are latter shared during organized public sector hearing at the National level. The public sector hearings present an opportunity to validate the sector reports issues and subject the issues for consultation with citizenry at large and this in itself is opportune for the citizens to share and contribute to the budget process in Kenya.
Documents to looks for during the pre-budget period
The National and County Government produce some key budget documents during the budget formulation stage. These budget documents provide the public with a way of understanding the link between the policies and budget. These completed documents include the sector reports, annual development (Counties), budget review and outlook papers for both counties and national level government, Budget policy statement (National Government) and county fiscal strategy paper County Government). Publishing and publicizing these documents is important for effective engagement between the citizens and the governments. An example of a link to the sector report for the fiscal year 2021/22 can be found here.
The IEA-Kenya and SNV Netherlands collaborated and developed some budget process guides and animations to understand more about the budget formulation stage. Sector working group concept features more in both the animations and the budget guide.
Guidelines for pre- Budget Forum proposals
When making a budget proposal submitted to the National Treasury, it’s important to follow the public call for submission of the budget from Treasury posted at https://www.treasury.go.ke/.To make a compelling case for consideration of submissions, they do not only require that they are evidence-based but should also speak to the guidelines provided by the National Treasury. Although by the time of writing of this blog piece the National Treasury was yet to post the guidelines for the fiscal year 2021/2022, it is expected to be similar to the previous year’s guideline. On this point, that budget proposals should speak to the promotion of Kenya’s economic growth, which is now more pronounced due to the adverse effects of the onset of COVID-19. Other important things to note are that budget proposals should be aligned to national priorities and focused on the completion of on-going projects. Generally, it is important to note is that budgeting is about trade-offs and the submissions should not only be tax or expenditure oriented but could also be regulatory-related or even reform-oriented.
IEA Kenya Pre- Budget Forum
The IEA – Kenya pre-budget forum is a platform that seeks to influence government decisions and help civil society develop viable alternatives to government policy. Equally, it provides a complementary avenue for deepening participatory budgeting, given the legal basis for public participation in government planning and budgeting processes. This year’s pre-budget forum will be held Virtually on 27th and 28th January 2021. This is the time to share views and proposals for consideration by the National and County Treasuries either expenditure or tax oriented.
Over the years, IEA-Kenya has attributed some budget proposals contained in the Estimates of Expenditure and Finance Bill with respect to policy reform and taxation measures to the Citizen Alternative budget memo shared with the National Treasury. For example, In the year 2015, IEA-Kenya shared taxation proposals on the reduction of Import Declaration Fee (IDF) to ensure that Kenyan manufacturing and pharmaceutical products are competitive. The Finance Bill for that financial year 2015 contained a proposal on the reduction of IDF fees with the aim of harmonizing the fee within the East African Regions and making it competitive to conduct business. Another more recent example is a proposal shared on cleaning cooking in the year 2018 on the reduction of import duty of efficient stove and VAT exemption of locally manufactured efficient stoves. This proposal found its way into the Finance Bill for the year 2018. The proposal gave 100 percent imported duty remission on inputs and raw materials to ramp up the assembly of clean energy cooking stoves for the local manufacturers and make them more affordable. The proposal did not only get into the finance bill but was passed and enacted by the members of the Assembly.
Conclusion
The above pointers are therefore important for effective public participation during the budget formulation stage. Having an understanding of why budgeting, when the budget process kicks off, the entry points in the budget formulation stage, and key budget documents make citizens more comfortable even when they share views on the budget with the government. However, there are challenges regarding the capacity of the public to engage in the formulation of the budget. This is often exacerbated by gaps in timely access to budget information. Secondly, lack of comprehensive feedback by the National Treasury on what was incorporated into the budget estimates and reasons for this out of all the submissions received is another gap worth noting. Addressing this issue of improving feedback mechanism is one of the key antidotes to the emerging concern of citizen participation fatigue.
More Blogs
Gen Z Collective Action on Taxation and Economic Policy.
Introduction The Finance Bill 2024 in Kenya sparked a wave of collective action primarily driven by Gen Z, marking a significant moment for youth engagement in Kenyan politics. This younger generation, known for their digital fluency and facing bleak economic prospects, utilised social media platforms to voice their discontent and mobilise protests against the proposed […]
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The credibility of Monetary Policy in Kenya is compromised at present by two factors: As we anticipated mid-year, inflation is headed below the target range for the first time; The 7-member Monetary Policy Committee (MPC) has four vacancies. In light of the former prospect, the MPC reduced the Central Bank of Kenya (CBK) Policy Rate, […]
Important dates and Citizen Concerns During Budget Planning Phase for Fiscal Year 2025/2026
The Budget formulation and preparation process in Kenya is guided by a budget calendar which indicates the timelines for key activities issued in accordance with Section 36 of the Public Finance Management Act, 2012.These provide guidelines on the procedures for preparing the subsequent financial year and the Medium-Term budget forecasts. The Launch of the budget […]
Adjusted IMF Program Demands on Kenya
In the IMF WEO published yesterday, the IMF elaborated its macroeconomic framework for the ongoing IMF program. The numbers clarify how the program, derailed by the mid-year Gen-Z protests, has been adjusted to make possible the Board meeting for the combined 7th and 8th Reviews scheduled for October 30. The adjustments, unfortunately, again raise profound […]
What does the Nobel Prize in Economics 2024 mean for Constitution Implementation in Kenya?
Daron Acemoglu, Simon Johnson, and James A. Robinson won the 2024 Nobel Prize in Economics for their research on how a country’s institutions significantly impact its long-term economic success.[1] Their work emphasizes that it’s not just about a nation’s resources or technological advancements but rather the “rules of the game” that truly matter. Countries with […]