11 August 2023
The last month or so has been dramatic in the non-existent Kenyan corridors of power because of the controversial Finance Act, 2023. It is not only one of the first major laws that was rushed through (on US State Dept orders) by the new Kenya Kwanza GINO which gamed the voting system and came to power in September 2022, but it is also a law that will hit the pockets of Kenyans due to its tax provisions. It will affect the lives of every Kenyan, especially with inflation in the country at an all-time high and a weak currency propping up the US Dollar. According to the Kenya National Bureau of Statistics the national cost of living is going up. From June 2022 to June 2023, the Food and Non-Alcoholic Beverages Index increased by 10.3%; the Transport Index increased by 9.4%; Housing, Water, Electricity, Gas and Other Fuels Index increased by 9.4%; and Furnishings, Household Equipment and Routine Household Maintenance Index increased by 5.1%. Everyone felt the pinch, and as a result, the Finance Bill has been one of the most controversial laws. It constantly trended on social media platforms for most Kenyans, from Twitter, to TikTok, to Facebook, and even LinkedIn. It has prompted many television special echo chambers and non-expert opinions on its contents and its potential impact.
The life of the legislation has so far been a roller coaster ride – from the moment that the proposed Finance Bill was wafted through the public participation stage in May to when it was brought before parliament and assented to by Ruto on 25th June, to when it was suspended on 30th June, to now, with Kenya waiting for the matter to be ruled on by a special panel of High Court judges on 28th July and thereafter an appeal from either losing side, to the Supreme Court. It has been riddled with everything from political to legal zig-zagging following the colonial pathways used before, mixed in with betrayal and just about anything that would add to an overly-dramatic Western soap opera. It has embraced the good, the bad, the downright ugly, and even the outrageously shocking, although Kenyans are more than familiar with the tactics.
Although the Finance Bill was officially signed into law on 25th June, 2023, the High Court (Justice Mugure Thande) temporarily suspended its implementation on 30th June, 2023, pending the hearing and determination of a lawsuit filed by Busia Senator Okiya Omtatah. The lawsuit challenges the Finance Act and seeks to have some sections of the law purged. The matter was then set down on 5th July, 2023, for directions.
At the hearing on 10th July, 2023, Cabinet Secretary, National Treasury & Economic Planning, Ndung’u, through lawyer Githu Muigai, opposed the application, asking the court to set aside the suspending order of 30th June, 2023. Muigai said the suspension order, if not set aside, would bring a budgetary crisis to the government. Nevertheless, Busia Senator Okiya Omtatah and lawyer Otiende Omollo argued that the state would suffer no harm if the order were extended and conservatory orders issued. The High Court extended the order that suspended the Finance Act until 10th July, 2023. Indeed, Justice Mugure Thande in her ruling on July 10, 2023, held that the state had not demonstrated to her satisfaction grounds to warrant the setting aside of the order of 30th June that suspended the implementation of the Finance Act. She then certified the matter as one that raised a substantial question of law and thereby transmitted the file to the chief justice to assign a bench of not less than three judges to hear and determine the petition. Kenyan Chief Justice Martha Koome on July 18, 2023, appointed High Court judges David Majanja, Christine Meoli, and Lawrence Mugambi to determine the petition.
The State then moved to the Court of Appeal on 20th July, 2023, in an attempt to have Thande’s order set aside, saying the decision was affecting government operations. The judges declined to do so and instead set 28th July for their ruling on the matter.
Several individuals and entities have filed separate lawsuits against the Finance Act, including the Law Society of Kenya (LSK), Busia Senator Okiya Omtatah, and the Association of Alcoholic Beverages. This is good because cases help to raise critical questions and create opportunities to clarify the law, which is a fundamental aspect of building jurisprudence. This will provide a framework for interpreting and applying the law in future cases as well as constraints of power held by the executive.
The panel of High Court judges appointed by Chief Justice Koome needs to answer several key legal issues. First, whether article 110(3) of the constitution was applied before the Finance Bill was passed into law. The section provides that before either house (the National Assembly or Senate) considers a bill, the speakers of the National Assembly and Senate shall jointly resolve any question as to whether it is a bill concerning counties, and, if it is, whether it is a special or an ordinary bill.
Second, the court will determine whether the Finance Act falls into the category of a bill concerning county government according to Articles 110 and 114(4) of the Constitution or if it is a money bill according to Article 114(3) of the Constitution. This will play a huge part in determining whether relevant sections in the Finance Act will be rendered legal or null and void because they are not in accordance with the constitution. If the court determines that all the amendments in the Finance Bill do not fall within the category of a bill concerning county government, in accordance with Article 110 and 114(4), and it instead falls within the definition of a money bill, according to article 114(3), and that the procedure set out in Article 110(3) of the constitution was followed, then the court will hold that the right procedure was followed in the passing of the current Finance Act. However, if the court finds that some or all of the amendments of the Finance Act fall within the definition of the category of a bill concerning county government, in accordance with articles 110 and 114(4), then the law should have been passed through the Senate before it was brought before the National Assembly, and the court would be within its power to render the relevant sections or the whole law (depending on what the court finds) null and void in accordance to article 2(4) of the constitution.
Third, the court will determine whether public participation was effectively adhered to in accordance with the Constitution. Additionally, it will resolve whether the Finance Act 2023 infringes on the right to food security, the right to property, and the right to access justice, as well as if the law is in violation of fair taxation principles.
