House rejects Sh4b maize subsidy

Parliament has rejected the payment of Sh4 billion for maize flour subsidy on account of non-disclosure of the quantity of maize supplied and the areas in which the subsidised flour was supplied.

MPs also noted that the retail outlets involved in the distribution of the commodity were not disclosed.

The matter now becomes an audit query for the Auditor-General to open an inquiry to establish how the money was spent without the approval of Parliament as required by Article 223 of the Constitution.

National Assembly’s Budget and Appropriation Committee has also rejected the expenditure of Sh10 billion spent under Article 223 of the Constitution.

The law states that the national government can spend monies that have not been appropriated by Parliament on three conditions; if the amount appropriated for any purpose under the Appropriation Act is insufficient; or secondly, if a need has arisen to spend money for purposes for which no amount has been appropriated by that Act. It can also be allowed if the money has been withdrawn from the Contingencies Fund.

Among issues raised by the committee chaired by Kiharu MP Ndindi Nyoro are that, among the approved expenditure that had not been disbursed was Sh17 billion for the fuel subsidy programme. The committee thus raised concerns on the criteria that was used to disburse another Sh25.6 billion that had been approved and spent.

In its report on the first Supplementary Estimates for the year 2022/2023 tabled yesterday, the committee noted that out of Sh127.5 billion allocated to the national government, only Sh75.7 billion had been spent. 

About half of the disbursed amount was spent on August 4 and 5, 2022, about a week to the election.

The committee, according to Nyoro, sought an explanation from the Controller of Budget on the justification for the approval of such expenditure at the time. “In her submission, the Controller of Budget informed the committee that her office was under undue pressure and duress to approve some of the said disbursements,” Nyoro said while tabling the report in the House.

Budget process

The committee has also called for an inquiry to probe the payment of Sh6 billion for the exit of Helios Investment from the shareholding of Telcom Kenya Limited, Kenya’s third largest telco after Safaricom and Airtel.

Nyoro said, “The committee noted that there was no justification provided for such payment under Article 223 and why the payment could not wait for the normal Budget process.”

Leader of Majority Kimani Ichung’wah said there was blatant misuse of Article 223 during the tail end of the Jubilee administration, whose term ended in September.

Although much of the money went to the payment of subsidies for purchase of maize, millers were not paid and many Kenyans did not benefit from the affordable maize flour.

“What happened to the fuel and maize subsidies? Parliament must probe the payments and those who authorised them,” Ichung’wa posed.

Despite raising the questions, the Budget Committee has, however, approved the utilisation of Sh12 billion intended for the Annuity Fund to finance approved road projects.

The money will be refunded by the Exchequer in future appropriations to the fund based on annual requirements. “The alternative financing from the Annuity Fund is to avoid interest and other penalties on delayed payments for road projects,” says the report in part.

Several expenditures under Article 223 have been approved under the Kenya Kwanza administration, which succeeded the Jubilee administration. According to the Budget Committee, the new expenditure items were to enable the new administration to settle and undertake a comprehensive review of the Budget. Among the major disbursements made by President William Ruto’s government include Sh10.2 billion towards operationalisation of the Financial Inclusion Fund, commonly known as the Hustler Fund and Sh3.8 billion for the fertiliser subsidy programme.

Financial inclusion

The parliamentary team further noted that there is no radical shift in government policy based on the changes in the supplementary estimates, but there are key indicators that signal the policy direction of the new administration. 

“These include efforts towards fiscal consolidation, shift from consumption to production subsidies, support of Small Medium Enterprises as evidenced by allocation to the Hustler Fund and empowerment of Kenya Revenue Authority for enhanced revenue mobilisation,” it states.

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