budgeting for land reforms: ensuring … for land reforms: ensuring people ... budgeting for land...

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June 2012

BUDGETING FOR LAND REFORMS:

ENSURING PEOPLE’S PARTICIPATION

Hakijamii

June 2012

LINKING THE BUDGET TO POLICY IMPLMENTATION: THE CASE OF THE

LANDS SECTOR

Hakijamii

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Economic and Social Rights CentreGolf Course Commercial Centre, Kenyatta Market

PO Box 11356 – 00100Nairobi, Kenya

In collaboration with

International Budget Partnership820 First Street, NE Suite 510Washington, DC 20002 USA

© 2012 International Budget Partnership

We would like to acknowledge the generous contribution of Kios and Misereor towards the production of this booklet

Hakijamii






We would like to acknowledge the generous contribution of Kios and Misereor towards the production of this booklet

Hakijamii






We would like to acknowledge the generous contribution of Kios (The Finnish Foundation for Human Rights) and Misereor towards the production of this publication

The publishers will gladly consider any request for permission to reproduce part or the whole of this manual with the intention of increasing its availability to those who need it. Individuals or organizations wishing to use any material from this publication

for non-commercial purposes are welcome to do so as long as the source is duly acknowledged. Please address any correspondence to:

The DirectorEconomic and Social Rights Centre (Hakijamii)

Golf Course Commercial CentreKenyatta Market, Nairobi

P O Box 11356, 00100 NairobiTel: +254 (0) 20 2731667 Fax: +254 (0) 20 2726023

Email: [email protected] Website: www.hakijamii.com

Edited by Betty RabarCover design and layout by Peter Wambu

Hakijamii

BUDGETING FOR LAND REFORMS: ENSURING PEOPLE’S PARTICIPATION

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LIST OF ABBREVIATIONS AND ACRONYMS

AG Auditor GeneralAIA Appropriations-In-AidAIE Authority to Incur Expenditure

ARD Agriculture and Rural DevelopmentASF Agricultural Settlement FundBSP Budget Strategy PaperCFS Consolidated Fund ServicesCLB Community Land BoardDLB District Land Board

EALS East African Land Surveyors GAV General Account of VoteGFS Government Financial StatisticsGoK Government of KenyaH/Q HeadquartersIDP Internally Displaced PersonIOU I Owe You

KISM Kenya Institute of Surveying and MappingKshs Kenya ShillingsLAM Land Administration and ManagementMoL Ministry of LandsMP Member of Parliament

LIMS Land Information Management System MTEF Medium Term Expenditure FrameworkO&M Operation and Maintenance (Costs)PAC Public Accounts CommitteePEV Post Election ViolencePIC Public Investments Committee

PGA Paymaster General AccountPMG Paymaster General

PY Project YearRD Refer to Drawer

SFT Settlement Fund TrusteesSida Swedish International Development Agency

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PREFACE

It is difficult to overestimate the significance of land issues in contemporary Kenya. The ethnic clashes that tore the country asunder in 2007/2008 are intimately linked to perceived land injustices. Land inequality is in part an inheritance of the colonial government, but it has remained a challenge for every post-colonial government. Powerful leaders in Kenya today are beneficiaries of this inequality, and politicians often contribute to the country’s noxious politics by encouraging citizens to combine their anger over land issues with ethnic antipathies. Of course, the problems cannot be blamed only on politicians. Kenyans have been all too willing to use violence to settle scores that have fused over time into a toxic mix of ethnic rivalry and land injustices.

Kenya’s history as an independent country is littered with plans and policies that were intended to right historical wrongs related to land. Few of these have been fully implemented, or made a lasting impact. One recent example is the Ndung’u Commission report of 2005, which began to collect dust almost as soon as it was completed. The problem in Kenya has never been one of knowing about the problem or drafting plans to deal with it, but of creating a political coalition in favor of reforms and putting resources behind these.

In light of this, and in light of the radical potential of the 2009 National Land Policy, the 2010 Constitution, and the new land legislation that has followed from both of these, the International Budget Partnership and Hakijamii began a discussion several months ago about whether Kenya was at a turning point in the struggle for land reform. We felt that the country had moved very far down the road of actually starting to implement at least some important land reforms on paper. The risk was that these pieces of paper would yield very little if they were not backed up with financing. Yet the debate over land reform in the past year has not looked carefully at the resource requirements for reform, or whether government has seriously endeavored to martial those resources.

We commissioned this study to begin investigating the link between land reform and the budget. We first wanted to know what the challenges in managing resources in the lands sector have been in recent years. What do we know about how money has been managed for existing resettlement programs, for example? Where are reforms needed? Then we wanted to know if the government was really taking into consideration the implications of land reform in the budget process. Was adequate money being set aside this year, or in the next three years, to implement the ambitious reforms? We wanted to have this information to inform the advocacy of land activists during the 2012/2013 budget debate, where, we believed, Parliament would need to rise to defend the reforms and demand their implementation.

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What we have found, in brief, is that the government has managed funds in the land sector poorly in the past, and there is little evidence of consistent, clear, transparent planning or budgeting for land reforms as we speak. The time to demand a different path is now. If Kenya misses this chance at implementing land reforms, it is difficult to say when the next opportunity will present itself.

We want to thank Nicodemus Odongo for the superb work he has done in putting this together on an expedited schedule, and responding to our many queries.

Odindo Opiata Hakijamii

Jason LakinInternational Budget Partnership

June 2012

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EXECUTIVE SUMMARY

Land is a critical resource for the economic and social development of the Kenyan people. Historically, the struggle for independence in Kenya in the 1950s and 60s was mainly driven by the fight for land. Recently, the issue of land played a major role inthe post 2007 election violence that was witnessed in Kenya. Given the emotive nature of land in Kenya, it is of concern that many of the historical injustices related to land still remain unresolved even as the country moves towards the next general elections in early 2013. Inconsistent land policies and poor implementation have had far reaching effects, including compromising food security, employment and income. To address these challenges the Constitution of Kenya 2010 has provided, in Chapter Five (Land and Environment), a framework of land reforms that would improve the challenges currently facing the sector.

The findings of this report are that despite the overwhelming need for urgent land reforms the Kenya government has not demonstrated the necessary support to the sector on requisite financial allocation. This is manifested in the inadequate financial resources that have been allocated over time as compared to the required financial resources as documented in the annual MTEF reports for Agriculture and Rural Development Sector.

It is also clear that through review of audit reports by the Auditor General that spending of budget allocations at the Ministry is bedeviled with myriads of challenges including; perpetual annual under-expenditure, under-collection of earmarked Appropriations-In-Aid, presentation of incorrect accounts for audit, inefficient management of grants to settlement funds trustees, unsupported expenditure, unvouched expenditure, acquisition of land and even pending bills.

Another fundamental problem is the lack of transparency in budget information from the lands sector. A review of budget information from the Ministry from fiscal year 2006/07 reveals that detailed documents on land financing are not available to the public. The readily available information is just estimates of expenditure books; which are highly aggregated and written in technical and sophisticated budget language. This scenario continues to be a barrier in budget scrutiny and has had the effect of perpetuating the inefficiency and lethargy, which has been in the lands, sector for so long.

To address the above issues it recommended that:

Parliament should allocate money for the Land Settlement Fund in the 2012/2013 • Budget so that the National Land Commission can begin the task of creating a more efficient and transparent settlement programme, including the resettlement of IDPs. The Land Settlement Fund must keep open and well-managed accounts, and these must be presented for audit annually with sanctions, in the event of failure to do so.

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Parliament should provide additional development funds for the immediate • operationalization of the National Land Commission. Providing funds only for salaries will compromise the work of the Commission.All Appropriation-in-Aid should be streamlined by converting it into revenue for collection • centrally by the Kenya Revenue Authority, in the same manner as the stamp duty. The Public Accounts Committee should order for a forensic audit to be done on • the Agricultural Trustee Fund so that those found culpable for the delays and any misappropriation can be punished. The Budget Policy Statement, which lays out the Government’s broad budget plans • for the year, should be tabled on time in March, and posted online immediately after it is tabled in Parliament (and no later than seven days after tabling).The Budget Estimates must be made available to the public immediately after tabling • in Parliament, both at the Government Printing Office and on the Treasury website. The current situation, where these estimates are still unavailable to the public a month after their release, is unacceptable. The public cannot provide comments on documents it does not have access to.The Treasury should write the Budget in a language and style that is easily • understandable and reader-friendly to facilitate effective and meaningful public participation. The initial attempt by Treasury in developing a Citizens’ Budget from 2011/2012 should be improved to include more information in a systematic way for all Ministries, Departments and Agencies. The document should also explain technical budget terminologies, be translated into Swahili and provide more specific justification for the various allocations. This will enable citizens to understand the reasons for the allocation patterns.To effectively operationalize Article 35 of the Constitution, Parliament should urgently • enact the law on the right to information and public participation with clear guidelines to address the confusion currently being witnessed as a result of the existing unstructured system.The Government should set aside adequate funds to retrain the staff of the Ministry of • Lands and the National Land Commission on transformation and new management strategies for the Ministry staff. Unless this is done the envisaged land reforms as per the constitution would largely fail. In the meantime, the Ministry of Lands should consider recruiting new staff to spearhead the reforms instead of using its current staff, most of whom may not have the independence to drive the envisaged reforms and improve the absorptive capacity. The Ministry of Lands and the National Land Commission should undertake a • comprehensive and urgent review of the costing for land reforms based on the new land laws and institutions.

The current inertia in the lands sector has, for a long time, created an environment that has allowed wayward officials to enrich themselves. To ensure realization of the constitutional reforms in Chapter Five of the Constitution, it is critical that stakeholders and civil society organizations keep pressure on the Government generally and the Ministry of Lands in particular to ensure that the envisaged land reforms are implemented.

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CHAPTER ONE

BACKGROUND

Land is one of the most important resources in Kenya as it is the basis upon which agriculture, the most dominant economic activity, is carried out. It is critical for the economic, social and cultural development of the country. Historically, the struggle for independence in Kenya in the 1950s and 60s was driven by the fight for land. Recently, the issue of land played a major role in the post 2007 election violence which was witnessed in Kenya. Given the emotive nature of land in Kenya, it is of concern that many of the historical injustices related to land still remain unresolved even as the country moves towards the next general elections in early 2013. Inconsistent land policies and poor implementation have had far reaching effects including compromising food security, employment and income.

Nevertheless, the recent constitutional reform has breathed life into land reform. Chapter Five of the Constitution of Kenya 2010 (Land and Environment), Article 60 focuses on ownership and management of land, which shall be held, used and managed in accordance with the principles outlined in the National Land Policy (drafted in 2009), including: equitable access, security of land rights, sustainable and productive management of resources, elimination of gender discrimination in law, customs and practices related to land and property in land, among others.

The Constitution sets the stage for reform. Parliament is required to revise, consolidate and rationalize existing land laws among other policy and legislative obligations to give effect to the provisions of Article 60 of the constitution. Operationalization of new land laws will require the use of public resources, both to set up new agencies and to undertake new managerial and redistributive tasks in the land sector. The said reforms have started with the enactment of three new land laws in April 2012. These are: Land Act 2012, Land Registration Act 2012, and National Land Commission Act 2012.

