If passed into law, the Constitution of Kenya (Amendment) Bill, 2024, is set to significantly alter the political landscape and impact the operating environment for private sector businesses in Kenya. The Bill, first read in the Senate in September and subsequently referred to the Justice and Legal Affairs Committee for consideration, proposes sweeping changes to Kenya’s governance structure and fiscal arrangements.

At the heart of the proposed amendments is an increase in county revenue allocation from 15% to 40% of national revenue. The national government, facing a substantial reduction in its available funds, would need to find ways to maintain its essential services and obligations. This could potentially lead to the introduction of new taxes or the increase of existing ones to bridge the revenue gap. The proposed legislation’s most immediate impact on the private sector would likely be felt in the realm of taxation. Businesses might face adjusted tax structures as both national and county governments seek to maintain their operational capabilities. This means a more complex tax compliance environment. On the plus side, an increase in resources for country governments could potentially have a positive ripple effect on businesses. The increased funding to county governments could translate into improved local infrastructure and other facilities that directly impact business operations if the funds are utilised efficiently. Local businesses could see increased opportunities for government contracts at the county level in the face of such a change.

The Bill’s introduction of a Prime Minister position adds another layer to Kenya’s governance structure, potentially creating new channels for business-government stakeholder relations. This structural change, coupled with the proposed extension of electoral terms from five to seven years for the President, Members of Parliament, and County Governors, could result in extended periods of policy continuity. For the business community, extended terms pose a double-edged sword. While this would mean a more stable policy environment allowing for confident long-term investment decisions and strategic plans, the private sector runs the risk of extended periods of unfavourable policies. Further, with leaders staying in power for seven years, companies might want to invest more resources in building sustainable relationships with government authorities and adapting their operations to align with longer-term policy directions. 

The Bill is still in its early stages and must navigate several challenges before it can become law. Currently, it is under public scrutiny, with the National Assembly inviting submissions by Friday, October 25, 2024, and a public hearing scheduled for the same day. Adding to the uncertainty about the Bill’s future, the ruling United Democratic Alliance (UDA) party has publicly distanced itself from these proposed amendments. The party has described the Bill, introduced by Senator Samson Cherarkei, as a “sensational distraction” and “legislative mischief,” raising reasonable doubt about its prospects for success in Parliament.

The proposed constitutional amendments could represent a significant turning point for Kenya. While extending electoral terms might offer more stability by allowing leaders more time to implement their policies, it raises important questions about democratic oversight. This is particularly relevant in a context where some leaders have faced criticism for their effectiveness. It is noteworthy that this proposal comes from an MP within the ruling party, which has been grappling with civil unrest over governance issues. This raises concerns about the motivations behind such changes. It is also worth noting that the United Democratic Alliance (UDA) has distanced itself from this proposal, reflecting a commitment to maintaining democratic principles. Kenya has made considerable strides in building a democracy that benefits its citizens and tampering with the mechanisms that ensure accountability could hinder progress. The experiences of our neighbouring countries serve as a reminder of the potential consequences of weakening democratic institutions.

Supporters of the change may argue that it will lead to greater political stability, more time for policy implementation, and long-term planning. Critics, on the other hand, may warn that it risks undermining democracy by reducing accountability and allowing for the entrenchment of political elites. It is a moment that could set a precedent for how power is distributed and exercised in the future. Decisions made in this period will have lasting implications for the nature of governance and the democratic fabric of the nation. The extended electoral terms could either bolster long-term policy-making or weaken the accountability mechanisms that are crucial for a healthy democracy. Either way, it is clear that this is a pivotal moment in Kenya’s political evolution.