1. The Sugar Development Levy was scrapped during the 2016/17 budget speech. It used to cater for roads and bridges in the sugar belt. It was also cheap source of money for factories during maintenance. Out-grower companies also relied on it.

Who takes care of the said maintenance roles now? Could the government have inadvertently allowed a "free fall" without arranging for an alternative and communicating the same to farmers and other stakeholders? It would be nice if the CS Rotich harmonised his response with Agriculture Ministry so that we get one official position. (David Okello, Nairobi).

The removal of this levy was based upon advise from the Ministry of Agriculture and was even extended to other crops like coffee, tea, and sugar. The aim is to ensure that more money reaches the farmers so that they benefit more from their efforts. The activities for roads, bridges etc.  will be financed through the normal budget process.

2. The Treasury has in the recent past stated that the Auditor General always gets it wrong for government funds are never stolen. Please elucidate on this. (Githuku Mungai, Nairobi)

The National Treasury compliments the office of the Auditor General in the oversight of public funds at both levels of Governments and therefore we work closely with the Office of the Auditor General in this respect.  It is important to note that unsupported expenditure does not mean loss of funds but that the relevant documents supporting those expenditures have not been availed to the Auditor in time. The issue that the Treasury has raised consistently was regarding the allegations that public funds have been lost, whereas the key issue at hand as reported by the Auditor General is on un-supported expenditure by the respective Ministries Departments and Agencies (MDA’s). These support documents in most cases were availed to the auditors at the time of conclusion of the audit but the audit report still reflected expenditure as unsupported. This is usually confirmed later by the National Assembly’s Public Accounts Committee when respective Accounting Officers of MDA’s appear before them and table the requisite expenditure supporting documents.  There has however, been substantial improvement in terms of communication between the auditor and the auditee and has hence reduced this problem.  

3. Have you ordered the Water Ministry to respond to the Auditor General's audit query on unaccounted for Sh11.2 billion Eurobond money in year 2014/ 2015? (Githuku Mungai, Nairobi)

The National Treasury has indeed ordered all Ministries, Departments and Agencies including Ministry of Water and Irrigation to respond to all audit queries raised by the Auditor General with regards to the audit findings of financial year 2014/2015. These responses shall be considered by the National Assembly’s Public Accounts Committee who shall make appropriate recommendations on the way forward.

4.    Why is it taking too long to merge the National Bank of Kenya with other talked of government owned banks? (Githuku Mungai, Nairobi)

The National Treasury had engaged a consultant to look at the matter in a more analytical and objective approach and come up with informed recommendations. The consultant has now prepared a report which we are studying with a view to implementing the recommendations.
5. In 2013 the Kenya Agricultural & Livestock Research Organization (KALRO) was formed by merging Kenya Agricultural Research Institute, Kenya Sugar, Tea and Coffee Research Foundations. Why has it taken the Treasury too long to allocate funds for research in Kalro and harmonise staff salaries? (Maurice Mudeheri)

Beginning Fiscal Year 2016/17, funds for research have been provided for through the National Research Fund and it is from this fund that all government research institutions will obtain funding. KShs 3 billion have been budgeted for this financial year. With respect to staff matters, KALRO has received approval from the Salaries and Remuneration Commission and will soon start the exercise.

6. Is it true that the government has over 10,000 accounts with commercial banks? Why have funds lying idle in these accounts when the government is the biggest borrower? Why won't you listen to Jaindi Kisero's advice to consolidate all government's bank accounts into a manageable number? (Millicent Wahome, Nyeri)

The Public Finance Management Act, 2012 allows Government to open and operate bank accounts. Most of the government bank accounts maintained in the commercial banks are owned by Semi-Autonomous Government Agencies such as universities, hospitals, schools, colleges and health centers e.t.c. Prudent public financial management requires that the management and administration of these institutions run their own funds as opposed to lumping funds owned by various entities into one bank account. However, the National Treasury has commenced the process of creating a database of all bank accounts maintained by government entities both at the Central Bank and Commercial Banks with a view to harmonizing them and ensuring no idle balances are in kept in these accounts. This will ensure that all funds maintained in banks accounts are properly disclosed and accounted for. In addition, the National Treasury is in the process of implementing a Single Treasury Account aimed at enhancing efficiency in management of its cash flow.

