Policy think tank: Counties can double own revenues

It has been 10 years since the Institute of Public Finance (IPF) was established as a public policy think-tank. 

The Standard had a chat with IPF Chief Executive James Muraguri on the decade-long journey, challenges with accountability and the relationship between counties and the National Government on matters of public finance. 

Has IPF lived up to its mandate as it marks 10 years of existence? 

Looking at where we are, we still have a long way to go, but it is not that the goal is elusive. The type of work we engage in, generating evidence for policy and action, is at the heart of the political class. Our work looks at mainly how the government collects taxes and how it spends those taxes in a manner that is transparent, accountable and participatory as provided for in the Kenyan Constitution. 

What milestones has IPF achieved in the last 10 years, and what challenges have you encountered if any?  

We consider ourselves as an SME that is for the public good. We are a public limited company by guarantee, providing evidence for policy and action. As an indigenous non-profit think tank, we have got to a point where we are regarded within both government and non-government circles as a critical voice in public finance. We are respected for our unbiased feedback in matters of transparency and how the government makes decisions on taxes.

Your work, as you have mentioned, requires a lot of political goodwill. How do you win over the political class?

The responsibility of raising revenue or spending money lies squarely with Parliament, according to the Constitution. This means that as a think tank, we have to continuously keep engaging Parliament and providing them with feedback that they need for policy and action.

This essentially means flagship products that we produce like Macro Fiscal Analytic Snapshot or the National Annual Shadow Budget are critical alternatives to what the Executive provides Parliament with. However, it is important to note that we have to continue having this conversation with the political class because they are the ultimate decision-makers when it comes to revenue and spending. 

What positive legal changes and loopholes have you witnessed in the last decade when it comes to public finance?

One of the key things we have to look at is how our legal framework has evolved in terms of participation in public finance. We have had precedent-setting cases made by the High Court on the involvement of citizens that the National Government or county governments cannot wake up and make a decision without involving citizens, for instance, in Kiambu County where the county tabled two documents in one sitting, and they did not indicate one of them was a Finance Bill.

And then they said that was public participation. The citizens took the county to court, and that process was nullified.

That should tell you also how our courts play a critical role in advancing the public participation ecosystem. Further, we have seen the High Court rule on the importance of the Senate in making decisions when it comes to the Budget Policy Statement, for example.  The National Assembly never used to involve the Senate. Those were legal framework weaknesses. 

When it comes to money, the relationship between the State and counties is usually frosty. What challenges do you see between these two levels of government when it comes to public finance?

There is no problem with how money is handled. The biggest question is accountability. The National Government has refused or deliberately delayed the transfer of functions to the counties. For example, you have HIV/AIDS, TB, and malaria functions that need to be at the county level because that is where services are. If that [transfer of functions] was to be the case, we would see the money that goes to counties double from the current Sh370 billion to about Sh500 billion annually.  

What should be done to improve accountability when it comes to the management of public funds?

We need to strengthen public finance management institutions like the Office of the Auditor General (OAG), which is struggling. We need Parliament to also be careful with the OAG because someone has to audit the auditor just like we say citizens have to audit Parliament by asking difficult questions and voting out those who are not performing after every five years.

Parliament can make a strong decision on the OAG and call for an effective audit of counties. We are getting qualified opinions all the time. I don’t think over the last 10 years there is a county that has gotten an unqualified opinion. We need strong oversight institutions and transfer all functions. Money follows functions.

Do we have a gap in the law when it comes to the accountability of public funds?

No, there is no gap. We have refused to strengthen our institutions, playing politics with citizens’ money.

We shouldn’t politicise the war on corruption but let the oversight institutions like the Ethics and Anti-Corruption Commission, Directorate of Public Prosecutions, Directorate of Criminal Investigations, Controller of Budget and OAG be equipped and funded to be able to make the right decisions.