Support project to the implementation of the Public Finance Management reform strategy, through the GESDEK Program in Kenya – KENGEFIP

In Kenya, the National Treasury has initiated several Public Financial Management Reform (PFMR) initiatives under the PFMR strategy 2013-2018 that was renewed in a 2018-2023 Strategy. This PFMR strategy seeks to make Public Finance Management more efficient, effective, participatory and transparent resulting in improved accountability and better service delivery for Kenyans. The new County governments also have PFM responsibilities that were integrated within the new PFM strategy produced in 2018. The current PFMR strategy is based on eight results areas outlining key PFM reforms:

1. Sustainable and predictable fiscal space to deliver government programs.
2. Strategic and Transparent Spending on Public Investment and Service Delivery in Line with National and County Policy Commitments
3. Reliable cash for service delivery and public investment.
4. Value for money in procurement and contract management.
5. Value for money, performance & accountability in staffing for service delivery
6. Education institutions, health and other service facilities effectively manage public resources.
7. Disciplined financial management and accurate reporting.
8. Accountability delivered through audit, oversight and follow up

AFD has agreed to support the implementation of the PFMR Strategy, along with a sectoral budget support - GESDEK – co-financed with the World Bank, which uses the “Program for results” tool. The AFD support will be funded through two means:

• A soft loan in the form of a Sector Budget Support (SBS), of 30 million euros.
• A grant in the form of a Technical assistance support (TA) of 1.5 million euros, managed by Expertise France, the French public agency for international technical assistance.

The TA support will also aim to promote partnerships between Kenyan institutions and their French counterparts. Expertise France will ensure the mobilization and coordination of the technical expertise.

The PFMR Secretariat of the National Treasury has recruited a local coordinator in order to (i) monitor the implementation of the TA support in conjunction with the other departments of the National Treasury and the Office of the Auditor General, and to (ii) coordinate and complement the short-term expertise supports. 

Public investment context

A recent PFM assessment quoted that among core pillars of PFM, PIM needed strong development:  “A medium term perspective is required for selecting capital projects consistent with a government’s development strategy and which meet project appraisal criteria. Once selected, they should be entered into the MTEF (Medium Term Expenditure Framework) and annual costs budgeted for.” […] “As yet there is not a standard set of rules and procedures to be followed when monitoring progress in investment project implementation”.

The implementation of a comprehensive process will ultimately allow the allocation of public resources to projects with the best social and economic returns ("value for money") and in accordance with the strategic orientations of state policy.

The National Treasury has setup a PIM unit (Public Investment Management unit) in order to establish and manage this framework.

The main tasks of this unit should be the following:

• Establish a normative framework and unified criteria for the evaluation of projects initiated by the line ministries, then extended to those of public institutions and public enterprises that have signed program contracts with the State, and finally to the projects of the local authorities;
• Use this framework to evaluate proposed projects;
• Propose the necessary arbitrations between these different projects;
• Evaluate the relevance of the envisaged contracting method (public market, PPP ...);
• Manage a database of projects using a dedicated information system;
• Follow up on selected projects.