County budgeting and planning in Kenya
By: Geoffrey Kerosi
4th February, 2020
Venue: Sweet Lake Resort, Naivasha
Article 201 of the Constitution of Kenya 2010 provides for openness and transparency including public participation in issues of Public Finance Management (PFM). This is a paradigm shift from the previous practice where public budgets were top government secrets.
In this article derived from the Public Finance Management Act 2012, we highlight some of the key elements of County planning and budgeting in Kenya. It is our since hope that you will find this inspiring and educative.
Why participate in county planning and budgeting?
- Participatory budgeting promotes democracy – direct representation
- Active citizenship and effective checks and balances;
- It is the way to identify discrimination of marginalized, minority groups and indigenous communities;
- It is a way of fighting or at least minimizing corruption
- Participatory budgeting promotes inclusiveness
- It aligns priorities of the state with that of the public
Stages in County Planning and Budgeting in Kenya
There are four (4) main stages in the county planning and budgeting process in Kenya.
These stages are as listed below:
- 1) Formulation Stage
- 2) Approval Stage
- 3) Implementation Stage
- 4) Oversight (Monitoring and Evaluation)stage
- These four stages at times overlap. This means that implementation can overlap with formulation and oversight at the same time.
Legal provisions supporting public participation in county planning and budget
- Article 201 of Constitution of Kenya provides for transparency and accountability including public participation in the county planning and budgeting process;
- Public Finance Management Act 2012 also provides for public participation in county planning and budgeting;
- County Governments Act 2012 –
County Planning
- Section 126 directs that every county government shall prepare a development plan in accordance with Art 220(2) of the Constitution of Kenya;
- The Annual Development Plan (ADP) shall be prepared and submitted to the County Assembly not later than 1st Sep of each year;
- The CEC Finance to manage the Budgeting process for the county;
Public participation in the planning and budgeting process
- Sec 125(2) the County Executive Committee member of finance to ensure that there is public participation in the budget process;
County budgeting process
- According to Section 117 of PFM Act, the County County Treasury shall prepare and submit to the county Executive Committee the County Fiscal Strategy Paper (CFSP) for approval and and the County Treasury shall submit the approved CFSP to the County Assembly by 28th Feb of each year;
- The County Treasury shall align its CFSP with the national objectives in the Budget Policy Statement;
- The CFSP shall contain the broad strategic priorities and policy goals that will guide the county government in preparing its budget for the coming financial year and over the medium term;
County Fiscal Strategy Paper (CFSP)
- The Contents of the CFSP to be informed by the views of Commission on Revenue Allocation; the public; interested persons; any other forum established by legislation;
- The County Treasury shall publish and publicise the CFSP within 7 days after it has been submitted to the County Assembly;
County Budget Review and Outlook Paper (BROP)
- Sec 118 of PFM Act 2012
- The BROP to be prepared every year;
- CBROP to be submitted to the county executive by 30th September of each year;
- Contents: actual fiscal performance; updated economic and financial forecasts; any changes in forecasts; reasons for any deviation;
- Every county government shall submit a county cash flow plan and forecasts to the County Treasury;
Budget Circular
- Article 128(2) of PFM Act 2012 provides that the county Executive should issue a circular setting out guidelines to be followed by all county government entities in the budget process;
- The circular shall include: a schedule for preparation of the budget with key dates, methodology for the review and projection of revenues and expenditure, key policy areas and issues to be taken into consideration when preparing the budget;
- The procedure to be followed by the members of the public who wish to participate in the budget process;
- The format in which information and documents relating to the budget are submitted;
Budget Estimates
- Budget summary which includes: – budget policies including revenues, debt, expenditure and deficit financing;
- Budget estimates which include all the county government entities that are to receive funds appropriated from the budget of the county government;
- Estimates of revenue projected from the Equalization Fund over the medium term;
- All revenue allocations from the national government over the medium term, including conditional and unconditional grants;
- All other estimated revenue by broad classification;
- All estimated expenditure, by Vote, and by programme, clearly identifying the recurrent and development expenditures;
- Information regarding loans made to the county government, including an estimate of principal, interest and other charges to be paid by the county government in the financial year in respect of those loans;
- Any payments and liabilities to be made or incurred by the county government for which an appropriation is not included in Appropriation Act;
Budget Approval
- The County Assembly to consider the CG budget estimates with a view of approving them with or without amendments;
- The budget to be passed by 30th June in each year;
- The budget and appropriation committee to discuss and review the estimates and make recommendations to the County Assembly;
- The Committee to take into account the views of the Member of County Executive for Finance and the Public;
Supplementary Budget
- Section 135 of PFM Act 2012, supplementary budgets are used to deal with unforeseen expenditures in county and national budgeting
- or when money has been withdrawn from the government Emergency Fund;
- If money allocated for expenditure remains unspent at the end of the financial year, such resources are returned to the County Revenue Fund;
Establishment of Budget and Economic Forum for county budget Consultation Process
- A county government is required to establish a forum to be known as County Budget and Economic Forum;
- Members:
- A) Governor – chairperson
- B) other members of the County executive;
- C) representatives not being public officers to represent women, labour issues, persons with disabilities, the elderly, professionals, elderly and faith-based groups at the county level;
Role of CBEF
- Provide a means for consultation by county governments;
- Preparation of county plans – CFSP, CBROP etc
- Matters relating to budgeting, the economy and financial management at the county level;
County government authorised to lend money
- A county government entity may lend money on accordance to this Act;
- Money loaned under this section is payable only from an appropriation for development expenditures;
Implementation reports
- County governments are required to prepare quarterly reports for county government entity;
- Implementation reports are also prepared by the Office of Controller of budget;
- The report is to be prepared not later than 15 days after the end of each quarter;
- Not later than 1 month, the County Treasury shall deliver copies to the Controller of budget, National Treasury and Commission on Revenue Allocation;
Participation by ethnic minorities
‘Inclusive – Often participation involves the “usual suspects”: organizations and individuals with information, interest, resources, and opportunity to engage. Those who do not participate are often less educated, from physically disconnected locations, poorer, and minorities in their societies.’ – International Budget Partnership (IBP).
Key dates in county planning and budgeting
- 1st September each year: submission of County Annual Development Plan to the County Assembly for approval;
- 28th February each year: County Fiscal Strategy Paper (CFSP) to be tabled at the county assembly
- 30th April: deadline for submission of budget estimates to the county assembly for approval;
- 30th June: The deadline for the approval of budget estimates by the County Assembly
- 30th September: County Budget Review and Outlook Paper (BROP)
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