CDF Act... Loophole in there?

Following Bankelele's comment on my Kudos CDF post, suggesting that the CDF Act needs to be revised to incorporate more governance structures, i quickly dismissed the idea, as in my mind the structures already in place are quite a number and could very possibly become a bureaucratic hinderance to the effective administration of the CDF funds.

However, and to ensure that i not mislead myself (worse still anyone in the kenyan blogosphere), i decided to go back and take a look at the Act and the governance structures in place. Note that my personal comments are in italics.

These are the structures:

1. National Management Committee which consists 4 Permanent Secretaries, Clerk of Parliament, 8 persons appointed by the Minister and qualified in certain specified fields, an Administrative Officer and 8 persons from a list of public organisations.

• This Committee in a nutshell ensures proper management of the CDF Fund.

• Importantly, every disbursement from the Fund must be approved by the National Committee; which raises the question whether they are able to effectively ensure proper management of the Fund in all constituencies.

• Positively however, this Committee can impose reasonable restrictions on any constituency that misuses funds.

2. Constituency Development Committee is constituted for each constituency and consists of the MP, 2 Councillors, 1 District Officer, 2 persons representing religious organisations, 2 men representatives, 2 women representatives, 1 youth representative, 1 NGO representative.

• The CDC deliberates project proposals received from all locations in the constituency & joint projects with other constituencies, and lists them in priority for submission to Parliament
• The CDC is chaired by the MP unless he opts out.

3. District Projects Committee is convened for every district and consists of the MPs within that district, Chairmen & Mayors of local authorities, District Commissioner, District Development Officer, Chairpersons of CDC (MP of each constituency represented) and District Accountant.

• The DPC's main function is to coordinate implementation of projects financed tho' the Fund
• Each MP for each constituency represented tables a list of projects for his/her constituency before the DPC
• The DPC examines the list of projects and ensures no duplication where its prudent to combine efforts on projects
• The DPC, where there is no duplication, shall recommend the list of projects for onward transmission to the Clerk thro' the individual MPs.
• Its noteworth, that the DPC is not entitled to withhold its approval for any grounds besides duplication, thereby reducing to that extent their governance function.

4. Constituencies Fund Committee is a Parliamentary Select Committee which consists of a chairman and not more than 10 other MPs who are not Ministers/ Assistant Ministers.

• The CFC considers project proposals received from all constituencies and advises the Clerk of Parliament on which projects shall be submitted to the Minister for inclusion in the annual Govt. budget of a particular financial year. Consider the number of constituencies and the number of projects that this CFC must approve- we must wonder whether they have the necessary capacity.
  
• Project proposals must go thro' the approval process and reach the Clerk before the end of February of each year to enable the Minister accomodate the projects in the annual budget

What do you think about the governance structures. Are they adequate? See the Act in full here.

Kudos to CDF Guardians

The report on the utilisation of CDF funds in several consitituencies is fairly remarkable with particular emphasis on Bahari Constituency. What stood out for me as worthy of applause is the investment of KShs 1M to facilitate capacity building of the local leadership (undertaken by ActionAid); thereby ensuring that the remaining KShs. 59M available for the constituency is utilised efficiently and effectively to reap maximum and longterm results.

Notable too, is the laudable work of the Starehe CDF Committee which has catered for inter alia the traders (built trading sheds), the Rescue Dada Rehabilitation Centre (former street girls) and Mji wa Huruma (aged) albeit to the paltry collective sum of KShs. 300,000. The Committee's Patron and Area MP, Maina Kamanda does not normally command excess respect from me(just like many of our politicians), but his advise to other MP's and Patrons was uncharacteristically wise: "the secret of the success is to allow the constituency committee to function independently without political interference".

This dude Paddy on the other hand(!) needs a private seminar dedicated totally to him and his misconceived understanding of his social responsibility to his constituents. Its not everyday that you find a popularly elected official abusing powers of his office and going public about it. One positive attribute that this situation shares with the Artus Saga, is that we get to see whether there's anybody out there supervising the administration of national resources and national security and ready to take action in the event of any administrative breaches.

If Hon. Eng. Karue (Chair of the Constituencies Fund Committee) doesn't cry foul, we shall be concerned about the possibility of other suspect dealings with CDF resources.

Kenya Budget (2006/2007)

I stumbled upon a copy of KRA's Staff Advice Memo on the effect of Kimunya's 2006/7 budget to Kenya's tax laws. Some interesting items caught my eye:

1. Turnover Tax
Kimunya introduced a tax targeted at SME's and other organisations that have annual turnover of less than 5m. The Govt. will henceforth levy a 3% tax on their gross receipts. The logistics on this is still underway.

2. Road Maintenance Levy
Kimunya has increased this from the previous 5.8 shillings per litre to 9bob per litre. Quite a heavy burden on car owners and eventually on every user of processed items and any item that requires transportation in its constituent states or final products. The Minister has done away with issue of Road Licence Fee to cushion the car owners.

3. VAT on services provided by Kenswitch & Pesa Point
Kimunya has clarified that VAT will be levied on the services (including ATM services) rendered by the above companies. Am not certain whether that was in place before the 2006/7 Budget, but it it wasn't- this will surely see a rise in the cost of atm transactions. I currently pay 40 per withdrawal from my Kenswitch atm... i might just have to store that cash under the pillow, or at NSE!

4. VAT(Exemption) on Kenyan Entertainment

Kimunya has put a smile on our local artists' faces by providing vat exemption where entertainment is provided wholly by Kenyan talented people. (If your not talented, you pay VAT... just kidding!) This is intended to promote growth of the local entertainment industry. Kudos there!

5. VAT Zero rating on Computers & accessories thereto
Following the Govt's commitment to support the ICT sector, Kimunya has taken this further step. I see more Kenyan's carrying laptops on the shoulders! I've seen some mobile phones that have MS Office... i wonder if Kimunya could make those cheaper as well!

6. Napkins, Feeding Bottles, Wheat.... Zero Rated
Am still not convinced that the move on napkins and feeding bottles will have any serious impact on anyone's life. The guys really in need of help and who use these things go to shop at Toy and Gikosh for their Napkins and Feeding Lining. Well... maybe Bottles, but still- hardly felt. (Its probably the ignorant bachelor in me speaking!)
On the wheat- and even the rest, i think the fuel increase will undo the good intended by these gifts from Kimunya.

7. ETR
Kimunya has added provisions making it more difficult for anyone refusing to buy and utilise the ETR from surviving in Kenya's market.

All in all, as i ain't an economist, i shan't purport to make any further criticism to what i think was a fair attempt by Kimunya.