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Budget making process in Kenya : The Standard




NAIROBI, KENYA: The Cabinet Secretary for National Treasury Henry Rotich will unveil a Sh3.02 trillion budget for the period 2019/20 Thursday afternoon.

This year’s budget is heavy on education (Sh473.4 billion), Energy, Infrastructure and Information, Communication and Technology (Sh406.8 billion) and Public Administration and International Relations (Sh270.9 billion) sectors.
Budget policy statement (BPS) on the National Treasury website also shows state prioritises investments in The Big Four plan (manufacturing for job creation, food and nutrition security, Universal Health Coverage, and affordable housing.
The creation of a conducive business environment under all the enablers of the “Big Four” Plan also takes center stage in this year’s budget.

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The 2010 Constitution removed the entire budget making process from the National Treasury.
Members of the public, Parliament, Auditor General, and the Executive among other players are now part of the process in order to ensure checks and balances in the system.
According to Dr David Kabata, Economics and Entrepreneurship lecturer at Kirinyaga University, the budget making process starts in August and goes all the way through to February. “Before the ritual budget reading in every June of the year a lot of background work takes place in its making process,” he says.
“The key stages in the budget making process includes drafting of proposal of a spending plan by the executive, debate and approval by the legislature, implementation of approved budget and monitoring and implementation,” he says.
The first stage in budget making entails the formulation of budget estimates and this is in the hands of the executives. During this stage, what happens is the Treasury will ask for budget estimates from various government institutions and ministries and through that what will come out inform coming with a budget statement.

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The process starts in August through to February, in between Treasury organises public forum meetings where Kenyans air their views on what they think about the budget and areas they want to be funded in that particular budget.
After formulation, the budget goes to the approvals by the parliament. The budget estimates presented by the executive is scrutinised by the parliament looking at the areas to be funded by the national government.
In Parliament, the Budget and Appropriation Committee forwards the proposed areas to different committees for instance the education committee will look at the education estimates, energy the same and so on.
After various committees’ opinion on the allocation, the budget therefore is presented before the parliament by Treasury Cabinet Secretary followed a debate on the same, which normally takes a period of about two weeks.
The implementation of the budget takes effect from the July 1 and this is the third stage of budget making. The executive implements the budget with the Parliament being the oversight body and the auditor general office going through what is happening during the implementation period.

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The government’s financial year is divided into four quarters and the auditor general is expected to give report after every three months about what has been implemented upto the time the year ends.
The Budget Making Process Cycle
Step One: Formulation
The processes involved here are mostly planning and preparation and it is handled by the Executive arms of both national and county governments at this stage. The public should take part in the formulation stage through public participation.
Parts of the formulation stage

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-Integrated development planning for long-term and medium-term
-Planning and determination of the financial and economic policies and priorities
-Making overall estimates of the governments’ revenues and expenditures, in form of Budget Policy Statement (National Government) and County Fiscal Strategy Paper (County Government).
-Preparing the budget estimates and submitting them to the assembly
Step Two: Approval
Parliament (national level) and County Assemblies (county level) are in charge of this stage.  It entails: –

  • Debate on the budget estimates by the parliament and county assemblies.
  • Amendment and approval of the budget estimates after treasury tables them before Parliament and/or the County Assemblies.
  • Enactment of the appropriation law (also known as Approved Budgets) and any other laws required to implement the budgetary proposals.

Step Three: Implementation
The National Treasury is in charge of the implementation stage. Here, the budget proposals passed by Parliament or the County Assemblies are implemented.
Parliamentary oversight also takes place at this point and it involves evaluating and accounting for budgeted revenues and expenditures; reviewing and reporting on those budgeted revenues and expenditures every three months. National and county governments also give trimestral budget implementation reports.
Quarterly budget implementation reports by the Controller of Budget are also documented and submitted at this stage. The national and county governments should also come up with quarterly budget implementation reports which belong to this stage.
Step Four: Audit
This is the final stage of the budget making process, usually handled by the Office of the Auditor General which reviews and reports on the accounts of both national and county governments.
The audit report confirms whether or not both levels of government spent public money legally and effectively.
The reports are then tabled before Parliament and the respective county assemblies; after which both are expected to debate and take appropriate action within three months of receiving the audit report.

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BudgetBudget making processCS Henry RotichNational TreasuryAuditor General

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