Economy

Counties, war on graft big winners in BBI

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President Uhuru Kenyatta and former Prime Minister display a copy of BBI Report during the presentation at Kisii State Lodge. PHOTO | PSCU

Summary

  • The counties, college students and the war on corruption will emerge big winners if Kenyans ratify proposals contained in the final report of the Building Bridges Initiative (BBI) reforms taskforce.
  • The report released Wednesday recommends stiffer penalties for economic crime offenders as well as increased allocation to counties under the equitable share of revenue with the national government.
  • It proposes legislative changes to make all wealth declaration forms open to public scrutiny and ban public officials from doing business with the government.

The counties, college students and the war on corruption will emerge big winners if Kenyans ratify proposals contained in the final report of the Building Bridges Initiative (BBI) reforms taskforce.

The report released Wednesday recommends stiffer penalties for economic crime offenders as well as increased allocation to counties under the equitable share of revenue with the national government.

It proposes legislative changes to make all wealth declaration forms open to public scrutiny and ban public officials from doing business with the government.

Wealth declaration is expected to increase transparency in the public sector and discourage the practice where influential State employees enrich themselves while in office.

The report also compels all Kenyans to report any knowledge or suspicion of instances of corruption or economic crimes, with offenders liable upon conviction to a fine not exceeding Sh5 million or imprisonment for a term not exceeding five years.

“Any person who aids or abets, or is accessory to any act of corruption or economic crime…knowing that any person intends to commit treason, does not give information thereof with all reasonable dispatch to the Commission, magistrate or an officer in charge of a police station,” says the report.

It seeks to amend Article 202 of the Constitution that says that the equitable share of the revenue raised nationally be calculated on the basis of the most recent audited accounts of revenue received, as approved by the National Assembly.

Currently, Parliament has delayed approving the audited accounts forcing counties and national government to share revenues based on collections dating as far as four years.

The delays have denied counties more money because revenue raised nationally have been on a year on year rise.

“Where revenue sharing in this Constitution is based on the approval of the most recent audited accounts by the National Assembly and the Assembly has not approved the accounts, the most recent audited accounts of revenue submitted by the Auditor-General shall be taken as the accounts of revenue for that purpose,” says the proposed amendment.

Proposed changes to article 203 of the Constitution will empower the Controller of Budget to authorise withdrawal of a maximum of 50 percent of the amount due in equitable share in case of delays in passing the revenue sharing Bill.

Counties endured three months without receiving part of the equitable share for the year to next June after Senate delayed passing the Division of Revenue Bill for over five months.

The delays pushed the devolved units into a near shutdown.

“If the Division of Revenue Act for a financial year has not been passed by Parliament before the beginning of that financial year, the Controller of Budget may authorise the withdrawal from the Consolidated Fund of up to fifty per cent of the minimum amount of equitable share guaranteed to county governments,” say the BBI report.

Perennial misses in own-source revenues have forced the 47 counties to rely on the transfers to run their operations.

College students will not pay interest on Higher Education Loans Board (Helb) loans until they start earning income if lawmakers approve recommendations contained in the BBI report.

Under proposed changes to the Higher Education Loans Board (Helb) Act, the grace period for loan repayment will be increased to four years after graduation.

Graduates are currently required to start repaying the student loans within a year after graduation in what has left thousands of beneficiaries in default.

The proposed changes to the Helb Act come against the backdrop of job cuts and a freeze in hiring plans in corporate Kenya, denying fresh graduates the employment income they need to settle their student loans.

“The Bill seeks to amend the Act to give loanees a grace period of four years from the date of completion of their studies before they can commence repayment of loans advanced to them,” says the report.

“The proposed amendments further exempt loanees without a source of income from paying interest on the loans advanced to them until such time that the loanees start earning an income.”

If Parliament approves the recommendations of the BBI report, Helb will lose the powers of setting the interest charges on students loans.

The changes will also hurt Helb’s finances as it relies on loan recoveries to support university and college students with fees and subsistence loans, which rise to a maximum of Sh50, 000 annually.

Helb is supposed to be a revolving fund, with beneficiaries who have completed their studies paying back the loans to support a fresh group of students.

Reporting by Edwin Mutai, John Mutua and Bonface Otieno