REVIEW OF THE NATIONAL GOVERNMENT CONSTITUENCIES DEVELOPMENT BILL AS PASSED BY PARLIAMENT ON 2 DECEMBER 2015

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1 About TISA The Institute for Social Accountability (TISA) is a civil society organization committed towards the achievement of sound policy and good governance in local development, to uplift livelihoods of, especially, the poor and marginalized in Kenya. TISA has been operational since March 2008, and is a locally registered Trust that has engaged with various relevant state and non-state actors in the quest to promote effective local governance in Kenya. We are joined in this endeavour by our partners the CEDGG. The Centre for Enhancing Democracy and Good Governance (CEDGG) is a grass root Civil Society Organization (CSO) that was founded in It works to empower vulnerable groups and ethnic communities to realize their governance and development rights. It has its head office in Nakuru Town Nakuru County REVIEW OF THE NATIONAL GOVERNMENT CONSTITUENCIES DEVELOPMENT BILL AS PASSED BY PARLIAMENT ON 2 DECEMBER 2015 Background The Institute for Social Accountability has had a keen interest in the Constituency Development Fund due to its potential in promotion of inclusive governance and poverty reduction. TISA involvement in the fund started in 2008 during which TISA developed a social audit manual and assisted communities in the undertaking of social audits on CDF projects. In 2013, TISA successfully obtained a court order blocking the release of the fund out of concern that the monies will be used to fund elections for members of parliament who were aspiring for political leadership. In the same year, TISA filed a case in court challenging the constitutionality of the Constituency Development Fund, 2013 in light of the Constitution of Kenya

2 In 20 February 2015, the high court gave a ruling to the effect that the 2013 fund framework is unconstitutional and that parliament and the CDF board should endeavour to align the framework to the constitution or windup the fund within a period of one year. Yesterday, on 2 December 2015 in bids to align the framework to the constitution parliament passed the National Government Constituency Development Fund Bill, 2015 to law. We note that the National Assembly CDF Committee provided the Kenyans an opportunity to submit memoranda and representations on the bill and offered audience to key stakeholders including TISA to make oral representations on the bill. To this end, we congratulate parliament for a well-coordinated public participation process save for fact that the period for submitting memoranda which was six days was in adequate. We hope that for future critical bills parliament will give the public ample time to prepare reactions. Further, as pertains to the substance of bill and the amendments that were passed in parliament, we note the following: Respect of the law to constitutional provisions and court ruling on CDF petition 71 and community orientation of the fund. 1. The law respects the separation of functions between the national and county governments and has room for national government to support county government functions as provided for intergovernmental relations provisions laws. 2. The law has made a considerable attempt to ensure that members of parliament do not participate in project implementation and but in oversight. 3. The law respects public finance principles of division of revenue. 4. There are attempts to ensure that the fund is oriented for the community through the citizen oversight forums and that the framework promotes citizen participation in service delivery. The law links the fund to national government coordinating structures during project implementation. However, TISA holds the position that framework is unconstitutional and will not achieve its objective due to the following: 2

3 In general, the fund framework creates a lot of disharmony in governance and service delivery in the country. This is because, the fund pre-supposes that the board is similar to a line ministry and thus awards it funds for implementation of all other functions that fall under the national government without a proper rationale. In addition to the above, the framework is further problematic as it provides for the creation of administrative structures such as constituency fund account, constituency development planning procedures, outside the ordinary planning and service delivery channels of the national government and again without proper justification. The details of issues are as follows: 1. The law maintains the constituency is a unit of service delivery against the court ruling. The law makes provision on creation of administrative systems for implementation of the fund at the constituency level. This is unconstitutional as it contradicts the foundational aspects of devolution in Kenya. 2. The law is passed without justification on funding gaps within line ministries, which the fund is supposed to finance outside the legitimate budget process. The public finance management principles provide that the cabinet secretary of finance can establish a national fund for a national government entity under which the functions of the fund fall. It is regrettable that parliament has passed the bill into law without a proper identification of the gaps the fund intends to fill. 3. The law creates an emergency reserve whilst the national government has elaborate mechanisms and resources to counter emergencies. 4. The law has reduced accountability on unutilized funds by requiring that such funds be maintained in constituency bank account. Unutilized funds should be returned back to the board fund account. 5. The law fails to provide for clear functions of the project management committees in light of fostering accountability during project implementation. 6. The law fails to provide linkages with citizen s platforms in service delivery such as the county education board within the education sector. 7. The fund fails to adhere to the principle of separation of powers as the term of the constituency committee is linked to the term of parliament. 3

