55640 BETTER REGULATION FOR GROWTH GOVERNANCE FRAMEWORKS AND TOOLS FOR EFFECTIVE REGULATORY REFORM REGULATORY CAPACITY REVIEW OF KENYA INVESTMENT CLIMATE ADVISORY SERVICES WORLD BANK GROUP WB206_RCRK.indd i 5/19/10 12:20:56 AM ©2010 The World Bank Group 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org All rights reserved Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The World Bank encourages dissemination of its work and will normally grant permission to repro- duce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center Inc., 222 Rosewood Drive, Danvers, MA 01923, USA; telephone: 978-750-8400; fax: 978-750-4470; Internet: www.copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2422; e-mail: pubrights@worldbank.org. About the Investment Climate Advisory Services of the World Bank Group The Investment Climate Advisory Services (IC) of the World Bank Group helps governments implement reforms to improve their business environment, and encourage and retain investment, thus fostering competitive markets, growth and job creation. Funding is provided by the World Bank Group (IFC, MIGA, and the World Bank) and over 15 donor partners working through the multi- donor FIAS platform. The findings, interpretations and conclusions included in this note are those of the author and do not necessarily reflect the view of the Executive Directors of the World Bank Group or the governments they represent. Better Regulation for Growth Program The Better Regulation for Growth (BRG) Program was launched in 2007 by the Dutch Ministry of Foreign Affairs, the UK Depart- ment for International Development (DFID) and IC, the investment climate advisory services of the World Bank Group. The objective of the BRG Program is to review and synthesize experiences with regulatory governance initiatives in developing countries, and to develop and disseminate practical tools and guidance that will help developing countries design and implement effective regulatory reform programs. Reports and other documentation developed under the BRG Program are available at: www .ifc.org/brg WB206_RCRK.indd ii 5/19/10 12:20:57 AM Table of Contents Acknowledgment ................................................................................ vi Foreword ........................................................................................... vii Acronyms: Kenya ...............................................................................viii Executive Summary ............................................................................. x Regulatory Reform in a National Context ............................................. 1 Economic development context ............................................................................1 Administrative and legal environment ....................................................................3 Recent regulatory reforms.....................................................................................7 National Policies and Institutions for Regulatory Reform .................... 12 Regulatory reform principles and policies .............................................................12 Institutions and drivers to promote regulatory reform ..............................................12 Coordination between levels of government .........................................................14 National-Local ..................................................................................................14 National ­ International .....................................................................................15 Administrative Capacities for Making High Quality Regulation ........... 16 Administrative transparency and predictability ......................................................16 Provisions for law-making procedures ..................................................................16 Provisions for consultation ................................................................................19 Current policies and practices ............................................................................19 Communication of regulations ............................................................................20 Compliance and enforcement of regulation ..........................................................22 Public redress and appeals.................................................................................23 Policy instrument alternatives ..............................................................................26 Use of RIA for understanding regulatory effects ....................................................28 Building administrative skills for regulatory reform .................................................29 Updating Regulations ......................................................................... 31 Revisions of existing laws and regulations ............................................................31 Reducing administrative burdens .........................................................................32 Use of ICT to support regulatory reform ..............................................................33 Roles of Donors and IFIS .................................................................... 35 Conclusions and Recommendations .................................................... 37 Assessment of strengths and weaknesses ..............................................................37 Policy options and choices .................................................................................38 iii WB206_RCRK.indd iii 5/19/10 12:20:58 AM APPENDIX A. Principles of Good Regulation ....................................... 39 APPENDIX B. DB Indicators, DB 2009.................................................. 40 APPENDIX C. The Legislative Process in Kenya's National Assembly .... 41 APPENDIX D. The Judicial System in Kenya ........................................ 