Powerful Treasury agency to vet new projects

A new powerful Treasury-based agency is set to take up vetting and approval of new public projects valued above Sh100 million to curb rampant wastage of billions of shillings of taxpayers cash.

The draft Public Investment Management (PIM) guidelines propose a Public Investment Management Department to appraise all requests for funding based on quality and cost-effectiveness of intended projects.

The Treasury says that the absence of a public investment management framework has opened room for shoddy projects finding their way into the budget, putting unnecessary distortion on funding plans.

“Without any methodological guidance on efficient public investments, the basis for consistent and comprehensive project appraisal is missing,” says the Treasury.

“The result is a bloated project portfolio, unpredictable funding, stalled projects, and inflated costs contributing to the under-execution of budgets and delayed translation of the investment in projected economic growth.”

The department will be responsible for approving funding for new projects and also carrying out independent evaluations for medium, large and mega projects.

The Treasury defines small projects as those costing less than Sh100 million while medium projects are those cost en Sh100 million and Sh500 million. All projects costing between half a billion and Sh1 billion will be classified as large while mega projects will be those valued above Sh1 billion.

Kenya is currently grappling with public debt that has crossed the Sh5 trillion mark, most of it spent on projects whose costs were either highly inflated or whose economic benefit to the country has been questioned.

To reverse this and control spending, the Treasury wants to introduce standard processes for identifying, appraising, budgeting, monitoring and evaluating projects to ensure that only priority ones are financed and implemented.

“It will improve the entire project management cycle from planning, identification, feasibility, appraisal, approval, budgeting, procurement, implementation, contract management and forward budgeting,” said Treasury Secretary Henry Rotich in a response to our queries.

The Treasury further wants to take up the role of determining and documenting the impact of some of the completed projects and ensuring that no funding is given before old projects are completed.

“The Treasury shall ensure that new projects will only be considered once the ongoing projects are completed and/or where there is fiscal space,” says the Treasury.

The new rules strengthen the Treasury’s role in national government and county government projects by requiring all accounting officers handling development projects to report to the new department to be formed.

Treasury’s PIM department will design and maintain a PIM management information system to serve as the focal point for all public projects. All counties will have a PIM unit reporting to the Treasury’s new department.

Accounting officers in all counties will establish project committees to identify feasible projects from public consultations and declare the same to the Treasury.

No project will be considered for funding before all its details are uploaded in the PIM information system.

The accounting officer will have to show proof that all pre-conditions such as land acquisition and compensation of owners have been met and all regulatory approvals obtained.

“Only projects processed and appraised through the system shall receive public funding, including Appropriation in Aid,” say the draft guidelines.