4 5. The fund provides for funding of social security programmes outside measures and policies for social security structures and provisions such as the social assistance act and the affirmative action social development fund. The constitutionality of the latter is challenged in court. 6. The constituency committee appoints the project management committee thus undermining community interest in the oversight of the fund. 7. The law fails to provide for adequate transition provisions. As a transition mechanism, there should be provisions for the disbandment of the current CDF board due to the Auditor General findings that 30 constituencies cannot account for 200million. Further to this, there should be provisions of social audits of projects funded by the previous framework. We therefore call upon the President to withhold assension of the bill to law until parliament streamlines the bill in the manner described above. ANALYSIS OF THE NATIONAL GOVERNMENT CONSTITUENCY DEVELOPMENT FUND BILL 2015 AS PASSED BY PARLIAMENT. Clause/ s made to national assembly by TISA Issue Status Long title: The National Government Constituencies Development Fund Bill, 2015 Clause 4 provides that: 4 (1) There is established a fund to be known as the National Government Constituencies Development Fund. The proposal to the committee was that to amend the bill to and substitute constituency with the term sub-county or further use the alternative National Government Community Development Fund. The National Government Coordination Act, No. 1 of 2013 establishes the mechanism for implementation and coordination of national government services. In order to address the local development as intended by the Bill, the Fund should be aligned with the national government service delivery system and structure. Consequently, the Fund can only be established for the development planning and service delivery within the The fund still recognizes the constituency as a unit of service delivery, thus unconstitutional. 4

5 Clause 2 interpretation in definition of Project Management Committee Project management committee means a committee appointed by the constituency committee to implement project There are no principles to guide implementation of the fund Include the following principles to guide implementation of the fund established structures i.e. county, subcounty, ward, location and sub-location as well as any other unit of decentralization of services as established by the county governments. Parliament approves the appointment of the constituency committee and the constituency committee appoints the PMCs. It has become commonplace to include principles to guide the implementation of legislation. This is particularly so when seeking to incorporate the values enshrined in the constitution of Kenya. We suggest the inclusion of the following: i. Participation by the public shall be based on inclusivity and volunteerism; ii. Members elected to represent communities shall meet standards required by chapter 6 of the constitution; iii. The process of identifying, prioritizing, and implementing projects must be driven by the community rather than government or state officers; iv. The responsibilities of selecting members to serve in communities must adhere to the ideals of democracy and inclusivity; v. The role of government should be restricted to technical and advisory tasks; vi. The fund shall employ proactive information disclosure and effective communication means including the use of ICT; Clause 8 The national government has a mechanism, resources and system for This amendment undermines separation of powers. PMCs are should be democratically elected by the citizens. It is curious to note that parliament does not want values as entailed in the constitution to guide implementation of the fund. Fund contravenes public finance management provisions 5

6 8. (1) A portion of the Fund, equivalent to five per centum (hereinafter referred to as the "Emergency Reserve") shall remain unallocated and shall be available for emergencies that may occur within the Constituency. (2) The Constituency Committee shall determine the allocation of the emergency reserve in accordance with the Act. (3) "Emergency" shall be construed to mean an urgent, unforeseen need for expenditure for which it is in the opinion of the committee that it cannot be delayed until the next financial year without harming the public interest of the constituents. 8A The project management committee shall set aside sum not exceeding five per centum of the total allocation for the project to cater for the administration expenses of the project 8B The sums set aside under section 8 and 9 shall be properly accounted for, and proper books of accounts shall be kept, and returns made to the Constituency Committee for that constituency on how the sum has been used. dealing with emergencies. There is no justification for the national government to maintain an emergency reserve for each sub-county through fund. Further, PFM regulations provide that a maximum of 3% and not 5 % of a public fund allocation to be used for administrative purpose. and further duplicates existing measures to counter emergencies thus resulting to imprudent use of resources contrary to article 201 of the Constitution. Delete this section 8 (1) and (2) on emergency reserve Composition of the Board Clause 13 Composition of the board shall comprise the Principle Secretary of ministries of devolution and planning, finance, education, security, sports and environment. The Board shall have an equal number of members nominated by organizations representing professionals, business, faith based groups, civil society, women, youth, persons with disabilities, the elderly. The bill has moved away from representative composition of the board (CDF Act 2003, 2007) to a direct nomination process. This has undermined public participation and accountability in the management of the fund. We recommend that the previous process of appointments to the board be used with the following amendment. This sort of composition is not representative and undermines the principle of collaborative governance 6