Resources for land must be allocated through the national budget process, both the Annual Budget Cycle and the Medium Term Expenditure Framework (MTEF)1, which sets priorities for the next three years. It is therefore imperative that citizens interrogate and understand the degree to which land issues have been prioritized in the Budget and MTEF and, where necessary, advocate for sufficient allocation. They should also monitor and ensure proper budget implementation.

The Kenya Constitution, 2010 also provides specific normative principles that must be taken into account in resource allocation. Articles 20 5(b) and 21 (3) are emphatic that in allocating resources the needs of the vulnerable must be addressed. It also provides new opportunities for citizens to participate in the budget process, which makes this an ideal time

1 MTEF refers to a three year rolling budgeting process with current year estimates and projected allocations for the next two years. Kenya adopted and has used MTEF budgeting process in the last decade

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to engage specifically in financing for land issues. For example, Article 201 states that the following principles shall guide all aspects of public finance in the Republic:

There shall be openness and accountability, including public participation in financial • mattersThe public finance system shall promote an equitable society.•

Article 221(5) specifically compels the National Assembly to seek representation from the public on the budget estimates and to take their recommendations into account in the Committee’s recommendations to the National Assembly.The 2012 budget estimates was expected to be submitted to Parliament by 30th April 2012 (two months before the end of the financial year as provided in Article 221 of the Constitution). Consequently, there is a two-month period for Parliamentary scrutiny and public debate.

1.1 Overall objectives of the research report

In order for citizens concerned with land issues to seize these opportunities, they need information. There is, therefore, need for research and analysis to be undertaken to avail synthesized information required by such citizens to advocate for proper implementation of land reforms. The research and analysis would aim at analyzing the budget for fiscal year 2012-13 and the medium term (MTEF) going forward to 2015 to ascertain whether or not the government is setting aside, or planning to set aside, the requisite funds to implement a series of intensive and complex land reforms as envisaged in the Kenyan Constitution. This would include money at both national and county levels to finance land reforms, resettlement or upgrading, among other issues. It would also involve drawing on existing cost estimates for comprehensive land reform, as established earlier by the National Land Policy, and additional costing of policies not foreseen by the National Land Policy. 1.2 Goal of the report

The immediate goal for the research and analysis is to provide information to civil society organizations working on land issues to inform their submissions to the relevant Committees (i.e. The Departmental Committee on Lands and Natural Resources; and The Budget Committee) in Parliament during the fiscal year 2012 budget process after the submission of the budget estimates by end of April 2012.

1.3 Land policy in Kenya

The Ministry of Lands is responsible for land policy in Kenya as per the Presidential Circular number 01/2008 issued by the Office of the President in April 2008. The Ministry is mandated to ensure security of land tenure, equitable distribution of land and sustainable land use, land planning and management, review and harmonization of laws related to land and its management, preparation and implementation of land use plans for all urban and rural areas, resolution of land and boundary disputes and revision of leased government land.

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For a long time in Kenya, inconsistent land policies and poor implementation compromised land ownership, food security, employment and income. Consequently the Government embarked on the process of formulating a National Land Policy in 2004. The Policy was adopted by Parliament in 2009 as Sessional Paper No. 3 of 2009.The Policy is geared towards addressing access to land, land ownership, land use and environment. It also proposed the formation of a National Land Commission that would enhance regulation and ensure land rights for all citizens. The Policy further recommends that the Government shall recognize and protect the land rights of all Kenyans regardless of gender or marital status and expand their enforceable legal rights of access, control, ownership and inheritance, access to credit and co-registration in all tenure systems.

It proposed classification of land tenure into three broad categories namely public land, community land and private land. Access to land contributes greatly to increased incomes and agricultural production. Although major challenges remain, the Government has made considerable efforts to tackle the land problem through land adjudication, land registration, resettlement schemes, and provision of long term credit for purchase of land and land transfer schemes. Fair access to land and better utilization of natural resources has been among the aims of land reforms in Kenya.

However, despite these challenges and overwhelming need for urgent land reforms the Government has not demonstrated the necessary support to this sector on requisite financial allocation. This is manifested in the inadequate financial resources that Ministry of Lands has been allocated over time as compared to the required resources. This is documented in the annual MTEF reports for the Agriculture and Rural Development Sector.2

2 Agriculture and Rural Development Sector is one of the many sectoral categorizations done by Treasury for budgeting purposes. Once a resource envelope is allocated to a particular sector, the Ministries and Departments therein contest for the same based on agreed criteria.

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CHAPTER TWO

HISTORICAL PERSPECTIVE: A REVIEW OF BUDGETARY ALLOCATIONS AND ACTUAL EXPENDITURE ON LAND

2.1 Introduction

In this chapter a historical perspective on lands financing is done by way of reviewing budgetary allocations and actual expenditure on land and land reforms from fiscal year 2006/07 to 2011/12.

The Agriculture and Rural Development (ARD) sector classifies all the mandates of the Ministry of Lands into one programme called Land Policy and Planning. This programme is then divided into the following mandates/sub-programmes for the Ministry: Land Policy and Physical Planning; Land Transactions; Survey and Mapping; Land Adjudication; Settlement Matters; Land Registration; Valuation; Administration of State and Trust Land, and Land Information Management System. In addition, a regulatory body, National Land Commission is being put in place (through the National Lands Commission Act, 2012) to manage public land on behalf of the National and County governments.

2.2 Allocations and actual expenditure on land reforms in Kenya

The total budgetary allocations to the Ministry of Lands have been averaging Kshs 3.2 billion from 2006/07 to 2009/10. The allocation however increased to Kshs 5.5 billion and Kshs 6.1 in 2010/11 and 2011/12 respectively. The enhanced allocations witnessed from 2010/11 have only been realized in the supplementary estimates; meaning that the Ministry of Finance did not initially plan for it – but had to be pressurized to enhance the figures to enable the Ministry of Lands implement some of its programmes. The actual expenditure for all the years under review are below the amounts allocated implying that some funds are returned to Treasury at the end of the financial year. Further analysis show that the absorption rate is very high for the recurrent budget but only averages about 60% for the development budget. According to the ARD sector report for 2012 the low absorption rate is mainly attributed to delayed disbursement of funds from Treasury to the Ministry of Lands.

Table 1: Comparison of Ministry of Lands total expenditure allocation and actual expenditure

Period 2007/08 2007/08 2008/09 2009/10 2010/11 2011/12Budget Allocation 3,271 3,439 2,308 3,868 5,503 6,102Actual Expenditure 2,557 3,058 2,037 3,608 4,992Absorption rate 78.18% 88.93% 88.23% 92.78% 90.71%

Source: Expenditure estimates for 2007/8, 2008/9, 2009/10, 2010/11, and 2011/12 Actual Expenditure Reports from the Ministry of Lands and Treasury, Various Issues Agriculture and Rural Development Sector Reports, 2011 and 2012

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2.3 Money for relocation of internally displaced persons

Review of budget estimates of expenditure books reveal that the Government has been setting aside money for the Ministry of Lands (Vote 36)3 for acquisition of land since 2009/10 as follows:

In fiscal year 2009/10, Kshs 1.4 billion was allocated and approved by Parliament • under the Headquarters Administrative Services for acquisition of land. The estimate books however do not provide details of specific persons to benefit from the said acquired land.

In fiscal year 2010/11, Kshs 2.5billion was allocated and approved by Parliament • under the Headquarters Administrative Services for acquisition of land. As was the case in the previous period, the estimate books do not provide details of specific persons to benefit from the said acquired land.

In fiscal year 2011/12, Kshs 2.5 billion was allocated and approved by Parliament • under the Headquarters Administrative Services for acquisition of land to cater for land for IDPs4. This is the only allocation specifically mentioned to be for IDP land.

The 2012/13 estimates of expenditure books have an allocation of Kshs 800 million under the General Administration and Planning for acquisition of land. Again, there are no details on whom the beneficiaries of the acquired land would be. In total, therefore, the Ministry of Lands has been allocated Kshs 7.2 billion and received parliamentary approval to utilize this money in the last four years towards acquisition of land. It is important to note that there is nil budgetary projection in the budget books for 2012 for this budget line of acquisition of land in the medium term.

2.4 Discussion

The Ministry’s utilization of budget allocation is below expectation as the average absorption rate for the last four years is only 90%.Considering that the Lands budget has always been lower than the required resources it would be expected that all the allocation would be fully utilized. This puts into question the commitment of the Ministry in planning for budget implementation and/or the commitment of Treasury in disbursing the funds for utilization. Whatever the case the low absorption rate of the Ministry of Lands negates the push by the Ministry for additional funding.

3 Vote, in budget terms, refers to a spending agency; either a ministry or an independent government department. Ministry has been coded vote 36 until 2012/12. The classification has been changed to 136 in the 2012/13 budget estimates.

4 IDPs as used in Kenya today refer to those people who were displaced from their original homes during the fracas arising after the General Elections of December 2007.

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Concerning the budget for acquisition of land, the budget books do not contain details of where the land is to be acquired, the size, the beneficiary and even the exact or actual amount disbursed and utilized. In a report posted in its website by the Task Force on Resettlement of Internally Displaced Persons (IDPs) and Forest evictees as at 19th March 2012, the Ministry of Special Programs has provided information regarding the number of displaced persons, the numbers that had been resettled, the amount used and the sizes of the land purchased. The information is however incomplete, confusing and difficult to understand is not adequately linked to the budget fragmented across ministries and ultimately does little to advance transparent5

It is therefore impossible to determine the exact amount of funds used in relocation of Internally Displaced Persons (IDPs). The failure to relate the expenditures with the information from the budget books has the implication of denying the Kenyan public knowledge on how the government is utilizing tax money. To that extent, therefore, the budget-making process fails the test of transparency as envisaged in the Constitution.

It then follows that accountability of the people and institutions charged with such public funds also becomes very difficult since the public do not have adequate and complete information to hold them to account. Envisaged land reforms cannot therefore be achieved as expected since people do not have sufficient information to push for faster implementation of the programmes.

It further demonstrates that the bureaucratic arrangement in Government regarding the resettlement of IDPs has only worsened the situation since so many agencies are involved in dealing with one issue. For instance; Treasury provides funds to the Ministry of Lands who should then procure and eventually buy land. The acquired land is then handed over to the Office of the President where the Ministry of Special Programmes then identifies the people to settle on it. This bureaucracy has been responsible for some confusion as to whom, between the Ministry of Lands, Treasury or Special Programmes was really responsible for this programme. Given the level of landlessness in the country even before the issue of the 2007 post election violence, it is important to immediately channel these funds and empower the National Land Commission to take up this responsibility as provided for under the Land Act.

2.5 Transparency of budget information from the lands sector

This part deals with an assessment of the transparency of budget information from the lands sector based on factors that hinder effective public participation including the Parliamentary one in the budget process.

The national budgeting process is complex and technical in design, form, language and presentation. A majority of people including a substantial number of Members of Parliament

5 See Task Force Progress Report on Resettlement of Internally Displaced Persons (IDPs) and Forest Evictees as at 19th March 2012 http://www.sprogrammes.go.ke/images/pressbrief20032012.pdf

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do not understand the budget books, thus their ability to participate in the budget process is greatly reduced. Further, the information in the estimates books is mostly aggregated and the details are scanty, thus MPs are unable to fully debate specific issues of interest. For instance on matters of resettlement, there are no details of where the land is being acquired, the size and who the beneficiaries are. Such fine details are completely unavailable to the public and this negates the transparency principle as enshrined in the constitution and makes oversight by Parliamentarians a very difficult exercise.