7. There has been long delays in paying legitimate claimants compensation arising out of wildlife damage and accidents. When will you release money for wildlife compensation? (Dr Joachim Kagiri, Mweiga Sub-county)

The Ministry has provided for some money in their budget for this purpose. But for a long-term and sustainable solution, the Ministry is working with the National Treasury to set up an insurance scheme to cover victims of human-wildlife conflict.

8. Nairobi is strategically located to be a leading financial hub that can have billions of funds under asset management in Africa instead of African millionaires taking funds abroad. Equally, Kenya has a rapport with other African countries to create the necessary confidence. Does the Treasury have any plans to ensure assets under management in Kenya come from other African countries and that Kenya becomes a financial hub attracting and funding resource exploitation across Africa? (Moses Kimutai)

The National Treasury established Nairobi International Financial Center through a legal Notice in May, 2014 whose key objectives are to: mobilize domestic, regional and international savings and investments to spur sustained growth in Kenya, attract Foreign Direct Investments (FDI) into the financial services sector; and generate production and export of international financial services from the financial centre. The policy framework is ready and we are about to complete the legal and regulatory framework (NIFC Bill, 2016 will be submitted to Cabinet and National Assembly for approval). We plan to launch the NIFC during early 2017.

9. I appreciate we have an economics scholar as our finance minister. From this perspective public expectations abound on your performance. First, are you aware of a fact-finding mission conducted personally by your colleague in cabinet, Dr Fred Matiang'i, which established five pupils share one text book and public universities have no libraries and those that are fortunate to have stock outdated books? In this context, what value do VAT on textbooks make to education in Kenya? As a scholar, don't you think taxing knowledge is unhelpful, defeatist and retrogressive? (Njoroge Waweru, Kikuyu)

The Government has been providing free primary education and recently introduced free secondary education. For public primary schools, books are provided free of charge.  For private schools, it is for those who can afford and they should be able to pay the tax. With respect to the challenge of insufficient text books, this is basically an administrative problem and the Ministry is dealing with it.
10. In 1988 I heard about clean drinking water for all by year 2000. Subsequently all governments that have hitherto been in power have put safe drinking water as an agenda in their manifestos, but water, leave alone clean and safe, is still a scarce resource even in big cities in Kenya like Nairobi. In this regard, can you justify why you have imposed multiple taxes on bottled drinking water when you know very well that this has been an innovation to bridge the perennial clean water deficit? How does the government spend the VAT and exercise duty it collects from bottled water? Do you think that money is enough to provide clean drinking water for all Kenyans by year 2030?Don't you think you are killing investment in the bottled water industry by imposing exercise duty and there by compromising standards of the water being packaged? (Teresiah Wangui, Kangema)

As many Kenyans have noticed, we have allocated a lot of money in infrastructure including investing in water. The Government, through the Ministry of Water has put in place many initiatives to provide clean water to many Kenyans as witnessed by the many water projects throughout the country.  It is only bottled water that is taxed and the explanation is that bottled water is used by a very small proportion of Kenyans who can afford it.  Bottled water is also a very small proportion of the water that is available to Kenyans.

11. Twenty years down the line and numerous court cases including contempt of court for failing to honour Sh42.5 billion awarded to retired teachers of 1997 and beyond, only Sh1.5 billion as per the last Nakuru court sitting has been released. Is there no contingency fund like that that can settle the matter or is the government waiting for these teachers who have taught ministers and MPs among others to die? (Alex Homem, Nairobi)

Now that we have a clear court ruling, the Pensions Department is working with the Teachers Service Commission to determine the number of teachers involved, the amounts owed to each, and immediately start payments. Considering the huge amounts involved, we will negotiate a payment plan that will spread the payments over a reasonable period of time beginning financial year 2015/16, where we allocated Kshs. 1.5 billion and this financial year 2016/17 a similar amount.

12. As Kenyans celebrate the 6th year of our constitution, a recent opinion poll established that a majority of Kenyans consider devolution as one of the outstanding benefits of it. However, your ministry has been accused of trying to undermine it through acts of omission or commission. Governors claim you have consistently failed to release funds at the agreed periods while you have spent our taxes to publicize balances of each county at their respective accounts at the Central Bank. Sir, who is fooling who? Are you playing politics with our survival? (Komen Moris, Eldoret).

