Background

The Committee deals with all matters relating to Public finance such as: -

• Review and monitor of policy and legislation on matters relating to Revenue Sharing; Budget Policy Statement, Revenue Sharing Formula, Division of Revenue Bill and County Allocation of Revenue Bill.
• Advise the Council on legislative amendments and intervention areas therein on all sectoral matters such as amendment to the Public Finance Management Act, Public Procurement and Asset Disposal Act, County Governments PFM Regulations.
• To advise County Governments on matters of policy and legislation with respect to County functions such as National Government’s Budget analysis, County Budget analysis and National Government’s expenditure framework.
• To coordinate and harmonize the Council’s position on matters of fiscal relations between the two levels of government.
• To provide a forum for consultation on matters of County Planning, Budgeting and Public Private Partnerships for County Governments.

Approach to undertaking Committee’s business

The committee functions through: -

• Intergovernmental forums such as the Intergovernmental Budget and Economic Council (IBEC) which brings together both the executive arms of the two levels of governments to deal with inter-governmental fiscal relations.
• Stakeholders’ engagements on Public Finance Management related issues to enhance Counties capacity on Public Finance Management.
• Inter-county consultative forums such as regional counties’ clusters to promote effective business environment by development of uniform tax raising measures.

Legal Framework

The primary source of legislation of the committee's activities is the Constitution of Kenya 2010. The other key sources of legislation include:

• The Public Finance Management Act, 2012
• The Public Procurement and Assets and Disposal Act, 2016
• The County Government Public Finance Management Regulations 2015
• The External Resource Policy 2014

Status Briefs (current agendas/issued being addressed by the Committee)

The Committee has done the following over the last four years: -

• Negotiated a European Union grant worth 15million Euros targeting 15 Counties for local economic development.
• Negotiated a Kenya Devolution Support Programme through World Bank worth USD 200 million targeting all the 47 counties.
• Developed a conditional grants guideline to enhance donor and national government additional resourcing to counties.
• Lobbied for an increased county equitable share of revenue for the 2017/18 FY from Ksh 291 billion to Ksh 302 billion.

Opportunities that the Committee offers

The Committee provides a platform for linkage between Public Finance Institutions; Independent Offices and the County Governments on all matters of public finance thereby creating an enabling environment for consultations on County financial matters.

Impact/Breakthroughs/Key Achievements.

• All donor grants to the Counties negotiated after the developed guidelines on conditional grants are currently operationalized through a framework.
• There has been increased equitable allocation to Counties as a result of the Committee lobbying; in 2015/16 financial year the equitable share was grown from Ksh 253 billion to Ksh 259 billion as a result of the Committee’s effort. Same applies to the 2017/18 FY when the allocation was grown from 291 billion to 302 billion.
• There is currently a policy on own source revenue for Counties that will help to increase Counties own source revenue. The policy has been developed through an inter-agency team comprising of the Finance Committee’s representation.

Resources

The committee develops and maintains a variety of resources on Public Finance, Commerce and Economics issues including: -

• Provision of technical assessment of all the national policies such as; the Annual Budget Policy Statement to ensure that counties interests are well presented.

• Technical assessment of national legislation including Public Finance Management Act 2012, Division of Revenue Bill and County Allocation of Revenue Bill to ensure County Governments operations are seamless.
• Collation of counties success stories showcasing the effective implementation of public finance management for the purpose of promoting efficient and effective resource management.
• Facilitation of inter-county capacity building workshops to enhance knowledge and ensure effective public finance management in counties.

Current Sector Challenges

• Under-funding of County Governments throughout the four financial years since 2013/14 financial year; in 2013/14 the allocation was Ksh 190 billion, Ksh 226 billion in 2015/16, Ksh 259 billion in 2016/17 and Ksh 280 billion in 2017/18.
• Late disbursement of Counties’ share of revenue leading to prolonged uncertainties in the implementation process.
• Lack of operationalization of the County borrowing framework to necessitate long-term borrowing by Counties.
• Un-funded County functions through the national shareable revenues; there are additional transferred functions to counties that are not funded; 31,000km of roads and 59 devolved libraries.

Key lessons from the Committees Cycle (2013-2017)s

• There is need for need based capacity building to County officials on public audit.
• Public participation in the budgeting process is key in enhancing ownership of the County projects by the local citizens.
• There is need for the establishment of the County Budget and Economic Forums by all the 47 Counties to provide a forum for interaction with interest groups in the County planning process.
• Intergovernmental engagement is key in ensuring seamless management of issues of public finance.
• There is need for consistent review of county legislations on public finance to ensure they are in line with the Public Finance Management Act, 2012 and the Constitution.
• Counties should be assisted with the development of Model Laws guiding in revenue generation to enable increased revenue generation.
Priorities and support required from Committee leadership from September, 2017
• Follow up with the National Government to operationalize the County borrowing framework.
• Operationalize the Own Source Revenue policy at the County level to enhance local revenue collection.
• Follow up with IBEC on the funding of the additional functions devolved to Counties; 31,000km of roads, 59 libraries.
• Operationalization of the external resource policy for mobilization of external resources to the Counties.