Another hindrance to budget participation is the availability of budget information. The most available document on land finances is the estimates of expenditure of the Government of Kenya books which are produced annually by the Ministry of Finance, printed by the Government Printer and availed to Parliament in June6. The copies delivered to Parliament are meant for Members of Parliament. However, a majority of Members of Parliament either don’t understand the budget information contained in the books or are not interested in the information contained therein. These budget books are very bulky and printed mostly in four volumes each averaging 1,500 pages and sold very expensively at Kshs 1,200 per volume. This means that for a person to access one set of these aggregated estimate books he or she must spend Kshs 4,800 which, in most cases, is more than the monthly income of a number of Kenyans. Further, the contemporary world has put pressure on many organizations to share information through information technology including official websites. It would therefore be expected that each Ministry, Department or Government agency avail all information in their websites so that any citizen can access them. The Kenya Government has aggressively tried to implement computerization programme in its records management for the last five years. However, certain critical information like financial and budgetary information remains obscured from the ministry websites. Access to detailed financial data is also very limited.

Lack of a legal framework for public participation in the budget process is another factor hindering public participation. Even though the Constitution provides for public participation in the budget process in article 221(5) there is still no legislation specifying a step-by-step process to do so. Parliament has attempted to hold public hearings on the budget since 2011 but the results have not been very encouraging due to a number of reasons. First, the estimates are published but not publicized. The public is then hurriedly confronted to give their views on issues they are not privy to. No civic education is done, even over the media, to educate the public on the contents of the budget estimate for which they are required to comment. As such, very scanty information should be expected to come from the public. Most comments they give are therefore general and do not address specific budget issues. Again, whatever views the public give hardly finds its way into the final budget approved by Parliament. Public participation in the budget process either through Treasury or Parliament is a fundamental issue which needs a proper coordinated framework; otherwise the so-called budget public hearings will be no better than a public relations exercise.

6 June had traditionally been the time the budget is availed in Parliament of Kenya until 2011. The new Constitution 2010 has however changed this by providing that the budget is submitted two months before the end of a financial year. Thus the 2012/13 budget estimates were submitted on 26th May 2012.

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The ‘top-down’ nature of budget making is another issue keeping the public off the budget process. Budgeting is ideally for the people and their involvement in crafting it sends a positive signal that their participation is meaningful. In the absence of the ‘bottom-up’ approach consultation, there is a feeling of exclusion. In fulfilling the letter and spirit of the Constitution so that the priorities of ordinary people, especially the marginalized groups can be captured in the budget figures, the people charged with the responsibility of making the national budget (Treasury) must change the approach from ‘top-down’ to ‘bottom-up’.

The MTEF budget, as presently constituted, uses the standardized classification known as Government Financial Statistics (GFS). The GFS classifies a specific Ministry budget into vote, sub-vote, head, sub-head and finally line item. These still leave the expenditure items in aggregates to the extent that specific expenditure lines are lost to non-budget practitioners. The inadequate budget disaggregation is a great limitation to budget scrutiny particularly in view of the fact that the constitution demands that in allocating resources attention should be paid to the vulnerability of particular groups. The MTEF budget classification should now adopt a more disaggregated approach if the desired details in the budget can be monitored for implementation.

In summary, the transparency of budget information from the lands sector remains generally poor and is therefore a major barrier. The starting point in overcoming such hindrances is to come up with a legislative framework which will streamline the process and build confidence of the public to participate. The approach to budgeting must also change from ‘top-down’ to ‘bottom-up’. The language, structure and form of the budget must also be simplified to ensure that many Kenyans can understand the contents. For this to happen, institutional and technical change management should be undertaken by Treasury officials who prepare the budget to help change their mindset.

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CHAPTER THREE

REVIEW OF AUDIT REPORTS REGARDING SPENDING IN THE LANDS SECTOR FROM 2006/07 TO 2010/11

3.1 Introduction

This chapter reviews Audit Reports from the Auditor General’s Office7 for the period 2006/07 – 2010/11regarding budget spending in the lands sector. The review brings out material issues affecting the spending of the allocated financial resources and which could have a bearing on the resources availed to the Ministry by Treasury. Section 4(4) of the Public Audit Act, 2003 requires the Accounting Officers to prepare and submit for audit Appropriation Accounts and other Financial Statements under their votes within three months after the end of the financial year. The 2010/11 is the latest Audit Report tabled in Parliament in late April 2012.

3.2 Emerging issues from audit reports on spending in the lands sector

3.2.1 Under-expenditure

The issue of under-expenditure in the Ministry of Lands has dominated the Auditor General’s report since 2006/07 for both recurrent and development budget. In 2006/7 alone, under-expenditure amounted to Kshs 714.25 million out of the total allocation of Kshs 3.271 billion; implying an absorption rate of 78.18%.The problem of under-expenditure has continued for all the successive years despite the push by the Ministry to be allocated more resources by Treasury. The under-expenditure rate currently stands at an average of 10% of the approved budget allocation, meaning that absorption rate stands at an average of 90%. Even though under-expenditure is rampant in almost all Ministries and spending agencies, the Ministry of Lands has a comparatively low development budget and, with proper planning, should therefore absorb most of its allocated funds to at least the 95% level.

The Ministry mainly attributes the under-expenditure to over-estimation, Districts not submitting work plans in good time, reduced land disputes and activities and inadequate field staff resulting in reduced travelling expenses, reduced foreign travel, over-estimation of some provisions, delay in release of Exchequer issues by Treasury to the spending Ministry, delay in procuring professional services and suspension and repeat of some tendering processes.

Even though some of these reasons are shared by other spending agencies, the capacity of a spending agency to plan in advance for efficient utilization of funds has a major impact

7 The Auditor General Office is one of the Independent Offices created under the constitution to conduct audits of all public funds in Kenya and reports directly to Parliament. They produce annual reports which are mainlyutilized by PAC and PIC to make recommendations concerning public spending for approval by Parliament.

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on the absorption of funds. A number of Ministries including the one of Lands have had a very long history of inefficiencies which has created an overall lethargy in the system. These are likely to have had the impact of making it difficult to be creative and proactive. The eventual failure to, for example, submit work plans, project plans and financial plans for funds disbursement from Treasury in time are some of the negative work practices which could be resulting in delayed disbursement of funds. Further, the Auditor General reports that despite the failure to utilize substantial amount of resources, the Ministry has not been indicating what action it intends to take to avoid similar under-utilization of resources voted and made available for development. This still adds to the issue of a non-committal attitude which has had a negative effect on instituting reforms in the Ministry.

3.2.2 Under-collection of appropriations-in-aid The Ministry of Lands has had a perpetual history of under-collection of Appropriations-In-Aid (AIA)8. Accounts for 2006/07 reported under-collection of Appropriations-In-Aid of Kshs 156.5 million (approximately 21.4%) of the estimated receipts of Kshs 731.1 million. The Ministry mainly attributes the under-collection of Appropriations-In-Aid to non-boarding of obsolete stocks, and reduced land disputes and activities. The Ministry has undertaken to prepare a more realistic budget in future. The Ministry has failed to identify revenue leakage and poor returns system as the major causes of under collection of AIA. It is a known fact that the Ministry of Lands has had serious challenges in accounting for monies collected from the district lands offices due to the highly manual nature of its operations. Until recently, it was not clear how much of the district collections would be reported at headquarters. Further, there are strong indications that the field staff who have, for a long time, misappropriated such field collections have been responsible for frustrating automation of land transactions for fear of losing this ‘backdoor income’. This has continued to deny the Ministry the much needed funds for reforms.

3.2.3 Presenting incorrect accounts for audit

The issues of delay in processing the recurrent appropriation account due to incorrect accounts presented by the Ministry of Lands for audit has dominated the Auditor General’s Reports since the 2006/07 fiscal year. The Auditor General has continuously observed that it appears that the Lands Ministry deliberately submits incorrect accounts merely to beat the deadline. This observation raises fundamental question as to the seriousness the Ministry gives to the requirement to submit its accounts by the third month of the end of a fiscal year. The Ministry is also fond of late submission of the accounts despite the knowledge that this is a contravention of the law and interferes with the programme for completion of the audit by the statutory date of 31 December.

8 Appropriations-In-Aid refers to the user charges i.e. monies collected by a particular Ministry or Department of Govern-ment and used at source without the money passing through the Consolidated Account of Treasury.

11


3.2.4 Grants to Settlement Fund Trustees

Section 168 of the Agriculture Act Cap 318 established the Agricultural Settlement Fund (ASF) and provided for the payments of sums provided by Parliament for the purpose of the Fund. The Auditor General has over the years reported the failure to submit Financial Statements of Agricultural Settlement Fund Trustees contrary to Section 18(2) (b) of the Exchequer and Audit Act, Cap 412 and Section 6(4) of the Public Audit Act, 2003, both of which require an Accounting Officer charged with the responsibility of administering a public fund to prepare fund accounts and submit such accounts within three months after the end of each financial year to the Controller and Auditor General.

In the 2007/08 audit report, the Auditor General reported that during the 13-year period between 1995/1996 to 2007/2008, the Settlement Fund Trustees received, on behalf of the Fund, grants totalling Kshs 2.383 billion provided by Parliament through the Ministry of Lands. However, the fund accounts for the years 1995/1996 to 2007/2008 had not been prepared and submitted for audit. As a result, it had not been possible to confirm receipt and proper accountability of these grants. However, in the absence of fund accounts for the period, it has not been possible to ascertain that the amount was received, utilized for the intended purposes and properly accounted for.

Even though the accounts for the past 12 years to 2006/07 were finally submitted in 2010 they were outside the stipulated timeframe for the preparation of audit reports by 31December. The accounts for 1995/96 to 2004/05 were submitted by 30 September 2009 while the accounts for 2005/06-2006/07 were submitted on 8 February 2010, meaning that they were late and could not be reported in the AG’s report for 2008/09.The accounts for the two years could only be carried forward to be reported in 2009/10. In all, the accounts for 1995/96 to 2006/07 were submitted beyond the legally stipulated timeframe.

Financial Statements and Accounts for 2007/08-2010/11 concerning Agricultural Settlement Fund Trustees had not yet been submitted by the Ministry of Lands for audit as at December 2011. No reason has been provided for failure to submit the financial statements. The records maintained at the Ministry’s Headquarters also indicate that during the period 2007/2008 to 2010/2011, the Ministry disbursed to the fund grants totaling Kshs. 5,148,850,000.00. However, and in the absence of the financial statements for the period, it has not been possible to confirm that the funds were correctly receipted and properly accounted for.

It is important to note that the Settlement Fund Trustees was one of the major interventions meant to drive land reforms in post-independent Kenya. Indeed quite a bit of money was assigned to it. The fact that it did not submit its accounts for audit for 13 years is one of the worst acts of impunity under the Lands Ministry. This practice could imply that funds have been misapplied and misappropriated thus the fear for submission of financial statements for audit. Further, there are no details of how and where the funds were to be specifically deployed. This impunity is a good indication of the misuse of funds meant for the settlement programme. The whole exercise has been shrouded in mystery and funds handled in a

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non-transparent, non-accountable manner in order to skew the benefits in favour of people politically aligned to the decision makers.

