OCHIDO: Why new NGOs law should be implemented

The Public Benefits Organisations Act, which seeks to repeal the NGOs Co-ordination Act of 1990, was enacted in 2013. However, the law has never been implemented despite multiple court orders for its enactment.

Strangely enough and despite its disinclination to implement the PBO Act, the State sponsored amendments to the Act through Section 96 of the Security Laws (Amendment) Act 2014. It also appointed a task force to review the law.

In Petition Number 351 of 2015 (Trusted Society of Human Rights Alliance vs the Cabinet Secretary Devolution and Planning and Others), the High Court ordered the Cabinet Secretary to commence the PBO Act within 14 days. In his ruling, Justice Joseph Onguto found that the Cabinet Secretary, by failing to appoint a commencement date for the PBO Act within a reasonable time, had not only been derelict in duties, but had also acted in a manner inconsistent with the Constitution and contrary to the expectations of Parliament. The judge found that the CS had no powers to appoint a task force to review the PBO Act and had acted ultra vires.

On May 13, 2017, the High Court ordered the Cabinet Secretary for Interior to publish in the Gazette, within 30 days, a day for the commencement of the PBO Act, failure to which he would be jailed for contempt of court. The judge noted that the government was already in contempt for failing to implement a similar ruling eight months earlier. The Cabinet Secretary is yet to act on the court orders.

So, what is it about the PBO Act that has made it such an anathema? What makes it so objectionable and the NGOs Act more preferable?

The task force on the PBO Act set up in 2015 by then Devolution Cabinet Secretary Anne Waiguru and which the High Court has declared unlawful, did not make any significant findings to discredit the law, nor did it make any major recommendations to materially review it. The only remarkable recommendation was the rather outlandish proposal that a percentage of donations received by PBOs be given to the Public Benefits Authority, a government body established under the Act, to ostensibly ensure effective regulation.

We undertake a comparative analysis of the PBO Act and the law it seeks to replace the NGOs Act by subjecting the two laws to key principles in PBO regulation. These are: Registration procedures, governance and liabilities of the board of directors, and regulation, enforcement and enablement.

Registration procedures: The PBO Act’s objective is to increase accountability and improve governance among organisations. It makes elaborate provisions for issues that must be covered in the constitution of a PBO as per Section 8(4). The PBO Act also provides for relatively more accountability and transparency in the registration process by outlining the circumstances under which registration may be denied. Secondly, it sets timelines for the regulator to communicate its decision to the applicant and thirdly, provides an administrative review mechanism through an independent quasi-judicial PBO Disputes Tribunal. This is in opposition to the NGOs Coordination Act which gives wide discretion to the regulator. The NGOs Act does not provide any timelines for the regulator to register an NGO. In terms of the Act, an aggrieved NGO can only appeal to the Cabinet Secretary or go to court, which can be time-consuming and costly.

Structure, governance and liabilities of the board of directors of public benefit organisations: Public Benefit Organisations are governed by a board of directors who are expected to be independent in their decision making. PBOs are consequently private in their governance but their accountability is public.

The NGOs Act is limited in its provisions on the governance responsibilities and liabilities of directors. The existing provisions in the regulations only prescribe what must be contained in the constitution of an NGO. The Act does not explicitly articulate the duties and liabilities of NGO directors who under common law have accountability for the running of PBOs. The effect of this inadequacy is that the NGOs Board has tended to obviate these shortcomings through administrative fiat — the legality of which is at times doubtful. The PBO Act, while generally retaining the provisions of the NGOs regulations, makes more comprehensive provisions on the structure and governance of PBOs. Nonetheless, while the PBO Act is an improvement on the NGOs Act, it does not adequately address the legal duties, responsibilities and liabilities of the board of directors. It consequently does not give sufficient effect to its objective of encouraging PBOs to maintain high standards of accountability.

Regulation, Enforcement and Enablement: Regulation of PBOs must strike the delicate balance between protecting public interest and providing an enabling environment for PBOs to pursue their charitable purposes. The NGO Act is more geared towards ensuring compliance and less towards enablement. Consequently, it prescribes criminal sanctions for non-compliance even for acts or omissions which could be construed as relatively innocuous. Unfortunately, however, these compliance requirements do not promote accountability by PBOs. The PBO Act does better in this regard. It makes it mandatory for PBOs to account to the government and listed multiple stakeholders. As per Section 25(5), PBOs are obliged upon request to open themselves to scrutiny on a wide range of operational issues. Section 29 (a) makes it mandatory for PBOs to institutionalise internal financial control systems and procedures for proper use of financial resources.

While the PBO Act is not perfect, it offers a better framework for the regulation of PBOs than the NGOs Act. The PBO Act better protects the interests of the public, government, beneficiaries and donors.

Implementation, however, shall require improved capacity and a change in regulatory approach by the NGOs Board, which is expected to transform itself into the Public Benefits Authority. The changes are necessary so that the NGOs Board can meet the key precepts of PBO regulation which require that a regulator be fair, consistent, competent and expert.

The writer consults on public benefits organisations governance and compliance. [email protected]