7 The Act shall provide guidelines for the conduct of the board to ensure its accountability and transparency The functions of the Board Clause 14 THAT Clause 14 of the Bill be amended as follows (a) by deleting paragraph (d). (b) by inserting the following to receive and discuss annual reports and returns from the constituencies; ensure the compilation of proper records, returns and reports from the constituencies; to ensure prudent management of the Fund; receive and address complaints and disputes and take any appropriate action; to ensure the compilation of proper records, returns and reports from the sub-county to ensure timely submission to Parliament of various returns, reports and information as required under the Act; Later in the act the board should be given powers of sanction; the board may withhold sending funds to any sub-county in breach of the requirements of the Act; The board shall ensure transparency in the manner in which it enforces sanctions;. The board shall publish the status of disbursements to sub-counties and indicate those under sanctions and reasons for such sanction. The clause provides the centralization of national government services contrary to Article 6 (3) of the Constitution, which provides for the decentralization of national public services. The projects should be approved at the sub-county level by the respective national government organs or administrative structures while the Board should only confirm that the projects approved conform to the requirements of the Act. The coordination of projects across the sub-counties should be carried out under the mechanisms established for the coordination of national government service delivery under the National Government Co-ordination Act, No. 1 of The bill lacks accountability mandates for the board. It is curious to note that the national assembly does not want the board to ensure that there is prudent use of resources. 7

8 Removal of Board member Clause (a) Insert words or Article 232 as it may apply. CEO of the Board clause (2) (b) No persons shall be appointed under this section, unless such person has at least ten years experience in the relevant field (c) Has served in a senior management position for a minimum period of five years Clause 17(a) cites Chapter Six. However, this chapter only applies to state officers. Chapter Six would bind principle secretaries, and members of the Board drawn from the public would be subject to the Article 232 on public officers. The bill leaves too much discretion to the Board on this important position. The bill should clearly spell out the mandate of the CEO and empower the office to perform. As it is there is lack of specificity on what ethical principles the board members should adhere to The provisions on the functions of the CEO are inadequate. Further, the amendments passed by parliament are discriminatory to young competent professionals. (2) The CEO shall serve as the accounting officer for the fund. The fund CEO shall- (a) supervise and control the administration of the Fund; (b) prepare annual budget and such plans for better administration of the Fund to be approved by the Board; (c) with approval of the Board, impose conditions or restrictions on the use of any expenditure arising from the Fund; (d) cause to be kept proper books of account and other books and records in relation to the Fund as well as to all the various activities and undertakings of the Fund; (e) prepare, sign and submit to the Board for transmission to the 8

9 Auditor-General in respect of each financial year and within three (3) months after the end thereof, a statement of accounts relating to the Fund in accordance with the Public Audit Act, 2003 and in such details as the County Treasury may from time to time direct; (f) furnish such additional information as may be required for examination and audit by the Auditor-General or under any law; and designate such staff as may be necessary to assist in the management of the Fund. Clause 20 The clause has been amended by inserting the following clause: 20A The constituency committee shall participate in the annual appraisal of the officer of the board seconded to the constituency based on a criteria developed by the Board Clause 21 Expenditure of the board 21 (1) The expenditure for running the Board and related purposes shall be set aside at the beginning of the financial year and not more than five per centum of the total allocation to the fund in the financial year may be used for this purpose, the annual budget of which shall be approved by the Cabinet Secretary with the concurrence of the National Assembly Committee Clause 21 (2) provides that the personal emoluments of Government officer working or involved in the management of the fund shall be provided for under the recurrent expenditure of government but any other emoluments or payments to the officers from the fund shall be determined by the Cabinet The PFM regulations provide that administrative costs of public funds should not exceed 3% A member of parliament role in approval of the board s budget is an avenue of parliament to control the board. This proposal is an attempt to intimidate members of the board in the constituencies. Already, members of parliament approve members of the constituency committee Besides the express violation of public finance management principles, there is further violation on the principle of separation of powers. 9