3.2.5 Unsupported expenditures

The Auditor General reports that various unsupported expenditures amounting to huge sums of money have been incurred in different Lands offices in the country despite the fact that the Ministry has always complained of inadequate resources. A few examples are given below:

In Kirinyaga District Lands Office, the Auditor General reported that on 10 September • 2008, Authority to Incur Expenditure (AIE No. 462792 for Kshs 4,494,560.00) was issued to the Lands Office to pay pending bills in respect of Land Dispute and Boards in the District. Out of the above amount, a sum of Kshs 3,597,590.00 was paid to the Lands Tribunal members for sitting, transport and lunch allowances covering the period between 2004 and 2008.However, the related documents in support of the payments including, dates of the sittings, minutes of the meetings, attendance registers and schedule of payments were not availed for audit review. In consequence the propriety of the expenditure of Kshs 3,597,590.00 could not be confirmed.

In Nyandarua North District Land Office, the Auditor General reported that the • Nyandarua District Land Officer made payments totaling Kshs 3,054,500.00 comprising Kshs 2,301,500.00 and Kshs 753,000.00 relating to the District Land Dispute Tribunal and District Lands Control Board Allowances, respectively. An examination of the relevant Schedules however revealed that payments in respect of the District Lands Control Board allowances worth Kshs 753,000.00 were not signed by the persons who purportedly received the cash. Instead, the amounts were collected on their behalf by third party individuals who do not appear to have been authorized by the bona fide payees. Further, it was observed that payments of Kshs2,301,500.00 made in respect of Tribunal allowances were not supported with minutes of meetings as well as attendance register for the Tribunal Committee. In the circumstances, the propriety of the expenditure totaling Kshs 3,054,500.00 incurred at the Lands Office could not be confirmed.

In Bungoma South District Land Office, the Auditor General reported that the audit of • the revenue records maintained at the District Lands Office Bungoma revealed that revenue amounting to Kshs 6,455,317.00 collected between 01 July 2010 and 30 June 2011 by the Revenue Clerks in respect of Appropriations In Aid (AIA) was not banked but instead held by the Cashier in form of fictitious receipts of Kshs 4,293,829.00, IOUs of Kshs 1,857,975.00, stale cheques of Kshs 147,913.00, inter borrowing deposit of Kshs 148,600.00 and cash shortage of Kshs 7,303.00. The serial numbers of the fictitious receipts were for receipt books which had not been issued as per the counter receipt register while IOU chits were not properly authorized, and some were dated as far back as 2008.

13


No action appears to have been taken against the Officers who perpetrated the • fraudulent transactions through which revenue totaling Kshs 6,455,317.00 was misappropriated.

The implications of these are that the Ministry has not put in place measures to protect its revenue sources and as such runs a very high risk of AIA revenue leakage on a large-scale. Because of failure to consolidate its own revenue collection and usage at source by putting in place proper management practices, the Ministry keeps piling pressure on Treasury to allocate it more funds from the Exchequer as its wayward staff continues to mismanage the resources. As such, the AIA revenue collections should be streamlined by ensuring that all revenue is collected from a central body e.g. how the Kenya Revenue Authority collects stamp duty.

3.2.6 Unvouched expenditure

Over the years, the Auditor General has persistently reported on unvouched expenditure. This has exposed the fact that expenditure management at the Ministry of Lands is wanting and could be responsible for its lacklustre performance. As at June 2009, unsupported expenditure totaling Kshs 58.7 million was incurred against various items in the Appropriation Account. Consequently, the propriety of the expenditure could not be ascertained. Further, as at June 2011, the Auditor General reported that the Payment Vouchers and other related records for expenditure totaling Kshs 151,037,133.00 and Kshs 45, 048,494.00 under Sub-Votes 360 – General Administrative and Planning and 363 – Survey of Kenya respectively, were not made available for audit review. Consequently, the propriety of the expenditure totaling Kshs 196, 085,627.00 could not be ascertained. According to additional information available, the expenditure relates to; Domestic Travel, Subsistence and other Transportation costs, Printing, Advertising Information Supplies Services, Other Operating Expenses, Refurbishment of Buildings, Purchase of office Furniture and General Equipment, Purchase of Specialized Plant, Equipment & Machinery and Construction of Buildings.

From the foregoing it appears that most of the budget allocations held in aggregated account for the Ministry Headquarters is a very good recipe for misappropriation given that most of the unvouched expenditures are made from there.

3.2.7 Township Roads and Drains Account

The Auditor General has been reporting, year after year, on Township Roads Drains Account9 as having queries ranging to millions of shillings. As early as 2005, questions were raised concerning Journal Voucher dated 30 September 2005 amounting to Kshs 361.197 million which was used to clear an accumulated deficit of Kshs 345.586 million against the Township Roads and Drains Accounts and as at 30 June 2004 had still not been supported

9 Township Roads Drains Account was created to help fix roads and drain identified lands for resettlement. The account has continued to exist though dormant. The Auditor General has been recommending its being wound up since it no longer serves any purpose; but this has not happened.

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with the relevant documents. It was observed in 2008/09 that the Ministry of Lands had not yet obtained approval from Treasury for clearance of the deficit. In the 2009/10 audit reports the Auditor General concluded that the Fund has not recorded any activity over the last two years and the balance in the Accounts has remained unchanged during the period. It proposed that in the circumstances, it might be necessary to review the purposes for which the fund was created.

Similarly, in the latest audit report for 2010/11 accounts, the Auditor General made reference to the previous unsupported journal voucher dated 30 September 2005 for an amount of Kshs 361.197 million used to clear an accumulated deficit of Kshs 345.586 million against the Township Roads and Drains Account as at 30 June 2004. A review of the position of Township Roads and Drains Account for the year ended 30 June 2011 revealed that the Treasury, declined to grant the Ministry authority to write off the loss relating to the accumulated deficit until investigations to determine the propriety of the expenditure which contributed to the deficit is completed. The Ministry has, however, not indicated the action it has taken subsequent to the Treasury’s instruction to bring the matter to conclusion. This issue therefore points to the waywardness of the Ministry in relation to certain expenditures, implying that the issue of financial mismanagement is rampant in the Lands docket.

3.2.8 Acquisition of land

Acquisition of land is one of the most sensitive issues being handled at the Ministry and has continued to raise various concerns. In the latest audit reports for 2010/11, the Auditor General reported that the Appropriation Account for the Ministry’s development budget for the year ended 30 June 2010 reflects an expenditure of Kshs 1.4 billion for Acquisition of Land, under Head 360101- Headquarters Administrative Services. However, out of the expenditure, payment vouchers and other related records for an amount of Kshs 550.352 million were not made available for audit review, with the result that the propriety of the expenditure could not be ascertained. This would mean that either transactions for those acquisitions had not been finalized or relevant documents were still not presented to the Auditor General. Whatever the case, the Ministry should be sanctioned for delay since they are aware of the timelines for submission of reports. This concern raises even more queries since more funds are being allocated to the same budget line without regard to pending audit issues. In the current fiscal year, 2011/12, another Kshs 2.5 billion was allocated through the supplementary budget in April 2012 for the same budget line.

3.2.9 Pending bills

The Ministry of Lands, like most other Ministries, has consistently maintained pending bills for supplies during the review period. The Auditor General has consistently reported, since 2006/07, that the Ministry fails to pay creditors but returns some of its budget allocations to Treasury. This has resulted in the said pending bills being settled in the succeeding years, thus reducing the available resources for implementation of projects. According to the Ministry’s audit reports some of the reasons provided for non-payment of the bills includes;

15


inadequate funds, late submission of invoices and reduction of voted provision during the year while expenditure had already been incurred.

The summarized pending bills issues are shown in Table 2.

Table2: Trend of Ministry of Lands pending bills

2006/07 2007/08 2008/09 9/10 10/11 11/12Recurrent 39.5 39.9 13.0 11.2 12.98 -

Development 0 0 22.5 3.1 26.97 -Total 39.5 39.9 35.5 14.3 39.95 -

Source: Audit Reports: 2006/07 – 2010/11 and ARD Sector Report for 2010/11/12

3.3 Discussion

The repeated nature of the audit queries points to a weak sanction system; in which case the Auditor General cannot discipline the non-compliant Ministries and Departments but can only forward a report of its findings to Treasury and Parliament. There are also concerns that the Auditor General’s reports mainly dwell on financial audits while paying very little attention to ‘value for money’ audits. For instance, even though there have been certain reports from stakeholders that the Agricultural Settlement Fund has not been well used, the audit reports has not been comprehensive enough on the same.

The Fiscal Management Act 2009 now specifies sanctions for such rogue Ministries and Departments. However implementation of PAC and PIC recommendations arising from the audit reports for action in Parliament are usually lost in the ensuing political debates and settlements with the result that most of the PAC and PIC reports are not approved by Parliament. In cases where they are approved, Treasury (read Executive) always drags its feet when it comes to implementation. In this case there is urgent need to rethink the whole arrangement of dealing with audit reports and recommendations apart from the traditional PAC and PIC method.

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CHAPTER FOUR

ANALYSIS OF BUDGET REQUIREMENTS AND BUDGET ALLOCATION FOR LAND IN FISCAL YEAR 2012/13 AND THE MEDIUM TERM

4.1 Introduction

This chapter deals with a comprehensive review of the 2012-2014 MTEF sector reports on Agriculture and Rural Development and the 2012 Budget Estimates to assess how much is being allocated for land, and specifically the allocations for the implementation of a series of land reforms required by the new legislation. Further interviews and access to documents was done at Ministry of Finance and Ministry of Lands to obtain sufficiently disaggregated data on the same.

4.2 Analysis of resource requirement and allocations

This part reviews resource requirement for the lands as provided for in the MTEF 2012/13-2014/15 Report of Agriculture and Rural Development (ARD), December 2011 version. These costs are then compared with allocations for the same sub-sector as contained in the two critical public finance policy documents from Treasury, namely: the Budget Policy Statement and Estimates of Recurrent and Development Expenditure. The latest ARD Sector report for 2012 provides for the following resource requirement for the lands programme within the sector.

Table 3: Resource Requirement and Allocation to Lands: Recurrent Versus DevelopmentResource Requirement for land and land reforms in Kshs Million

Type Printed Estimates2011/12

Projection2012/13

Projection2013/14

Projection2014/15

Recurrent 1,476 1,837 1,516 2,021Development 1,304 5,654 1,704 7,523

Total 2,780 7,491 3,220 9,544

Source: MTEF 2012/13-2014/15 Report of ARD Sector, December 2011 Report

Resource Allocation to land and land reforms in Kshs Million

Type Approved2011/12

Estimates2012/13

Projection2013/14

Projection2014/15

Recurrent 2,244 2,508 2,889 3,328Development 3,857 2,550 1,574 1,763

Total 6,102 5,058 4,463 5,091

Source: 2012/13 Estimates of Recurrent and Development Expenditure, April 2012

The apparent discrepancy in resource requirement and allocation is of concern and raises the issue of seriousness at the point of budgeting. For instance, the printed estimates for 2011/12 had allocated lands Kshs 2.780 billion in June 2011. This figure was finally more

17


than doubled to Kshs 6.102 billion during the supplementary budget in April 2012. In the same vein, whereas the ARD Sector report requested for Kshs 7.491 billion in 2012/13, the 2012/13 estimates of expenditure has only allocated Kshs 5.058. The inconsistency in resource request and allocation continues for the whole MTEF period.