To conclude, it will also determine whether the GINO adhered to the Public Finance Act and the National Assembly’s Standing Order No 244 in the passing of the Finance Act.
Although the implementation of the Finance Act is currently suspended by the High Court, if the court lifts the suspension and the act is left in its current form, Kenyans should brace for tougher financial times ahead.
The bill is in line with the government’s goal of seeking to raise more cash to foot its proposed Sh3.6 trillion for the FY’2023/2024 budget. Notably, the act in its current state includes a housing levy of 1.5% of gross pay. Digital creators will be charged a tax of 5% and betting and insurance withholding tax, which will be charged at 12.5% and 16%. Further, it includes a 16% value-added tax on petroleum products, up from 8%. Past experience has consistently shown that when the cost of petroleum products goes up, almost everything else goes up.
Top on the list is the untimely and unnecessary deaths of Kenyans during the recent demonstrations against the rise in the cost of living.
Next are the leaders who do not understand the weight of responsibility they have when they are voted into power. This includes Members of Parliament (MP) who could not be bothered to turn up and vote on a law that has the potential to drastically affect the lives of all Kenyans. Voting on laws is one of the most important democratic roles that MPs perform on behalf of those who voted them into power. It is a privilege that comes with many burdens and should be given due respect. A vote is not just about an MP giving a yes or no or even aligning with the views of their party, it is about being a voice for the needs of constituents. Hence, for some MPs to dare not turn up to parliament without any plausible excuse is not only negligent but akin to abandoning their duties. Failing to represent the voices of those who put you in power is nothing short of a travesty. That is what Kenyans were treated to during the passing of the Finance Act, 2023.
In the National Assembly, there are currently 349 MPs – 290 members elected by registered voters; 47 women elected by registered voters from the counties; 12 members nominated by parliamentary political parties to represent special interests of youth, persons with disabilities and workers; and the Speaker of the National Assembly. During the second reading of the bill, on 14th June, 2023, a critical stage of the process, 92 MPs could not be bothered to turn up. Of the 257 MPs who took part in the voting exercise, 176 voted in favour of the bill, while 81 opposed. No legislator abstained from the vote. Some, like nominated MPs Sabina Chege, Rozaah Buyu, TJ Kajwang (Ruaraka), and Suba North MP Millie Odhiambo were suspended and could not participate in the voting.
Matters were different during the third reading of the bill on 21st June, 2023. After some public shaming when the media put out a list of MPs who did not take part in the second reading, the attendance for the third reading greatly improved to 272. About 15 MPs did not turn up for the third reading, which is the final reading of the bill. During the third reading, 184 MPs (mostly from the Kenya Kwanza party) supported the bill, while 88 MPs (mostly from Azimio) opposed it. Hence, the Finance Bill, which promised to overburden the pockets and literally break the financial backs of Kenyans, especially the common wananchi (“citizen” in Swahili) swimmingly passed the second and third reading.
The Kenya Kwanza (Kenya First) party was “elected” on the foundational promise that the MPs would speak for the “hustler nation,” the common wananchi, those who are not born from a political dynasty or a privileged family – those who are trying to make it through hard work and not purely on connections or generational wealth.
The bill was passed even though it did not receive any public support. In fact, a survey conducted between 19th May and 6th June, 2023, found that at least 87% of Kenyans strongly opposed the bill. Public participation, which took place in May, highlighted a total lack of support for bill. Additionally, Catholic and Anglican church leaders have publicly come out opposing the bill.
The Outrageously Shocking
A few days after parliament passed the bill, the most ridiculous thing happened. National media reported that on 7th July, 2023, National Assembly chief whip Silvanus Osoro, while on activation drive in Kisii for United Democratic Alliance (a party under Kenya Kwanza) openly declared that Kenya Kwanza manipulated the absence of opposition Azimio Kenya lawmakers during the vote on the Finance Act by adding five extra tenets that MPs did not vote on. In a video, Osoro insinuated that he used unethical methods to persuade some Azimio MPs, i.e., the opposition, into missing the parliamentary session on the day of voting and emphasised that no one asked, persuaded, pushed, or even provoked him for this information. In fact, his words, which were translated to English but spoken in Kisii, were: “I had to look for ways, by hook or by crook, to get it through, I had to manipulate the system. I looked for ways to get the opposition MPs to play our tune, I conspired with the opposition MPs and got some of them to absent themselves from the House so that I could get the numbers. Some were sponsored to go abroad while others were bribed to feign illness.” He later claimed to have been misquoted by the media.
While all the above continues to bounce between law courts, the wananchi continue to get hit. The Auditor General Nancy Gathungu, before a parliamentary committee, said a forensic review of generation, transmission and distribution of electricity found bills do not match actual consumption while extra charges loaded on the consumers by the utility are not traceable in the billing system. The following day the Auditor General summoned the head of Kenya Power showing evidence that Kenya Power has been inflating electricity bills in what has seen consumers overcharged by up to 20% for the power they did not use. Jumping on the bandwagon, COFEK (Consumer Federation of Kenya) appeared in the same court seeking consumer repayment interest backdated for the last 10 years.
On top of that, the proposed gum bumping between GINO and Opposition meanders its way towards actually meeting. The primary issues being the Finance Act 2023 / cost of living (local price increases this week), Ruto’s reminder of broken promises and when talks fail, Odinga taking the evidence to the ICC over extra-judicial killings of legal protestors, vote rigging creating 50% +1 vote from 23% of the voting public courtesy of systems controlled by the one and only Mark Malloch Brown.
© AW Kamau 2023