10 Secretary in consultation with the Salaries and Remuneration Commission 24. (1) The number of projects to be included in the Constituency Projects Submission Form specified in the First Schedule shall be a minimum of five and a maximum of twenty-five f6r every constituency in each financial year. Identification and submission of projects 25. (1) The chairperson of the, Constituency Committee shall, within the first year of the commencement of a new Parliament and at least once every two years thereafter, convene open forum public meetings in every ward in the constituency to deliberate on development matters in the ward and in the constituency. (2) The Constituency Committee shall deliberate on project proposals from all the wards in the constituency and any other projects which the Constituency Committee considers beneficial to the constituency, including joint projects with other constituencies, consider the national development plans and policies and the constituency strategic development plan, and identify a list of priority projects, both immediate and long,term, out of which the list of projects to be submitted in accordance with the Act shall be drawn from. (3)The list of proposed constituency based projects to be covered under this Act shall be submitted by the Constituency Committee Board 1. CLAUSE 25 THAT Clause 25 of the Bill be deleted and substituted as follows Sub-county Development Plan 25. (1) Each sub-county Committee shall prepare a 3 year sub- Parliament deleted this sub-section to remove limitations on the number of projects the fund should implement in a constituency. The bill aligns itself to the electoral calendar and in so doing risks breaching the principle of separation of powers. There are only so many number of projects that can be effectively implemented with community participation and oversight within a constituency. The bill anchors the responsibility of convening public forums to the chair as a person opposed to the office of the chairperson. This then beats the purpose of setting up the institution. This clause is in breach of the principle of separation of powers to the extent that it creates linkages between service delivery and the term of parliament. 10

11 for county Development Plan for the national government functions provided under section 5. (2) The sub-county development plan shall provide among others (a) development needs of the sub-county related to the national government functions; (b) the development interventions; (c) priority development projects that may be funded under this Act; (d) the cost estimates of each project; and (e) any other matter as may be prescribed. (3) The sub-county development plan shall (a) be aligned with the relevant national development policies and plans related to specific national government functions; and (b) be the basis of funding of projects under this Act. (4) The relevant national government officer or organ responsible for the specific national government functions at the sub-county level shall, in consultation with the sub-county committee ascertain that the projects identified under section 26 comply with the requirements of this Act before their inclusion in the sub-county development plan. (5) The sub-county committee shall upon the completion of the sub-county development plan submit the plan to the Board 2. INSERTION OF NEW CLAUSE 26 AND 27 THAT the Bill be amended by inserting a new clause 26 and renumbering the Bill accordingly as follows In order to ensure that all development projects by the national government are aligned and coordinated, there is need to develop a sub-county development plan to guide the development. 11

12 Sub-county development meetings 26 (1) The sub-county committee shall within six months upon the coming into force of this Act and at least once every year thereafter, convene open public forums and meetings in each Ward for the purposes of deliberating on development matters in the Ward related to the implementation of this Act and preparation of the sub-county development plan. (2) The plan shall identify community priorities under respective sectors; (3) The national government officers in responsible for development or economic planning and any officer responsible for specific national or county government functions related to the functions described under section (5) shall attend the meetings held under this section and provide advice to the residents on development planning and projects viability (4) sub-county development plan will be shared with the county government through the County Government Intergovernmental Forum established under Section 54 of the County government Act 2012, for purposes of harmonization and coordination. Project implementation clause (1) Projects under this Act shall be implemented by the project management committee appointed in accordance with, with the assistance of the relevant department of Government and all payments through cheques or otherwise shall be processed and effected in accordance with government regulations for the time being in force The development planning for the purposes of the Fund should not be linked to the term of Parliament. The Fund is established for the purposes of implementing the national government functions in terms of services delivery. In line with the principle of separation of powers, the Fund should be delinked from the term of Parliament. It is necessary to provide for the collaboration of the national and county government at the local level for the purposes of development planning since some of the functions are to be implemented within the concurrent jurisdictions and others are interlinked such as pre-primary and primary schools. The bill should provide functions of the project management committees, which stress on accountability. The framework still fails to provide for elaborate functions of the PMCs The functions of the PMC include: 12