4.3 Comparative allocations between 2012 Budget Policy Statement and ARD Sector Report for the Land Programme

Table 4: BSP 2012 allocations per land programme as per ARD sector classification

Prog

ramm

e

Prog

ramm

e ob

jectiv

es

Programme output Medium term performance indicators and targets

Estimate2012/13

Projections

2013/14 2014/15

Land

Poli

cy an

d Plan

ning

To cr

eate

a con

duciv

e env

ironm

ent fo

r land

admi

nistra

tion a

nd m

anag

emen

t

Comprehensive National land Policy and Kenya Constitution 2010 implemented

60% of National Land Policy and Kenya Constitution 2010 recommendations implemented. No. of land legislations enacted.

National Land Information System developed

60% of National Land Information System developed80% of records safeguarded and digitized

Kenya National Spatial Data Infrastructure Framework

60% of Kenya National Spatial Data framework developed

Deed plans prepared 30,000 deed plans preparedNational topographical and thematic maps updated

30 National topographical and thematic maps updated

Students trained on surveying and mapping

390 regular students trained on surveying and mapping

Landless families settled 36,000 families settled

Adjudication sections finalized 90 Adjudication sections finalized

Land adjudication and boundary disputes resolved

39,000 Land adjudication and boundary disputes resolved

Issuance of title deeds 510,000 title deeds registered and issued

Assets valued for stamp duty purposes 60,000 stamp duty cases valued

Requirement (Report of ARD Sector,Dec 2011) 7,491 3,220 9,544Allocation (Budget Policy Statement, April 2012) 4,233 4,738 5,471Allocations (Estimates of Expenditure, April2012) 5,058 4,463 5,091

Source: Budget Policy Statement 2012, April 20122012/13 Budget Estimates, April 2012MTEF 2012/13-2014/15 Report of ARD Sector, December 2011 Report(All from Ministry of Finance)

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Table 4 shows great inconsistency in government resource planning. The Budget Policy Statement and Estimates of Expenditure both originated from Treasury in the month of April 2012.The fact that they differ significantly in terms of resources projected for lands, and indeed for many other sectors, confirms that the financial commitment of the Government is very weak, not firmed up and therefore cannot be adequately relied upon by the implementing Ministry to plan its budget implementation. This weakness effectively puts doubt on whether the MTEF budget process is a reality or just a paper policy as the Government continues with incremental budgeting. This problem is not confined to the Lands Sector alone; it affects all sectors.

Figure 1: Resource requirements versus allocation – 2012/13 to 1014/15

4.4 Budgetary allocation for land reforms

Enhanced budgetary allocations have been confirmed. Until 2010/11, allocations for land policy formulation were only confined to the recurrent expenditure with the highest ever allocated budget being Kshs 35.17 million in 2010/11. However, from the supplementary budget in 2012/13, a new budget line of Kshs 272.76 million was introduced in the development budget in the Land Policy Formulation Programme to cater for land reforms including formulation of land bills. The 2012/13 budget estimates have allocated an enhanced development budget to the Land Policy Formulation Programme which is further projected to increase in the medium term. The whole scenario of these allocations is shown in Table 5.These allocations, though not adequate, are a positive gesture on the part of the Government towards a series of land reforms required by the new Constitution.

A review of the Ministry of Lands budget reveals that the Land Policy Formulation Programme is the department responsible for reforms, including formulation of land bills. The books also reveal that this Programme had, in the past, been allocated only little recurrent budget averaging Kshs 16 million per year until 2010/11. From 2011/12 however, the budgetary allocation to this head has significantly changed through the introduction of a development budget of Kshs 222 million in addition to a recurrent budget of Kshs 11.5 million. This new budget line is projected to continue into the medium term. Table 5 depicts the allocation trend.

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Table 5: Land Policy Formulation Programme – (Land reforms including land bills formulation, etc.)

Period 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15Recurrent 25.78 14.74 16.10 12.34 35.17 11.49 11.96 12.73 13.46

Development 0 0 0 0 0 222.76 296. 303.53 310.26 Total 25.78 14.74 16.10 12.34 35.17 244.25 308.75 316.26 323.72

Source: 2012/13 Estimates of Expenditure; 2011/12 Supplementary Estimates

The information above seems to demonstrate that the government is specifically setting aside budgetary allocations towards land reforms in Kenya in 2012/13 and over the medium term. The increase in resource allocation is very significant from Kshs 35.17 million in 2010/11 to Kshs 244.25 million in 2011/12. Consequently the projected allocation increases averagely by 4.4% for the three years.

Figure 2: Trend of budget allocation to land policy formulation

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Table 6(A): Details of Land Policy Formulation Programme – (Development Estimates) He

ad C

ode

Unit Item Title Approved

2011/12Estimates 2012/2013

Projected Estimates

2013/14 2014/15

0001 07

2210200

2210300

2210400

2210500

2210600

2210800

2211100

2211200

2211300

22201002220200

3111000

1310200

Land policy formulation programmeCommunication, Supplies and ServicesDomestic Travel and Subsistence, and other Transportation costs Foreign Travel and Subsistence, and other Transportation CostsPrinting, Advertising and Information Supplies and ServicesRentals of Produced AssetsHospitality Supplies and Services Office and General Supplies and ServicesFuel Oil and LubricantsOther Operating ExpensesRoutine Maintenance – Vehicles and Other Transport EquipmentRoutine Maintenance – Other assetsPurchase of Office Furniture and General Equipment.

Gross Expenditure......... Kshs.Appropriation in Aid

Grants from Foreign Governments – Direct Payments

NET EXPENDITURE FOR SUB-HEAD 07

1,019,539

11,850,000

7,080,000

62,579,600

500,000

90,147,785

5,021,538

3,761,599

32,200,000

900,000650,000

7,050,000

844,539

6,850,000

5,330,000

106,000,00-

-

136,650,000

3,521,533

3,761,599

24,975,000

900,000-

7,950,000

895,000

2,240,000

4,672,000

110,000,000

-

139,700,000

4,000,000

3,800,426

29,000,000

970,000-

8,250,000

979,000

2,244,000

6,235,000

110,500,000

-

141,720,000

4,500,000

4,000,345

30,500,000

1,032,000-

8,550,000

222,760,061 296,782,671 303,527,426 310,260,345

50,000,000 50,000,000 50,000,000 50,000,000

172,760,061 246,782,671 253,527,426 260,260,345

Source: 2012/13 Estimates of Development Expenditure; 2011/12 Supplementary Estimates (Development Expenditure)

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4.4.1 Discussion

The detailed costing above shows that most of the land policy formulation programme budget goes towards hospitality supplies – an indication of the possibility of many meetings, workshops or seminars while the second largest consumer of the budget is printing, advertising and information supplies and services – implying that a lot of documents will be printed, advertising carried out and information shared through various other media. Whereas most of the budgetary allocation comes from the Government of Kenya provisions, the Programme, however, will be receiving a direct grant of Kshs 50 million from Sida in 2012/13 and the same amount each year over the medium term. There is no explanation in the books as to what exactly the Sida grant is targeted at. However Sida has been known to support the computerization of land records in the Ministry.

Even though Table 6(A) is classified in the estimate books as development expenditure, a critical look shows that the items of expenditure are recurrent in nature. It has been a common practice by the Treasury to lump all monies (except salaries and allowances) for specific projects as development. It however brings into question the rules of classification of expenditure items by Treasury as either recurrent or development. The misclassification could be sending a signal that Kenya’s development budget is growing which may not be true.

Further, it is not clear from the estimate books what exactly the allocated funds for lands policy formulation will be used for now that the three crucial land laws were enacted in April 2012. It is hoped that the Ministry would use the budget line for 2012/13 to carry out civic education and publicize the new land laws in addition to any necessary subsidiary legislation for the implementation of new laws.

Additional information (May 2012) also show that the Minister for Lands has requested Trea-sury for additional Kshs 300 million to come up with two more laws namely; Community Land Bill and Evictions and Resettlement Bill. It is our view that these two laws can be done within the framework of the finances already allocated to the Land Policy Formulation Programme within the Ministry. This is so because the task force will only work for three months and could benefit from the facilities that were used for the newly enacted three land laws. The task force will not start from scratch, thus may not require additional resources to the extent being requested for.

Table 6(B)shows the breakdown of recurrent expenditure for the Land Policy Formulation Programme.

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Table 6(B): Details of Land Policy Formulation Programme – (Recurrent Estimates) He

ad C

ode

Unit Item Title Estimates

2012/2013

Projected Estimates

2013/14 2014/15

0001 07

2210300

2210500

221070022108002211100221120022113002220100

3111000

Land policy formulation programmeDomestic Travel and Subsistence, and other Transportation costs Printing, Advertising and Information Supplies and ServicesTraining ExpensesHospitality Supplies and Services Office and General Supplies and ServicesFuel Oil and LubricantsOther Operating ExpensesRoutine Maintenance – Vehicles and Other Transport EquipmentPurchase of office Furniture & general equipment

NET EXPENDITURE FOR SUB-HEAD 07

1,430,000

3,319,2801,012,7474,108,450

465,910461,552775,000

184,000

208,000

1,512,900

3,485,2441,114,0224,313,872

543,562484,630813,750

210,000

253,000

1,599,945

3,659,5061,225,4254,529,567

570,740508,861854,437

220,500

286,500

11,964,939 12,730,980 13,455,481

Source: 2012/13 Estimates of Recurrent Expenditure

As can be seen from Table6 (B), even though it is expected that policy implementation in 2012/13 will require a lot of capacity building in enforcing the three new land laws already in place, only Kshs1 million has been allocated to training expenses and similar amount provided in each of the outer years in the 2012/13 recurrent budget estimates. Just like was the case in the development estimates for the Land Policy Formulation Programme (Table 6(A)), hospitality supplies is still allocated the biggest share of the recurrent expenditure followed by printing, advertising and information supplies and services.

23 REPORT ON FINANCING LAND AND LAND REFORMS IN KENYA

Tabl

e 7: B

udge

t allo

catio

ns to

Min

istry

of L

ands

: 200

6/07 t

0 201

4/15

(A) R

ECUR

RENT

BUD

GET:

2006

/07 -

2014

/15: K

shs m

illion

Appr

oved

Estim

atePr

ojecti

ons

Sub-

Vote

Head

2006

/0720

07/08

2008

/0920

09/10

2010

/1120

11/12

2012

/2013

2013

/1420

14/15

Head

quar

ters

250.2

33

6.5

288.4

25

0.5

251.7

30

0.0

490.5

60

0.6 68

9.5

Aids

Con

trol U

nit1.3

1.5

1.2

1.7

2.9

3.4

3.5

4.1

4.4

ICT

Unit

6.3

5.2

10.2

9.5

11.9

22.6

22.4

26.2

29.3

Comp

uteriz

ation

Pro

gram

me 30

.8 26

.2 14

.2 9.6

14

3.9

102.8

10

6.2

151.2

177.7

Fin

ance

Man

agem

ent S

ervic

es2.5

5.5

3.4

2.5

7.8

11

.0 10

.4 12

.514

.5 Ge

nder

and E

duca

tion

--

2.2

1.8

2.4

2.5

2.6

2.9 3.

