State agencies, which collect about Sh400 billion in fees on government services annually, face increased scrutiny in proposed changes by lawmakers targeted at improving accountability in the expenditure of public funds.
A committee report tabled in the National Assembly has signaled a change in the law governing how ministerial appropriations-in-aid (A-i-A) are collected and spent by various organs such as the Department of Immigration and Citizen Services.
The Budget and Appropriations Committee has raised concern over a growing trend where agencies underestimate the revenue they are likely to collect when the government budget is being prepared, only to raise the target in the year.
Ministerial A-i-A are revenues collected by various Government Ministries, Departments, and Agencies when discharging services and spent at source after appropriation by lawmakers.
Some of A-i-A receipts are the Road Maintenance Levy charged at Sh25 per litre of petrol and diesel, Railway Development Levy at 1.5 percent of value of imports, Housing levy at 1.5 percent of gross personal earnings matched by employers, Petroleum Development Levy and University Fees.
“The Committee noted with concern that A-i-A comprise a substantial component of financing for national government amounting to approximately Sh400 billion in the proposed budget for the financial year 2024/25,” the Committee, led by Kiharu MP Ndindi Nyoro, said in the report.
“However, agencies with a mandate to collect the A-i-A have continued to underestimate their A-i-A targets during budget approval, only to seek an upward review during supplementary estimates. This continues to reduce accountability and prudence in the use of A-i-A which is a form of revenue collected from taxpayers”
Treasury is yet to officially publish revenue in A-i-A for the year ended June 2024, but available data for nine months through March shows collections of Sh332.66 billion against a target of Sh285.68 billion — an over-performance of Sh46.98 billion.
The budget team has, as a result, asked that the National Treasury to prepare and submit to the House, a comprehensive report on the sources and expenditure of all A-i-A for the National Government by ministry, department, and agency by December.
“The report should also contain practical proposals for a review of legal frameworks governing the collection and usage of various A-i-A to provide an over-arching legal framework for governing this critical source of revenue,” the report recommends.
“The underestimation of A-i-A during budget approval equally increases the budget deficit in the fiscal framework which occasions additional borrowing.”
This has come at a time when the William Ruto administration has increased focus on cash in the accounts of commercial State Corporations and Semi-Autonomous Government Agencies (SAGAs).
Chief executives of SAGAs such as the Communications Authority of Kenya, Capital Markets Authority, and Central Bank of Kenya are required to surrender as much as 90 percent of surplus money, while commercial ones like Kenya Electricity Generating Company and Kenya Power have been directed to wire 80 percent of net profits.
