Heads of parastatals have come under fire for splurging on non-priority programmes when the government is battling deep budget cuts amid shortfalls in taxes.
Lawmakers have claimed semi-autonomous government agencies (SAGAs) present broad budget estimates, which are difficult to scrutinise and hold the management of the entities to account.
The fresh push for increased parliamentary oversight of parastatal budgets could open a battleground for control of billions of shillings pitting the legislators and independent boards of directors.
“Despite the fiscal constraints, a section of government agencies, namely parastatals and other SOEs [State-owned entities], have not been fully participating in austerity measures,” the Budget and Appropriations Committee of the National Assembly wrote in its latest report.
“This has allowed these agencies to continue incurring non-priority expenditures while the rest of government, including counties, faces expenditure cuts occasioned by the withdrawal of the Finance Bill 2024.”
The collapse of a plan to raise new and higher taxes this financial year has prompted the William Ruto administration to slash the total budget by Sh145 billion—comprising Sh105 billion for development projects and Sh40 billion for the operation and administration of public offices as well as the remuneration of staff.
The expenditure cuts will help fill about 42 percent of the Sh344 billion left after deadly youth-led anti-tax protests forced President William Ruto to ask the National Assembly to withdraw Finance Bill 2024. The remainder of the cash will be raised through borrowing.
The lawmakers have now turned their spotlight on semi-autonomous State entities that, even though they work under ministries, hold some degree of independence in their operations under the supervision and oversight of their respective boards of directors.
The legislators are now pushing to have a say on their expenditures, including projects they should implement and those they should defer to free up money for other programmes.
“The committee noted the limited information provided in the budget estimates of the semi-autonomous government agencies.
“This has hampered proper scrutiny, fiscal accountability, transparency, and parliamentary oversight of the budgets of the SAGAs,” the committee, led by Kiharu legislator Ndindi Nyoro, said in the report.
The lawmakers now want parastatal chief executives to start presenting budget estimates, which give finer details of programmes to be funded for scrutiny by respective departmental committees of the House.
This is expected to start when they prepare budgets for the next financial year from July 2025, a process that will kick off in a month or thereabouts.
“This itemised budget should detail all expenditure categories and projected costs, allowing for direct oversight and detailed analysis of specific budget items by the National Assembly,” the report states.
The fresh demands by MPs have come at a time when Dr Ruto has directed commercial State corporations to wire up to 80 percent of their net profit to the Treasury.
The presidential order, made in March, has now been included in performance indicators for chief executives this financial year ending June 2025.
“The money that some parastatals make does not belong to their boards or management. It belongs to the people of Kenya as returns on investment,” Dr Ruto told parastatal chiefs at State House on March 26.
The Ruto administration has this year embarked on far-reaching reforms in the operation and management of State corporations under a plan backed by the International Monetary Fund.
The restructuring plan targets to end budgets for commercial corporations and maintain a minimum allocation to entities, ending allocations for non-priority budgets such as memberships to clubs for top management, repairs, and hiring of new staff this fiscal year.
The implementation of the State Corporations reforms has been suspended by the High Court pending a determination of a case filed by the Law Society of Kenya and others challenging some aspects of the changes that they allege usurp the powers of the Public Service Commission (PSC), an independent constitutional agency.
PSC chairperson Anthony Muchiri had also protested Dr Ruto’s Executive Order No. 3 of 2024 on Guidelines for the management of State Corporations, terming it “illegal and unconstitutional” for excluding the commission from their formulation.
The executive order gazetted on May 24 provides for among others, terms and conditions of service for boards and human resource management of State Corporations.
“The Guidelines are in conflict with the provisions of the constitution and are, therefore, invalid pursuant to the provisions of Article 2(4) of the Constitution…,” Mr Muchiri wrote in a protest letter to State House’s Chief of Staff & Head of the Public Service Felix Koskei on May 28.
“The Guidelines violate several court decisions that found that it is only the Commission (PSC) that has power to establish offices and approve human resource instruments in the public service.”