2 La

nd P

olicy

For

mulat

ion P

rogr

amme

25.8

14.7

16.1

12.3

35.2

11.5

12.0

12.7

13.5

Rese

ttleme

nt Pr

ogra

mme

-4.5

4.2

-

--

--

-

Gen A

dmin

and P

lannin

gSu

b-tot

al: H

eadq

uarte

rs Ad

minis

trativ

e Ser

vices

316.8

39

4.2

339.9

28

7.9

455.7

45

3.8

647.6

81

0.393

2.1

Reve

nue S

ecre

tariat

11.5

10.5

10.2

8.0

6.2

14.2

17.6

22.6

27.4

Deve

lopme

nt Pl

annin

g Ser

vices

1.6

2.6

5.8

5.5

5.0

10.4

9.2

10.9

12.4

Land

Ad

judica

tion

and

settle

ment

Head

quar

ters A

dmini

strati

ve S

ervic

es50

6.2

44.9

46.4

46.7

46.4

56.1

58.4

68.7

81.1

Distr

ict La

nd A

djudic

ation

and S

ettlem

ent

219.5

24

5.1

279.0

28

7.4

310.6

33

6.4

340.0

36

3.339

1.8

S.F.T

. Man

agem

ent S

ettlem

ent P

rojec

t3.8

4.0

4.8

4.5

4.5

-

--

-

Surve

y of K

enya

Head

quar

ters A

dmini

strati

ve S

ervic

es20

1.3

176.2

19

0.2

199.8

21

1.9

289.1

19

8.6

226.5

251.6

Prov

incial

Sur

vey O

ffices

20.4

24.3

30.6

31.0

32.3

19.5

26.5

31.9

41.9

Distr

ict S

urve

y Offic

es13

9.4

153.3

16

8.1

176.0

19

3.7

237.8

31

3.3

369.6

431.3

Ke

nya I

nstitu

te of

Surve

ying a

nd M

appin

g 42

.1 45

.8 54

.4 68

.7 84

.9 81

.0 87

.7 96

.810

9.5

Land

sHe

adqu

arter

s Adm

inistr

ative

Ser

vices

161.1

21

2.3

224.0

23

3.6

226.6

26

0.5

256.6

29

1.2 33

5.2

Distr

ict La

nd O

ffices

156.0

19

5.6

243.2

21

0.5

292.7

28

9.4

343.0

35

9.0 42

4.7

Phys

ical P

lannin

gHe

adqu

arter

s Adm

inistr

ative

Ser

vices

57.2

54.3

68.8

70.6

78.6

71.9

97.7

110.7

125.0

Distr

ict P

hysic

al Pl

annin

g Offic

es 81

.4 84

.1 90

.9 10

5.0

112.5

12

4.2

112.1

12

7.3 16

3.3

Total

Gro

ss R

ecur

rent

Kshs

1,9

18.5

1,647

.2 1,7

56.3

1,735

.3 2,0

61.7

2,244

.5 2,

508.2

2,8

89.0

3,327

.5 To

tal N

et Re

curre

nt Ks

hs

1,742

.2 1,4

39.9

1,520

.9 1,4

90.0

1,749

.4 2,2

10.9

2,49

8.8

2,879

.03,3

15.3

Total

AIA

Ksh

s 17

6.3

207.2

23

5.3

245.3

31

2.3

33.6

9.4

10.0

12.0

24

BUDG

ETIN

G FO

R LA

ND R

EFOR

MS: E

NSUR

ING

PEOP

LE’S

PAR

TICI

PATI

ON

(B) D

EVEL

OPME

NT B

UDGE

T: 20

06/07

- 20

14/15

: Ksh

s milli

on

Appr

oved

Estim

atePr

ojecti

ons

Sub-

Vote

Head

2006

/0720

07/08

2013

/1420

13/14

2010

/1120

11/12

2012

/1320

13/14

2014

/15Ge

n Adm

in an

d Pl

annin

gHe

adqu

arter

s Adm

inistr

ative

Ser

vices

149.9

1,

674.6

25

7.9

1,70

6.2

2,98

3.7

2,76

7.9

1,176

.0 38

2.7

389.4

of

which

Land

Poli

cy F

ormu

lation

Pro

gram

me -

- -

- -

272.8

29

6.8

303.5

31

0.3

Land

Adju

dicati

on

and s

ettlem

ent

Head

quar

ters A

dmini

strati

ve S

ervic

es -

- -

- -

25.4

25.1

30.0

53.0

Di

strict

Land

Adju

dicati

on an

d Sett

lemen

t -

- -

- -

13.5

18.0

20.0

22.0

S.

F.T. M

anag

emen

t Sett

lemen

t Pro

ject

2.1

3.0

2.5

1.9

2.7

- -

--

S.

F.T. S

tate L

and

15.2

20.9

18.2

5.4

11.4

- 8.

0 9.

3 10

.3

199 S

.F.T.

Shirik

a Con

venti

onal

Sche

me11

.1 17

.0 29

.3 42

.9 35

.4 31

.6 29

.8 34

.7 37

.6 Su

rvey o

f Ken

yaHe

adqu

arter

s Adm

inistr

ative

Ser

vices

4.5

98.9

124.5

86

.9 16

2.2

727.1

1,0

39.1

777.7

88

6.0

Pr

ovinc

ial S

urve

y Offic

es -

- -

- 6.

0 6.

0 6.

0 8.

0 9.

0

Distr

ict S

urve

y Offic

es -

- -

- 3.

4 5.

0 5.

0 6.

0 7.

0

Keny

a Ins

titute

of Su

rveyin

g and

Map

ping

6.9

1.0

40.4

69.4

31.2

18.7

13.4

15.0

18.0

Land

sDi

strict

Land

Offic

es 7.

5 12

.0 52

.3 15

0.3

143.0

13

4.5

122.0

14

8.0

160.0

Ph

ysica

l Plan

ning

Head

quar

ters A

dmini

strati

ve S

ervic

es 9.

1 10

.0 22

.0 44

.0 36

.0 10

1.0

80.8

112.5

13

5.9

Di

strict

Phy

sical

Plan

ning O

ffices

2.5

5.0

13.0

25.7

25.7

26.5

26.5

29.8

35.0

Total

Gro

ss D

evelo

pmen

t Ksh

s 20

8.9

1,84

2.5

560.1

2,

132.7

3,

440.6

3,

857.2

2,5

49.7

1,57

3.7

1,76

3.2

Total

Net

Deve

lopme

nt Ks

hs

137.0

1,

792.0

48

0.8

1,95

0.4

3,21

6.0

3,82

0.9

2,468

.5 -

- To

tal A

IA K

shs

71.9

50.5

79.3

182.3

22

4.6

36.2

81.2

1,57

3.7

1,763

.2

Total

gros

s bud

get (

Recu

rrent

+ De

velop

ment)

2,127

.33,4

89.7

2,316

.43,8

67.9

5,502

.36,1

01.7

5,057

.94,4

62.7

5,090

.6

25


4.5 DiscussionIt is clear from Tables 7(A) and (B) that the Ministry’s budget allocation has been steadily rising from Kshs 2.127 billion in 2006/07 to Kshs 6.102 billion in 2011/12.The allocation is still projected to remain at about Kshs 5 billion per year in the outer years. This trend is worrying given that the envisaged land reforms will transfer a lot of functions from the Ministry to new institutions including the National Land Commission. The Ministry will mainly concentrate on policy formulation. It is anticipated that the Ministry’s budget will reduce significantly in the medium term as that of the National Land Commission increases. This is important to avoid duplication of functions and wastage of resources. As explained elsewhere in the report, this anomaly could be a demonstration that those who are charged with preparing the Government budget have not appreciated the far reaching changes brought about by the Constitution especially the reduced role of the Ministry of Lands. It could be a case of just doing incremental budgets. This puts into doubt the seriousness of Government with MTEF budgeting framework.

The huge budget increase for the Survey of Kenya is mainly on account of construction of buildings (650 million in 2012/13). The figure reduces to Kshs 380 million and Kshs 400 million respectively in the outer years.

4.6 Analysis of cost for land and land reforms

The Kenya Constitution envisages a series of reforms in the land sub-sector. Indeed Chapter Five (5) of the constitution extensively provides for Land and Environmental. Specifically, Article 67 of the Constitution provides for the formation of a National Land Commission in addition to other legislation on land (Article 68). As a result of the importance attached to land in the Republic, the Constitution directed that legislation on land be enacted within 18 months of its promulgation on 27 August 2012.

Arising from the constitutional provision, the Government, in consultation with different stakeholders and experts, drafted three land bills namely: Land Bill 2012, Land Registration Bill 2012 and National Land Commission Bill 2012. These pieces of legislation are crucial as a means to operationalize the provisions of the Constitution on land. The bills have just been passed by Parliament and were assented to on Friday 27 April 2012 to become law.

With the new land laws in place and having set up new institutions of land governance including the National Land Commission, the stage is now set for implementation of a series of land reforms which would significantly change the way land resource has been managed in Kenya. These institutions are critical considering the plethora of historical land injustices that have bedeviled the land sub-sector. The envisaged reforms obviously require significant and consistent financial resources to be fully implemented. These resources must therefore be set aside by the Government of the day in order to achieve the intended benefits envisaged in the land reforms.

26

BUDG

ETIN

G FO

R LA

ND R

EFOR

MS: E

NSUR

ING

PEOP

LE’S

PAR

TICI

PATI

ON

To assess the preparedness of the Government on land financing, a comparative analysis has been undertaken between the budgetary allocation by the government and a detailed costing based on existing estimates from the National Land Policy (and new estimates where existing estimates are insufficiently detailed) of the resources required to actually implement land legislation, including the Constitution, the Land Bill, the National Land Commission Bill, and the Land Registration Bill.

4.7 Costing details for financing the Land Reform Programme

According to the National Land Policy, financing the Land Reform Programme will cost approximately Kshs 9.9 billion over the first 6-year period. A significant proportion of the estimated cost will be financed by internal revenue sources that will be available to the National Land Commission. It is expected that effective implementation of the proposed land sector reforms will more than double the Ministry’s annual collection of revenue estimated to be Kshs 4.0 billion in 2007.This information has been corroborated by the Permanent Secretary in the Ministry of Lands10.

Adams11 (2005), in his report on budgetary implications and feasibility assessment prepared for the Coordinator of the National Land Policy Formulation Process, Ministry of Lands puts the total costs of the reform of Land Administration and Management at Kshs 9.944 billion. However, these estimates do not include costs for the Land Development Fund (for affordable housing) and the National Trust Fund (for restitution and compensatory redress). The cost of full data capture and conversion is also excluded. Adams explained that failure to carry out an all-inclusive costing was as a result of lack of statistics on the quantity and quality of existing land information and the poor quality of the management information which made it difficult to plan for land information management system (LIMS). He noted that data capture, conversion and maintenance constitute a large percentage of the overall cost of implementing a LIMS.

Table 8 gives the details of the total costs of reforms of Land Administration and Management (LAM) as contained in the Consultancy Report (2005) by Adams. Details of selected cost centres in terms of breakdown of the costs are shown in Tables 8-13.

