In April 2017, the Senate put Nairobi Governor Evans Kidero to task for failing to account for collections in local revenue worth KSh10 billion. The Public Accounts and Investments Committee of the Senate reported that the County Government of Nairobi deposited only KSh1 billion out of KSh11 billion of the county revenue in the County Revenue Fund (CRF) as required by law.
Governor Kidero challenged the interest of the Senate in the county’s local revenue. He said that the Senate had overstepped its mandate. He added that the role of overseeing the county’s local revenue was a preserve for the County Assembly.
However, the Senators dismissed the governor’s claim. They said that they have a say in the revenue county governments generate. This is because they are the custodians of the interests of the counties.
“Don’t think the hands of the Senate are tied when it comes to a county’s own revenue. If so, why is this matter before the Senate committee?” Senator Paul Njoroge (Nominated) asked.
The Committee was following up on audit queries raised by the Auditor General. The queries concerned how the county government spent the funds. The Committee was seeking evidence from the governor to clear the audit queries.
However, does the Senate have the authority to oversee local revenue collections made by the county governments?
Role of the Senate in oversight of revenue
The Constitution of Kenya under Article 96 stipulates the role of the Senate. Article 96(3) specifically states the following–
“The Senate determines the allocation of national revenue among counties, as provided in Article 217, and exercises oversight over national revenue allocated to the county governments”.
Article 217 primarily empowers the Senate to determine the basis for allocating the national share of revenue (equitable share) among the counties. This money is allocated every year to the 47 county governments. This equitable share should not be less than 15% of all the revenue collected by the national government based on the most recent audited accounts of revenue as received and approved by the National Assembly (Article 203).
When it comes to oversight, the Senate can oversee the national revenue allocated to county governments. This is as stipulated under Article 96(3) of the Constitution. The Constitution established two mechanisms that facilitate the Senate’s oversight role. These mechanisms are under Article 228 and Article 229 of the Kenyan Constitution. They are the Controller of Budget and the Auditor General respectively. The two are independent bodies that assist parliament to play the oversight role.
The Controller of Budget should submit reports on how the county governments are implementing their budgets every four months to both houses of parliament. The Auditor General should submit audit reports, in the case of the county governments, to parliament or the relevant county assembly within six months after the end of each financial year (deadline being 31st December).
Petition No.8 of 2014
A petition filed at the Kerugoya High Court expounds on the role of the Senate in revenue oversight.
In the case, the petitioner represented the Council of Governors. They challenged the decision of the Senate to summon nine County Governors and County Executive Members responsible for finance. They were to appear before the Senate to provide evidence and information on county expenditure.
The respondent to the case was the Senate and its clerk. They did not take part in the case or file any response to the petition.
Let us go straight to the areas in the case that touches on the Senate oversight role. The High Court presented several interesting arguments.
First, it ruled that the Senate has the authority to summon the Governors or the County Executive Member for Finance to provide information or evidence on how the county government spent the national revenue allocated to it. Petition No.413 of 2014 reinforced this ruling.
Can Senate oversee counties’ local revenue?
With regard to whether the Senate has jurisdiction over the revenue generated locally by the county governments, the High Court ruled otherwise. The Court ruled that the role of the Senate under Article 96(3) could not be likened to that of the County Assembly under Article 226(2) of the Constitution.
The Court noted that, while the County Assembly has the wider portfolio of oversight over both the revenue generated locally by the county governments and the national revenue allocated to the counties, the Senate’s oversight role is restricted to the national revenue allocated to the counties.
What that means is that the Senate has no authority to oversee the sources of county government revenue in Kenya other than the equitable share. This, in essence, makes the claim by Governor Kidero that the Senate had gone beyond its jurisdiction to be true.
By going after Nairobi County’s local revenue, the Senate overstepped its mandate. It usurped the powers of the County Assembly under Article 226(2) of the Constitution. The Court noted that the Senate and the County Assembly only have a joint oversight role. This role only applies to the national revenue allocated to the counties.