13 i. Monitoring of project implementation ii. Reporting of progress to the monitoring group iii. Representation at site meetings iv. Supervision of contractors v. Supervision of procurement process vi. Review of projects as fit for purpose Development of community ownership 42. (1) A person rnay present a petition to the Board for the dissolution of a Constituency Committee setting out Committee the alleged facts constituting any one or more of the following grounds for dissolution- (a) serious violation of the Constitution or any other law including a contravention of Chapter Six; (b) gross misconduct whether in performance of the member's or office holder's functions or otherwise; (c) physical or mental incapacity ' to perform the functions of office; (d) active involvement in the politics (e) incompetence; (f) bankruptcy; or (g) any other cause as may be deemed justifiable. 45A Funding of social security programmes Functions of the Sub-County development committee In the amendments paragraph c and d was deleted There are existing measures in the executive to support persons in need of social security. Financing this would amount to duplication of effects and imprudent use of resources Deletion of paragraph d creates a loophole, which may result to persons with political ambitions to use their position in the committees to gain political mileage. Instead, the provisions should specify that a person must declare intention to run for office and relinquish his/her membership in the committee a year prior the elections. This duplication amounts to imprudent use of public resources. Functions of the committee as provided in the framework are inadequate. 13

14 The functions of the Sub-County committee are; a) Approving the sub-county development action plan; b) Through consultations with technical departments making budget allocations for implementation of the sub-county development action plan; c) Oversee establishment of Project Management Committees Monitor implementation of sub-county action plan. Fund Manager (2) The fund manager shalla. supervise and control the day to day administration of the Fund; b. cause to be kept proper books of account and other books and records in relation to the Fund as well as to all the various activities and undertakings of the Fund; c. prepare, sign and submit to the Board such reports as are required under the Act; furnish such additional information as may be required for examination and audit by the Auditor-General or under any law; and Reporting s The CEO shall, within three months after the end of each financial year prepare a report which shall include Functions of the fund manager need to be augmented with the proposals made herein. The reporting proposals need to be considered. (a) the programs funded through the Fund; (b) the beneficiaries programs supported under the Fund; (c) the results of the programs implemented under these Regulations; (d) the challenges faced in the implementation of these Regulations and 14

15 the proposed mitigation measures; (e) the level of public participation in the implementation of this Act and any other matter as may be required by the Board. Transparency & Accountability The bill needs to provide transparency provisions. Access to information is a fundamental right as recognised under Article 35 of the Constitution of Kenya, National government as well as county governments are required to ensure and facilitate the enjoyment of this right by civilians. The bill shall provide for: i. Access to project lists, fund reports and other information to citizens upon demand ii. Use more ICT through the website, social media, SMS, twitter, etc. iii. Establish notice boards in areas accessible to the citizens. iv. Communication shall be tailored to meet the needs of persons with disabilities, older members of the society and the less educated residents v. Ensure all projects have development project site announcements. 4a) Procurement transparency There shall be a robust disclosure regime by the procuring entities. To begin with, the procuring entities shall prepare a procurement plan indicating procurement timelines, requirements, special conditions, budgets, etc. These plans shall be made available to the There are no TAP principles in the framework. 15

16 Transitional Provisions s The bill should provide for the disbandment of the present CDF board, in light of the Auditor General remarks that 30 constituencies are not able to account for over 200 million after the CDF expenditure audit; A handover plan should be prepared. A transition stakeholder committee should work with the ministry to oversee this process. This should include members of civil society private sector, etc. A handover period of four months should be given for the present board to compile the necessary reports and handover information to a new board. Stern sanctions should face any member public. Additionally key procurement information shall be made available to the public including i. Bill of quantities for the project ii. List of tenderers indicating: Full name and description of the tenderer The tenderers postal and physical addresss, telephone number and other contact details iii. Tender notice iv. Tender opening register v. Tender Committee minutes vi. Technical evaluation report vii. Final contract For CDF to deliver on its promise of reducing the levels of poverty in the local community, then the transition of the fund must ensure that mistakes made in the past are not carried into the future. Further, a thorough social audit of the project implemented by the fund has to be undertaken in order to increase the impact of CDF going forward by identifying the mistakes of the past and The transition provisions in the bill are inadequate 16

17 who destroys information or falsifies records. We also note that the CDF Board is also not properly constituted as the Chief Executive Officer is holding office in an acting capacity. Further an audit report prepared by the Auditor General s office in 2013 raised substantive queries about the financial probity of the CEO; We call for a nationwide social audit of all CDF projects to generate an informed transition report. Reports of the social audit to be shared with the Auditor General and EACC for investigation and prosecution. A social audit should be the first agenda item of the new board. It would identify abuse cases and refer them for remedial action holding to account persons responsible for mishandling the fund. For further information, please contact Rachael Gichuki or Caleb Gichuhi at P.O. Box Nairobi Tel: / / info@tisa.or.ke/ 17