10 This is contained in the Permanent Secretary’s presentation during a meeting with SIDA when negotiating assistance for computerization programme

11 Martin Adams is a Land Policy Advisor, Makoro Ltd, Oxford

27

BUDGETING FOR LAND REFORMS: ENSURING PEOPLE’S PARTICIPATIONTa

ble 8

:Sum

mar

y of T

otal

Cost

s of t

he re

form

of L

AM (K

shs

‘000 c

onst

ant p

rices

)

PY1

PY2

PY3

PY4

PY5

PY6

TOTA

LKs

h.’00

0Ks

hs ’0

00Ks

hs ’0

00Ks

hs ’0

00Ks

hs ’0

00Ks

hs ’0

00Ks

hs ’0

00Mo

L H/Q

2,775

,438

203,1

6621

1,133

219,4

9822

8,282

237,5

043,8

75,02

1Na

tiona

l Lan

d Com

miss

ion0

348,2

3927

2,094

248,1

6226

6,080

285,1

831,4

19,75

9Tr

ansfo

rmati

on U

nit29

6,436

296,4

360

00

059

2,872

Regio

nal L

and B

oard

Tribu

nals

010

0,793

70,09

270

,092

70,09

270

,092

381,1

60Di

strict

Land

Boa

rds a

nd D

istric

t Staf

f0

771,5

3061

2,605

637,6

1263

7,214

820,6

523,4

79,21

5Co

mmun

ity La

nd B

oard

s 0

5,282

5,282

5,282

5,282

5,282

26,41

0La

nd D

ispute

s Trib

unal

03,0

303,0

303,0

303,0

303,0

3015

,150

Land

Divi

sion o

f High

Cou

rt0

39,69

528

,738

28,73

828

,738

28,73

815

4,649

Gran

d Tota

l Cos

ts3,0

71,87

41,7

68,17

01,2

02,97

41,2

12,01

71,2

38,71

81,4

50,48

29,9

44,23

6

Tabl

e 9: H

/Q C

osts

for S

alarie

s, O&

M, an

d Ca

pita

l Cos

ts

PY1

PY2

PY3

PY4

PY5

PY6

TOTA

L

MINI

STRY

OF

LAND

S H/

QKs

h.’00

0Ks

h.’00

0Ks

h.’00

0Ks

h.’00

0Ks

h.’00

0Ks

h.’00

0Ks

h.’00

0Su

b-To

tal S

alarie

s25

2,390

59,64

661

,544

63,53

665

,628

67,82

557

0,569

New

Dire

ctora

te – L

and A

dmini

strati

on an

d Man

agem

ent

Dire

ctor (

1)0

1,800

1,800

1,800

1,800

1,800

9,000

Depu

ty Di

recto

r (1)

01,5

001,5

001,5

001,5

001,5

007,5

00Ch

ief E

cono

mist

Plan

ning (

1)0

1,500

1,500

1,500

1,500

1,500

7,500

Lega

l Offic

er (1

)0

1,500

1,500

1,500

1,500

1,500

7,500

Land

Infor

matio

n Man

agem

ent S

pecia

list (

`1)

01,5

001,5

001,5

001,5

001,5

007,5

00Ch

ief La

nds R

egist

rar (

1)0

1,500

1,500

1,500

1,500

1,500

7,500

28

BUDG

ETIN

G FO

R LA

ND R

EFOR

MS: E

NSUR

ING

PEOP

LE’S

PAR

TICI

PATI

ON

Senio

r Per

sona

l Sec

retar

ies (3

)0

1,200

1,200

1,200

1,200

1,200

6,000

Senio

r Cler

ical O

fficer

/Exe

cutiv

e Offic

er (2

)0

800

800

800

800

800

4,000

Supp

ort S

taff (

4)0

720

720

720

720

720

3,600

Total

Sala

ries n

ew D

irecto

rate

012

,020

12,02

012

,020

12,02

012

,020

60,10

0La

nd A

djudic

ation

and S

ettlem

ent

344,4

730

00

00

344,4

73Su

rvey o

f Ken

ya68

9,869

00

00

068

9,869

Land

s50

6,705

00

00

050

6,705

Phys

ical P

lannin

g14

2,001

00

00

014

2,001

Total

Sala

ries H

/Q1,9

35,43

871

,666

73,56

475

,556

77,64

879

,845

2,313

,717

Add 3

0% fo

r O&M

Cos

tsinc

luded

21,50

022

,069

22,66

723

,295

23,95

411

3,484

Sub-

Total

H/Q

Cap

ital C

osts

840,0

0011

0,000

115,5

0012

1,275

127,3

3913

3,706

1,447

,819

TOTA

L COS

TS F

OR H

/Q S

ERVI

CES

2,775

,438

203,1

1621

1,133

219,4

9822

8,282

237,5

043,8

75,02

1

Tabl

e10:

Nat

iona

l Lan

d Co

mm

issio

n Sa

lary C

osts

, O&M

, and

Cap

ital C

osts

NATI

ONAL

LAND

COM

MISS

ION

PY1

PY2

PY3

PY4

PY5

PY6

TOTA

LKs

hs ’0

00Ks

hs ’0

00Ks

hs ’0

00Ks

hs ’0

00Ks

hs ’0

00Ks

hs ’0

00Ks

hs 00

0Bo

ard M

embe

r (9)

016

2016

2016

2016

2016

208,1

00Su

b-To

tal-S

alarie

s0

115,7

4211

9,960

123,7

3213

5,940

148,9

6564

4,339

Add 4

0% fo

r O &

M0

46,29

747

,984

49,49

354

,376

59,58

625

7,735

Sub-

Total

Sala

ries a

nd O

&M

016

2,039

167,9

4417

3,225

190,3

1620

8,551

902,0

74Su

b-To

tal C

apita

l Cos

ts0

41,20

08,4

008,4

008,4

008,4

0074

,800

Sub-

Total

NLC

020

1,223

173,3

2017

7,593

193,6

7621

0,399

956,2

10Ca

pacit

y Buil

ding /

Awar

enes

s Acti

vities

010

0,000

50,00

050

,000

50,00

050

,000

300,0

00Ad

dition

s to b

e Deta

iled

29

BUDGETING FOR LAND REFORMS: ENSURING PEOPLE’S PARTICIPATIONLa

nd R

estitu

tion (

Histo

rical

Injus

tices

)St

aff of

4 plu

s 2 re

sear

ch0

15,00

015

,000

30,00

0La

nd T

itles T

ribun

al (N

dung

’u Re

port)

Staff

plus

Tribu

nal

015

,000

15,00

030

,000

Land

Res

earch

Infor

matio

n Cen

treAt

tache

d to U

niver

sity

015

,000

15,75

016

,538

17,36

418

,233

82,88

4

Sub-

Total

Add

itiona

l Insti

tution

s to b

e deta

iled

045

,000

45,75

016

,538

17,36

418

,233

142,8

84Gr

and T

otal N

LC0

348,2

3927

2,094

248,1

6226

6,080

285,1

831,4

19,75

9

Tabl

e 11:

Tota

l Cos

ts fo

r Lan

d Di

visio

n of

Hig

h Co

urt

PY1

PY2

PY3

PY4

PY5

PY6

TOTA

LKs

h.’00

0Ks

h.’00

0Ks

h.’00

0 Ks

h.’00

0 Ks

h.’00

0 Ks

h.’00

0Ks

h.’00

0LA

ND D

IVIS

ION

OF H

IGH

COUR

TJu

dges

(3)

16,12

816

,128

16,12

816

,128

16,12

816

,128

80,64

0De

puty

Regis

trar(1

)67

267

267

267

267

267

23,3

60Ex

ecuti

ve O

fficer

448

448

448

448

448

448

2,240

Secre

taries

(4)

1,075

1,075

1,075

1,075

1,075

1,075

5,376

Cour

t Cler

ks (3

)40

340

340

340

340

340

32,0

16Re

gistry

Cler

ks (5

) 67

267

267

267

267

267

23,3

60Ca

shier

(2)

403

403

403

403

403

403

2,016

Drive

r/Sec

urity

(4)

538

538

538

538

538

538

2,688

Mess

enge

r/Clea

ner (

2)18

818

818

818

818

818

894

1Su

b-To

tal20

,527

20,52

720

,527

20,52

720

,527

20,52

710

2,637

Add 4

0% fo

r O&M

costs

(inclu

ding C

LB

activ

ities)

8,211

8,211

8,211

8,211

8,211

8,211

41,05

5

Capit

al Co

sts10

,957

10,95

7To

tal co

sts39

,695

28,73

828

,738

28,73

828

,738

28,73

815

4,649

30

BUDG

ETIN

G FO

R LA

ND R

EFOR

MS: E

NSUR

ING

PEOP

LE’S

PAR

TICI

PATI

ON

Tabl

e 12:

Reg

iona

l Lan

d Bo

ard

Trib

unals

Cos

ts fo

r sala

ries,

O&M,

and

Capi

tal C

osts

REGI

ONAL

LAN

D BO

ARD

TRIB

UNAL

SPY

1PY

2PY

3PY

4PY

5PY

6TO

TAL

Ksh.

’000

Ksh.

’000

Ksh.

’000

Ksh.

’000

Ksh.

’000

Ksh.

000

Ksh.

’000

Chair

man o

f Reg

ional

Tribu

nal

024

,000

24,00

024

,000

24,00

024

,000

120,0

00Re

gistra

r of th

e Trib

unal

018

,000

18,00

018

,000

18,00

018

,000

90,00

0Si

tting A

llowa

nces

for M

embe

rs (2

)0

3,600

3,600

3,600

3,600

3,600

18,00

0Cl

erica

l Ass

istan

t0

180

180

180

180

180

900

Sub-

Total

045

,780

45,78

045

,780

45,78

045

,780

228,9

00Ad

d 40%

for O

&M0

18,31

218

,312

18,31

218

,312

18,31

291

,560

Sub-

Total

Sala

ries a

nd O

&M0

66,36

066

,360

66,36

066

,360

66,36

033

1,800

Capi

tal C

osts

Offic

e Spa

ce /B

uildin

g0

6,000

6,000

6,000

6,000

6,000

30,00

0Ve

hicle

030

,000

30,00

0Eq

uipme

nt 0

700

700

Sub-

Total

Cap

ital C

osts

036

,700

6,000

6,000

6,000

6,000

60,70

0TO

TAL R

egion

al Tr

ibuna

ls0

100,7

9270

,092

70,09

270

,092

70,09

238

1,160

31

BUDGETING FOR LAND REFORMS: ENSURING PEOPLE’S PARTICIPATIONTa

ble 1

3: D

istric

t Lan

d Bo

ard

and

Dist

rict S

taff

Coas

ts fo

r sala

ries,

O&M

and

Capi

tal C

osts

PY1

PY2

PY3

PY4

PY5

PY6

TOTA

L

DIST

RICT

LAND

BOA

RD S

AND

DIA

TRIC

T ST

AFF

Ksh.’

000

Ksh.’

000

Ksh.’

000

Ksh.’

000

Ksh.’

000

Ksh.’

000

Ksh.’

