Public Finance

Part I—Principles and framework of public finance

1. 201Principles of public financePublic finance must be open and accountable, with public participation. Taxes must be shared fairly, revenue shared equitably between national and county governments, and spending must help marginalised groups and areas. Public money must be used prudently, and benefits shared fairly across generations.
2. 202Equitable sharing of national revenueRevenue raised nationally must be shared fairly between national and county governments. Counties may also get extra allocations from the national government's share, with or without conditions.
3. 203Equitable share and other financial lawsFair sharing of revenue must consider things like national interest, public debt, county needs and abilities, and disadvantaged areas. Counties must get at least 15% of all revenue the national government collects, calculated from the latest audited accounts.
4. 204Equalisation FundAn Equalisation Fund receives half a per cent of national revenue each year. It is used only for basic services such as water, roads, health facilities and electricity in marginalised areas. The Article lapses after twenty years unless Parliament extends it.
5. 205Consultation on financial legislation affecting countiesWhen a Bill on revenue sharing or county finances is published, the Commission on Revenue Allocation looks at it and may make recommendations. These are tabled in Parliament, and each House must consider them before voting.

Part 2—Other public funds

1. 206Consolidated Fund and other public fundsAll money raised by or for the national government goes into the Consolidated Fund, with limited exceptions allowed by law. Money may leave it only as the Constitution or an Act of Parliament allows, and only with the Controller of Budget's approval.
2. 207Revenue Funds for county governmentsEach county has a Revenue Fund for all money it raises or receives, with limited exceptions allowed by law. Money may be withdrawn only as the law or county legislation allows, and only with the Controller of Budget's approval.
3. 208Contingencies FundA Contingencies Fund exists, run under an Act of Parliament. The law must allow advances from it when the finance Cabinet Secretary is satisfied there is an urgent, unforeseen need for spending with no other authority.

Part 3—Revenue-raising powers and the public debt

1. 209Power to impose taxes and chargesOnly the national government may impose income tax, VAT, customs duties and excise tax. Counties may impose property rates, entertainment taxes and others Parliament authorises. Both may charge for services. County taxes must not harm national economic policy or the movement of goods and labour.
2. 210Imposition of taxNo tax or licensing fee may be imposed, waived or changed except as legislation provides. Any waiver must be recorded with reasons and reported to the Auditor-General. No law may exempt a State officer from tax because of their office or work.
3. 211Borrowing by national governmentParliament may set the terms on which the national government borrows and require reports. If either House asks, the finance Cabinet Secretary must, within seven days, give a committee details of any loan or guarantee, including total debt and how the money is used.
4. 212Borrowing by countiesA county government may borrow only if the national government guarantees the loan and the county assembly approves it.
5. 213Loan guarantees by national governmentAn Act of Parliament sets the terms on which the national government may guarantee loans. Within two months after each financial year, the national government must publish a report on the guarantees it gave that year.
6. 214Public debtPublic debt is paid from the Consolidated Fund, though an Act of Parliament may charge some or all of it to other public funds. It means obligations from loans and securities raised or guaranteed by the national government.

Part 4—Revenue allocation

1. 215Commission on Revenue AllocationThis Article creates the Commission on Revenue Allocation. It has a chairperson, members nominated by parties in the National Assembly and Senate, and the Principal Secretary for finance. Nominated members cannot be MPs and need extensive financial and economic experience.
2. 216Functions of the Commission on Revenue AllocationThe Commission on Revenue Allocation recommends how national revenue should be shared between national and county governments and among counties. It also advises on county finances and publishes criteria for identifying marginalised areas.
3. 217Division of revenueEvery five years the Senate decides, by resolution, how revenue is shared among counties, after consulting the Commission, governors and the public. The National Assembly can amend or reject it only by two-thirds; if it does not vote within sixty days, it stands approved.
4. 218Annual Division and Allocation of Revenue BillsAt least two months before each financial year ends, Parliament must receive a Division of Revenue Bill and a County Allocation of Revenue Bill. Each comes with a memorandum explaining the proposed sharing and any departures from the Commission's recommendations.
5. 219Transfer of equitable shareA county's share of national revenue must be transferred to it without undue delay and without deduction, except when the transfer has been stopped under Article 225.

Part 5—Budgets and spending

1. 220Form, content and timing of budgetsNational and county budgets must estimate revenue and spending, separating recurrent from development spending, and propose how to finance any deficit and any new borrowing. National law sets the structure and timing of county plans and budgets.
2. 221Budget estimates and annual Appropriation BillAt least two months before the financial year ends, the finance Cabinet Secretary submits spending estimates to the National Assembly. A committee reviews them and must seek public views. Approved estimates go into an Appropriation Bill authorising withdrawals from the Consolidated Fund.
3. 222Expenditure before annual budget is passedIf the annual Appropriation Act is not in place by the start of the financial year, the National Assembly may authorise withdrawals to keep services running. The total may not exceed half of the tabled estimates.
4. 223Supplementary appropriationThe national government may spend unappropriated money if a budget is insufficient or money has been taken from the Contingencies Fund. Parliament's approval must be sought within two months, and spending is capped at ten per cent of the year's appropriation unless Parliament approves more.
5. 224County appropriation BillsEach county government prepares and adopts its own annual budget and appropriation Bill, based on the Division of Revenue Bill, in the form and procedure set by an Act of Parliament.

Part 6—Control of public money

1. 225Financial controlParliament must legislate for expenditure control and transparency. The finance Cabinet Secretary may stop transfers to a public body only for serious or persistent breaches, for up to sixty days, with Parliament's approval within thirty days. At most half a county's funds may be stopped.
2. 226Accounts and audit of public entitiesLaw must provide for financial records, audits and an accounting officer in every public entity, who answers to the National Assembly or county assembly. The Auditor-General audits all governments and State organs. Anyone who directs unlawful use of public funds is liable for the loss.
3. 227Procurement of public goods and servicesState organs must buy goods and services through a system that is fair, equitable, transparent, competitive and cost-effective. An Act of Parliament may provide preferences for disadvantaged groups and sanctions against poor-performing contractors, tax defaulters and those guilty of corrupt practices.

Part 6—Financial officers and institutions

1. 228Controller of BudgetThe Controller of Budget is nominated by the President and appointed with National Assembly approval, for one eight-year term. The Controller approves withdrawals from public funds only if authorised by law, and reports to Parliament every four months on budget implementation.
2. 229Auditor-GeneralThe Auditor-General is nominated by the President, appointed with National Assembly approval, and serves one eight-year term. Within six months of year end the office audits governments, courts, commissions, parliament and the public debt, reporting whether public money was used lawfully and effectively.
3. 230Salaries and Remuneration CommissionThis Article creates the Salaries and Remuneration Commission. It sets and reviews pay and benefits of all State officers and advises on pay for other public officers, keeping the public wage bill sustainable, rewarding performance and acting transparently and fairly.
4. 231Central Bank of KenyaThe Central Bank of Kenya sets monetary policy, promotes price stability and issues currency. It is not under anyone's direction or control in doing so. Notes and coins may show Kenyan images but never the portrait of any individual.

Summaries and answers are a plain-English guide written by Iam254, not legal advice. The official text is what counts. Official text: Constitution of Kenya, 2010, Kenya Law (National Council for Law Reporting), legislation as at 3 September 2010. It has not been amended since.