Opaque budget cycle process dims Kenya’s investment potential
By Noel.Wandera, May 31, 2024
Kenya’s limited transparency and public involvement in the budget cycle process is negatively impacting the country’s ability to attract foreign direct investment (FDI), latest survey by the Institute of Public Finance (IPF) reveals.
James Muraguri, the CEO of IPF said the importance of adequate budget cycle information and stakeholder participation lead to more informed, transparent, and accountable investment decisions, which are crucial for the success of any financial endeavour.
Budget priorities
“Transparency and participation in the budget process are consistently associated with improvements in the quality of the budget, such as a lower deficit, more targetted budget priorities, and increased operational efficiency. These values can also lead to better governance and redirection of spending to marginalised communities,” Muraguri said.
The Open Budget Survey (OBS) 2023 country analysis was conducted in collaboration between IPF and the International Budget Partnership (IBP), and released yesterday. It reveals that Kenya’s transparency score has remained stagnant at 55 since 2021. Despite being above the global average of 45, this score falls short of the international benchmark of 61, which signifies sufficient transparency to foster informed public debate on the budget.
Muraguri said that Kenya is currently seen as a country providing limited information, which creates uncertainty and hampers investment attraction.
“Right now, we are considered as a country that is providing limited information and that is not good in attracting investment as a country because of uncertainty,” he said on the sidelines of the launch event.
However, Muraguri also mentioned that the National Treasury has committed to improve this score by availing the necessary information and engaging citizens at all stages of the budget-making process.
Despite Kenya’s strides in budget transparency through online audit reports, the survey findings indicate room for improvement.