000

Urba

n Dist

ricts

– LAM

categ

ory A

A(n=

7)8 B

oard

Mem

bers

+ ch

airma

n =12

sittin

gs pe

r yea

r0

576

576

576

576

576

3,780

Sub-

total

all sa

laries

0

55,35

655

,356

55,35

655

,356

55,35

627

6,780

High

Pote

ntial

Distr

icts –

LAM

categ

ory A

(n=2

9)8 B

oard

Mem

bers

=cha

irman

=6 s

itting

s per

yean

01,5

661,5

661,5

661,5

661,5

667,8

30

Sun-

total

all sa

laries

018

9,293

189,2

9319

8,911

198,9

1122

7,766

1,004

,173

Less

popu

lated

distr

icts-L

AM ca

tegor

y B(n

=12)

–Prio

rity 1

8 Boa

rd M

embe

rs =

chair

man =

6 sit

tings

per y

ear

064

864

864

864

864

83,2

40

Sub-

total

all sa

laries

078

,328

78,32

882

,308

82,30

894

,248

415,5

20Le

ss de

nsely

popu

lated

distr

icts-

LAM

categ

ory B

(N=1

2) –

prior

ity 2

8 Boa

rd M

embe

rs =

chair

man =

6 sit

tings

per y

ear

064

864

864

864

864

83,2

40

Sub-

total

all sa

laries

078

,328

78,32

882

,308

82,30

882

,308

403,5

80Pa

stora

l spa

rsely

popu

lated

distr

icts –

LAM

Categ

ory C

(n=1

0)8 B

oard

Mem

bers

= ch

airma

n =3 s

itting

s per

year

027

027

027

027

027

01,3

50

Sub-

total

036

,270

36,27

032

,270

32,27

032

,270

181,3

50To

tal sa

laries

DLB

s0

437,5

7543

7,575

455,1

5345

5,153

495,9

482,2

81,40

3Ad

d 40%

for O

&M co

sts (in

cludin

g CLB

activ

ities)

017

5,030

175,0

3018

2,061

182,0

6119

8,379

912,5

61Ca

pital

costs

Urba

n Dist

ricts

– LAM

Cate

gory

AA(n

=7)

Sub-

total

capit

al co

sts0

28,52

528

,525

High

poten

tial d

istric

ts – L

AM C

atego

ry A(

n=29

)Su

b-tot

al ca

pital

costs

061

,125

57,05

011

8,175

Less

dens

ely po

pulat

ed di

strict

s – LA

N Ca

tegor

y B (n

=24)

Su

b-tot

al ca

pital

costs

048

,900

48,90

097

,800

Pasto

ral s

parse

ly po

pulat

ed di

strict

s – LA

M Ca

tegor

y C(n

=10)

Sub-

total

capit

al co

st0

20,37

520

,375

40,75

0

Total

Cap

ital C

osts

015

8,850

126,3

2528

5,250

TOTA

L COS

TS D

LBs

077

1,530

612,6

0563

7,214

637,2

1482

0,652

3,479

,215

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4.7.1 Discussion

From the costing tables above and the explanations of exclusions of certain costing parameters (Adams 2005) it is clear that the Ministry of Lands and the Government, at large, have not reviewed the costs since 2005. Indeed the final Land Policy document published in 2007 had talked about the same costs of Kshs 9.9 billion as they were in 2005. Further, costing information available from the Ministry of Lands still maintains the costing at Kshs 10 billion. This has been the case despite the fact that these initial costs were based solely on the policy but now the Constitution introduced new institutions. Bodies such as District Land Boards, Land Dispute Tribunals and even Land Division of High Court are still costed under the Ministry of Lands.

As explained by the report on the Kenya National Land Policy Formulation Process, the estimates do not include costs for the Land Development Fund (for affordable housing); the National Trust Fund (for restitution and compensatory redress); and the cost of full data capture and conversion. Costs for buying land, resettlement, or addressing issues of historical injustices are also out. The cost for historical injustices requires more thinking since part of the remedies may include land acquisition for the victims.

The Ministry of Lands budget for 2012/13 has been done in the same manner as was the case in the previous years. Headquarters and district services have been budgeted for as usual. The National Land Commission has been allocated Kshs 125 million under the consolidated funds services12, with Kshs 54 million being salaries for the Chairman, Deputy Chairman and Commissioners and Kshs 71 million being personal allowances for the same group. However, operations and other costs for the Commission have not been budgeted for. It is therefore difficult to see how the Commission will execute its duties and recruit the necessary staff. The fear is that most of the initial staff will be seconded from the Ministry and other Government departments thereby compromising the reform process. 4.8 Assessment of government costing of the land legislation on land and budgetary

provisions in the medium term

From the budget books, it is evident that the Government had not taken sufficient stock of the cost of land legislation when preparing the 2011/12 budget despite knowing that the constitution had to be implemented. The original total budget for Lands was only Kshs 3.47 billion as presented in June 2011. This was later to be increased to Kshs 6.102 billion in the April 2012 supplementary budgets in order to accommodate the necessary reforms like enactment of the three13 constitutional land laws and acquisition of land for resettlement of IDPs. If the government had taken sufficient stock of the costing for land reforms then there would not have been such a huge budget increase in allocations during the supplementary budget.

12 Consolidated fund services refers to all constitutional expenditures which take the first charge in the national budget13 The three bills referred to here are the constitutional land laws namely Land Bill 2012, Land Registration Bill 2012 and

National Land Commission Bill 2012

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Another evidence of Government not taking sufficient stock of cost is the ever widening gap between the land sector financial requirement and budget allocation (see Table 4). The Treasury has continued to ignore the Ministry of Lands costing while allocating budgetary resources. For instance; according to the latest ARD Sector report, the Ministry of Lands was to be allocated Kshs 7.491 billion in 2012/13. However, Treasury has gone ahead to allocate the Ministry only Kshs 5.058 billion as per the 2012/13 estimates of expenditure. Going forward, Treasury has projected to allocate the same Ministry Kshs 5.091 billion in 2014/15 against a requirement of Kshs 9.544 billion.

Concerning the National Land Commission, there is an allocation of Kshs125 million to cater for salaries and allowances of the Chairman, Deputy Chairman and other Commissioners. There is, however, no allocation for administrative functions which could delay the setting up of the Commission; which may consequently take a bit longer to start its operations. It is however expected that upon its establishment the Treasury, working together with the Ministry of Lands, will have to allocate or re-allocate the Commission some initial money to for set-up. Such allocations would have to be regularized through the supplementary budget in early 2013. This will then meet the constitutional requirement in Article 249 (3) that parliament should allocate adequate funds to enable the National Land Commission to perform its functions as a separate vote. In the next budget the National Land Commissions will have its independent budget like all other Constitutional Commissions.

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CHAPTER FIVE

CONCLUSION

The following conclusions can be drawn from the analysis of financing of lands and land reforms:

Expenditure of public resources in the Ministry of Lands is riddled with many audit • problems just like most of the other Ministries and Departments. Misappropriation of funds and failure to provide supportive documents for audit is rampant in the Ministry, signifying a perpetual inefficiency and lethargy. Further, the Ministry performs very poorly in collection of Appropriations-In-Aid assigned to it. This could be as a result of weak administrative structures, especially financial services.

The Ministry of Lands has been unable to absorb or utilize its full budgetary allocation • since 2006/07. Unless there is a rigorous programme to upscale its capacity to absorb resources, the Ministry will continue to have a weak case for demanding enhanced budget. They have failed to show their ability to absorb the additional funds. This could be as a result of internal capacity issues or due to poor planning. It could also be due to disbursement problems from Treasury.

Despite the overwhelming and sensitive responsibilities bestowed on the Ministry of • Lands the Kenya Government has not demonstrated the necessary support to this fundamental sector in terms of allocating the requisite resources that are necessary to make it play its rightful role. This is demonstrated by the meager resources that it has been allocated over time as compared to the required resources in the sector reports of the Agriculture and Rural Development Sector.

There area number of factors affecting transparency of budget information. They • hinder effective public participation in the budget process. The most important is lack of a legislative framework for public participation. Another includes technical nature of the budget in terms of language, form, and structure. The top-down approach has been deployed in the budget process for long thus the public have disassociated themselves from the process, hence the very low interest in budget matters.

The budget classification, as it stands, structured in vote, sub-vote, head, sub-head • and finally line item; still leave the expenditure items in aggregates to the extent that specific expenditure lines are lost to non-budget practitioners. The inadequate budget disaggregation is a great limitation to budget scrutiny particularly in view that the constitution demands that in allocating resources attention should be paid to the vulnerability of particular groups. The MTEF budget classification should now adopt a more disaggregated approach if the desired details in the budget can be monitored for implementation.

35


There exists a detailed and comprehensive costing of land reforms that was • professionally done in 2005. If the Government strictly follows the available costing with a few adjustments to cater for inflationary pressures then the envisaged land reforms are likely to be achieved.

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CHAPTER SIX

RECOMMENDATIONS

In view of the above findings the following are some short and long term recommendations:

Parliament should allocate money for the Land Settlement Fund in the 2012/2013 1. Budget so that the National Land Commission can begin the task of creating a more efficient and transparent settlement programme. The Land Settlement Fund must keep open and well-managed accounts, and these must be presented for audit annually with sanctions, in the event of failure to do so.

Additional development funds should be made available for the immediate 2. operationalization of the National Land Commission. Providing funds only for salaries will compromise the work of the Commission.

All Appropriation-in-Aid should be streamlined by converting it into revenue for 3. collection centrally by the Kenya Revenue Authority, in the same manner as the stamp duty.

The Public Accounts Committee should order for a forensic audit to be done on 4. the Agricultural Trustee Fund so that those found culpable for the delays and any misappropriation can be punished.

The Budget Policy Statement, which lays out the Government’s broad budget plans 5. for the year, should be tabled on time in March, and posted online immediately after it is tabled in Parliament (and no later than seven days after tabling).

The Budget Estimates must be made available to the public immediately after tabling 6. in Parliament, both at the Government Printing Office and on the Treasury website. The current situation, where these estimates are still unavailable to the public a month after their release, is unacceptable. The public cannot provide comments on documents it does not have access to.

The Budget must be written in a language and style that is easily understandable and 7. read-friendly for ordinary people if participation is to be meaningful. The initial attempt by the in developing a Citizens’ Budget from 2011/2012 is clearly a step in the right direction but this should be expanded to include more information in a systematic way for all Ministries, Departments and Agencies. The document should also explain technical budget terminologies, be translated into Swahili and provide more specific justification for the various allocations. This way citizens will be determine why some sectors are more valued than others.

37


A clear legislative framework for public participation in the public policy decision-8. making, including the budget process, should be enacted to replace the current unstructured system so as to improve the quality of such participation.

There is urgent need for transformation and change management strategies for the 9. Ministry staff. Unless this is done the envisaged land reforms as per the constitution would largely fail. In the meantime, the Ministry should recruit new professionals to lead the reforms instead of using its current staff, most of whom may not have the independence to drive the envisaged reforms and improve the absorptive capacity.

A comprehensive and urgent review of the costing for land reforms should be 10. undertaken based on the constitutional demands and the envisaged new legislation.

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BIBLIOGRAPHY

Government of Kenya, April 2012: Budget Policy Statement, Ministry of Finance1.

Government of Kenya, April 2012: 2012/13 Estimates of Recurrent and Development 2. expenditure of the Republic of Kenya, Government Printer.

Government of Kenya, December 2012: Agriculture and Rural Development MTEF 3. Sector Report

Government of Kenya, 2007: National Land Policy, National Land Policy Secretariat, 4. Ministry of Land of the Republic of Kenya

Government of Kenya May 2011: Economic Survey, Kenya National Bureau of 5. Statistics, Government Printer

Martin Adams, November 2005: A Report for the Coordinator National Land Policy 6. Formulation Process on the Budgetary Implications and Feasibility Assessment, Ministry of Lands

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