Recent events have thrust Kenya onto the global stage for both positive and negative reasons. On the one hand, the country’s youth have come to the fore of its political discourse, and on the other, the reported cases of violence have blighted the country’s effervescent image. 

More importantly, and in the ensuing events, the country’s legislature has witnessed an unprecedented moment. Following intense protests under the moniker #RejectNotAmend, there was a dramatic breach of Parliament. Despite his earlier firm stance, President Ruto, in a stark departure from his authoritative address the day before, much to the surprise and mixed reactions in the country, announced the withdrawal of the Finance Bill 2024. 

This announcement not only raises questions about the constitutionality of such an action but also has profound implications for the country’s fiscal policy, budget-making process, and the political landscape. It cannot be reiterated enough that this decision is precedent-setting and has huge ramifications for the financial year (FY) 2024/25. 

Hard rock-hard surface: The constitutional dilemma

Article 115 of the Constitution outlines the procedure for Presidential assent and referral of bills before they become law. The President is presented with the option of either assenting to the bill or rejecting it with reservations, which are then sent back to Parliament for reconsideration. Further, where the President does not assent or refer the bill back to Parliament, the bill will take effect as law within a stipulated period. 

Indeed, the Constitution is silent on the supposed withdrawal of a bill by the President after it has been presented for assent. House Rules, in the form of Standing Orders, outline the process of withdrawal of bills. The Standing Orders, insofar as withdrawals are concerned, indicate that a member may withdraw their bill at any time before assent. The question, therefore, begs as to whether the President was right to say he had withdrawn the bill. 

In an attempt to play within the law, the President has since shared a memorandum rejecting the Finance Bill with the National Assembly, which is currently on a month-long recess. He cited his reasons as the public rejection of the bill and asked for the deletion of the clauses of the entire bill. While the determination of the next steps now lies in the hands of the National Assembly led by the Speaker, it cannot go without saying that the supposed withdrawal of the bill by the President and subsequent attempts at remedying the anomaly was navigation outside the established legislative framework, setting a potentially contentious precedent.

Implications for FY 2024/25

The Finance Bill is a cornerstone of Kenya’s fiscal policy, outlining revenue-raising measures to meet the country’s budgetary needs for the financial year. While the Finance Act 2023 remains in force, this situation certainly throws FY 2024/25 into a state of uncertainty. Without a clear legislative framework to guide revenue collection and public spending, the government faces significant challenges in maintaining fiscal discipline. Key programs and projects may face delays or cancellations, potentially stalling economic growth and development.

Impact on budget-making process

The budget-making process in Kenya is a complex and iterative cycle involving multiple stakeholders, including the Treasury, Parliament, the President, and even the citizenry. The withdrawal of the Finance Bill disrupts this cycle, creating a vacuum in fiscal planning. 

The government will need to expedite the drafting and approval of a new Finance Bill to avoid a fiscal crisis and potential revenue deficits, as the Finance Act 2023 may not be able to meet the targets of FY 2024/2025.  The scenario we find ourselves in currently highlights the need for a more robust legal framework to address such unprecedented occurrences and ensure continuity in fiscal policy.

Policy implications

In the grand scheme of things, policymakers must retrospect on the policy implications, including: 

• Legislative reform: The withdrawal of the Finance Bill underscores the need for legislative reform to clarify the President’s powers regarding bill withdrawal. Such reforms could provide a clear procedure for addressing contentious bills without resorting to extra-constitutional measures.
• Public trust: The President’s decision may be perceived as a response to public pressure, potentially enhancing his popularity. However, it also raises questions about the stability and predictability of Kenya’s legislative norm, which could erode public trust in the government’s ability to manage fiscal policy effectively.
• Economic stability: The uncertainty created by the bill’s withdrawal could impact investor confidence and economic stability. Clear and predictable fiscal policies are crucial for attracting investment and fostering economic growth. The government must act swiftly to restore confidence and ensure economic stability.

Conclusion

The unprecedented events surrounding the Finance Bill 2024 have brought to the fore critical concerns about the country’s fiscal policy and budget-making process. Not only does the country need to navigate the miry clay we find ourselves in currently, but it also needs to begin a thought process that prevents similar occurrences in the future. This needs to be done urgently, as the stability and predictability of our fiscal policy remain essential in fostering a conducive environment for economic growth and development.

In the coming months, the government’s actions will be closely watched by both domestic and international stakeholders. Swift and decisive measures to restore fiscal order and legislative clarity will be essential in mitigating the potential negative impacts on Kenya’s economy and political stability. The lessons learned from this episode need to be instrumental in shaping the future of Kenya’s legislative and fiscal landscape.