PFM blog

What can South Africa learn from Kenya on fiscal transparency and participation?

6 March 2014
Images Blog What Can South Africa Learn From Kenya On Fiscal Transparency And Participation

Hence, Kenya is at an important juncture of strengthening its PFM system. In order to strengthen fiscal transparency and participation, one of the key challenges looking ahead for Kenya will be to reinforce programme based budgeting and move away from line item budgeting. This will involve refining existing budget programmes for departments and publish budgets and expenditure by programme, sub-programme and economic classification items. The Kenyan National Treasury will also need to distinguish budget programme structures from organisational structures and publish non-financial information by programme. Capacity may need to be enhanced in order to fully implement programme based budgeting.

A second key focus of Kenya in the coming years will need to be improving the accessibility and availability of budget information, by for example, publishing all relevant budget documents on the day of the budget (detailed, timely, reliable, comprehensive, consistent information), publishing expenditure, revenue and non- financial information for state corporations and enhancing information published in the Citizen’s budget.

In South Africa, a lot of this information is already being published on a regular basis. The programme based budget information is published, including programmes, sub-programmes and economic classification expenditure items for each department. Non-financial information for each programme within a department and financial and non-financial information for public entities are published in budget documents. All budget documents and related databases are made available online on the day of the budget. In-year expenditure reports are published and presented to legislature on request. The past year’s annual report, including the Auditor General’s report is available 6 months after the end of the financial year.

In Kenya, line item and some high level programme budgets for sectors are published, with some non-financial information. Sector expenditure review reports are made available to the public online during budget preparation and the budget strategy paper is also available. In-year expenditure reports for national and county government are also published on quarterly basis. However, the past year’s annual report has been available more than 12 months after the end of a financial year and the National Audit Office report available more than 12 months after the end of a financial year. Also, in 2013, only the budget speech and statistical annex, budget highlights were available online on the day of tabling the budget.

While transparency is stronger in South Africa than in Kenya, the South African Treasury can learn from Kenya regarding the progress it has made in institutionalising public participation in the budget process. In Kenya, public participation processes are institutionalised in the Constitution and PFMA, civil society is active and engages with government on budgetary issues and the public participation process is governed by 10 principles, formulated by civil society. Sector working groups have also been established, whereby civil society is invited to make recommendations on allocations.

Public hearings are held by Parliament and the Parliamentary Budget Office (PBO) also engages with civil society on budgetary matters. In comparison, in South Africa, there are no strong legislative requirements and only a few formal processes for public participation (for example, parliamentary budget hearings). Some civil society organisations are interested in sector specific budgetary issues, in specific provinces but generally are not as capacitated and active in engaging in budgetary issues.

South Africa needs to establish formal public participation processes, such as a process to identify relevant civil society organisations to participate in the budget process.

South Africa can also investigate how it can help build capacity of civil society and it can consider regulating the participation processes i.e. timing, feedback process, and incorporating public inputs into budget documents.

Kenya’s effective PBO is also an example that South Africa can follow. Kenya’s PBO is fully established and operational and has strong capacity and networks to support its advisory role to parliament on the budget. It is also a purely technical office and hence non-partisan.

Finally, while Kenya’s Integrated Financial Management Information System (IFMIS) is currently being “reengineered”, it is a route that South Africa has not yet taken and could consider in the future.

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