The National Treasury has been at the fore front in supporting Devolution in Kenya. We regularly release funds to the Counties as per the agreed schedule that is approved by the Senate and gazetted by the Cabinet Secretary. Since devolution started, the National Treasury has disbursed fully all allocations due to County Governments by 30th of June each year.  Moreover, we have been supporting devolution not only through financial transfers but also in terms of human and institutional capacity building. Regarding publication of county bank balances, the Public Financial Management ACT requires the Cabinet Secretary to publish money released to Ministries, Departments, and Agencies as well as Country Governments. We must also abide by the principle of openness and accountability. Accordingly, there is nothing wrong with publishing county bank balances.

13. Dumping of toxic and substandard goods and tax evasion in the country have reached alarming levels. What concrete, viable and smart measures have you put in place to arrest this grim situation that threatens our fragile economy? (Enock Onsando, Mombasa)

Over the years, Kenya Revenue Authority (KRA) has been implementing reforms to eliminate tax evasion. For example, we have put in place measures to address under-valuation, under-invoicing and transfer pricing. In addition, as part of these reforms, we have in place rules regarding controls on Container Freight Stations (CFS’s) and importers obtaining a  pre-Inspection Certificate of Conformity to ensure that goods entering the country are in accordance with our standards and the valuation is in order. Furthermore, KRA has integrated port and customs management including introduction of iTax, and has strengthened Customs and Border Controls.  With respect to toxic and substandard goods/ materials, the Kenya Bureau of Standards (KEBS) and the Kenya Counterfeit Agency are putting in place measures to deal with this problem.

14. There was a time back, whereby I read from a certain local article that you, that is the National Treasury Cabinet Secretary reported that a large chunk of cash, almost Sh196 billion was poured into infrastructure while other Sh53 billion was tied up in a foreign account for the purpose of paying external debts. Can you clarify what these external debts are about? What criteria should be followed to enable the government debts outside the country? How can Kenyans know whether the external debt are actually being paid and to whom? (Katee Martin)

In recent years, we have allocated a lot of money in infrastructure and the funds are mobilized from revenue collection and domestic as well as external borrowing. Our borrowing is informed by our debt management strategy which we present to parliament every fiscal year. There is no money stashed in a foreign account to repay foreign debt. Debt repayment is reflected in the budget that is approved by parliament each fiscal year.

15. The mandate of the National Treasury is to ensure prudent management of the economy and promote sound financial management practises. Though you have done fairly well on the economic management but on financial management you have done poorly and this has been attributed to the fact that some senior officials of the respective departments do not hold requisite qualifications especially in accounting and finance. What are you doing to address this shortcoming? (Stanley M.  Nganga, Bahati Nakuru)

Thank you for acknowledging the sound economic management by the Government.  Contrary to your assertion that there are senior officers without the requisite qualifications and competence, public finance management is one of the most professionalized area in Government and may be in Kenya. Towards, this end, the National Treasury recently formed Public Sector Accounting Standards Board (PSASB) which has recently adopted an aggressive capacity building programme that has seen over 3,000 accounting, finance officers and internal auditors trained on a biannual basis on wider aspects of public finance management that includes procurement, budgeting, accounting, reporting, and use of IFMIS, e.t.c. This initiative is intended to raise the job competences and skills of government public finance professionals. This programme shall be sustained for the foreseeable future until the government achieves a critical mass of well-trained finance professionals.

16. Sir, tell us the difference between treasury bills and treasury bonds if there is any. How can ordinary Kenyans acquire them? How do they affect the economy of the country? (Patrick Muniu, Juja, Kiambu)

A treasury bill is a paperless short-term borrowing instrument issued by the Government through the Central Bank of Kenya to raise money on short term basis – for a period of up to 1 year. Treasury bills are issued in maturities of 91, 182 and 364 days. Treasury Bonds are medium to long term debt instruments, usually longer than one year issued by the government to raise money in local currency. Maturities of Treasury Bonds that have been issued so far range from 1-30 years.  More information is available in th Central Bank website. Further, the National Treasury is in the process of developing a product (M-AKIBA) to allow ordinary Kenyans to participate and access the Treasury Bills / Bonds and we shall shortly be launching this product. The funds accrued shall finance priority expenditures such as roads, water, energy etc.