44 The Court system ..............................................................................................44 The Court of Appeal ..........................................................................................44 The High Court .................................................................................................44 Subordinate courts ............................................................................................44 Sources of Kenyan law ......................................................................................45 The constitution .................................................................................................45 Acts of Parliament .............................................................................................45 Specific Acts of Parliament of the United Kingdom .................................................45 Certain Acts of the Parliament of India .................................................................46 English statutes of general application in force in England on 12th August 1897 ......46 The substance of common law and doctrines of equity ...........................................46 African Customary law ......................................................................................46 Islamic law .......................................................................................................46 International instruments .....................................................................................46 APPENDIX E. Kenya Gazette Supplement No. 79 ................................ 47 iv WB206_RCRK.indd iv 5/19/10 12:20:58 AM List of Boxes Box 1: Cabinet Memorandum.............................................................................17 Box 2: Format of Legislative Drafting Instructions ...................................................18 Box 3: Public Complaints Standing Committee ......................................................27 v WB206_RCRK.indd v 5/19/10 12:20:58 AM ACKNOWLEDGMENT This report was produced by Roy Pepper, consul- Delia Rodrigo, and from interviews with many tant and former Lead Investment Policy Officer key stakeholders and experts on regulatory reform in FIAS between 2002 and 2007. Delia Rodrigo in Kenya, including Ben Musau, Emmanuel A. and Peter Ladegaard of the World Bank Group's Lubembe, Raphael Mwai, Sarah Ochieng and Investment Climate Department designed the Simon Lapper. approach for the study and provided ad-hoc guid- ance and input. Zai Fanai and Vanessa T. Co supported the pub- lication of the report. The report benefited from valuable comments from Fred Zake, Ismail Chemjor, Lars Grava and vi WB206_RCRK.indd vi 5/19/10 12:20:58 AM FOREWORD Regulatory reform has emerged as an important East and Southern Africa (the others are on Zam- policy area in developing countries. For reforms bia, Uganda, Rwanda, and Tanzania). The report to be beneficial, regulatory regimes need to be is based on a review of public documents prepared transparent, coherent, and comprehensive. They by the government, donors, and the private sector, must establish appropriate institutional frame- and on a limited number of interviews with key works and liberalized business regulations; institutions and individuals. enforce competition policy and law; and open external and internal markets to trade and The report is an input to the Investment Cli- investment. mate Advisory Services (IC) discussions aimed at helping governments improve regulatory This report examines the institutional set-up for quality--that is, reform regulations to foster and use of regulatory policy instruments in Kenya. competition, innovation, economic growth, and It is one of five reports prepared on countries in social objectives. vii WB206_RCRK.indd vii 5/19/10 12:21:00 AM ACRONYMS: KENYA ACC Anti-Corruption Commission ASLAG Association of Local Government Authorities BAC Business Advisory Council BEST Business Environment Strengthening for Tanzania BPT Business Premises Tribunal BRRU Business Regulatory Reform Unit CET Common External Tariff COMESA Common Market for Eastern and Southern Africa DeG Directorate of e-Government DFRD District Focus for Rural Development EAC East African Community ECR Electronic Cash Register ERSWEC Economic Recovery Strategy for Wealth and Employment Creation GJLOS Governance, Justice, Law and Order Sector HRDD Human Resource Development Division IC Investment Climate Advisory Services ICT Information and Communication Technology JCA Judicial Complaints Authority KAM Kenya Association of Manufacturers KIC Kenya Industrial Court KLGRP Kenyan Local Government Reform Programme viii WB206_RCRK.indd viii 5/19/10 12:21:04 AM KLRC Kenya Law Reform Commission KRA Kenya Revenue Authority LAS-DAP Local Authority Service Delivery Action Plan LGRP Local Government Reform Program LGTF Local Government Transfer Fund MCTI Ministry of Trade, Commerce, and Industry MDG Millennium Development Goals MOF Ministry of Finance MOJNCCA Ministry of Justice, National Cohesion, and Constitutional Affairs MOLG Ministry of Local Government MSPS Ministry of State for the Public Service MTI Ministry of Trade and Industry NCLR National Council for Law Reporting NGO Non-Governmental Organization NTBs Non-Tariff Barriers OAG Office of the Auditor-General ODPM Office of the Deputy Prime Minister OECD Organization for Economic Cooperation and Development PCSC Public Complaints Standing Committee PMBO Program Management and Business Analysis Office PPARB Public Procurement Administrative Review Board PSC Public Service Commission PSDS Private Sector Development Strategy PSRP Public Service Reform Program RARMP Revenue Administration Reform and Modernization Program RBP Regulatory Best Practice Program (Uganda) RIA Regulatory Impact Analysis RRC Regulatory Reform Committee SAGA Semi-Autonomous Government Agencies SBP Single Business Permit SCM Standard Cost Model UNCTAD United Nations Conference on Trade and Development WCRR Working Committee for Regulatory Reform for Business Activity in Kenya ix WB206_RCRK.indd ix 5/19/10 12:21:05 AM EXECUTIVE SUMMARY For decades, Kenya has suffered from low and In recent years, Kenya has done better on GDP volatile economic growth: per capita real GDP growth: over the 2003­2006 period, growth aver- growth averaged 1.2 percent over the period 1960- aged 4.9 percent in contrast to virtual stagnation 2000, but with wide swings. The country has had between 1991 and 2002, and growth has contin- a reputation for being politically risky, marked by ued at even higher levels in spite of the political corruption, policy uncertainty and the impor- turbulence of the last few years. Nevertheless, tance of patronage and political connections in Kenya, with a per capita income of $640 in 2007, the business arena, added to structural weaknesses remains one of the poorer countries in Africa. The in infrastructure and public administration. Kenya government's long-term development objectives, began economic liberalization in the late 1980s, expressed in Vision 2030, are to create "a globally and the speed of reform accelerated in the 1990s. competitive and prosperous nation with a high However, throughout the 1990s, Kenya's eco- quality of life by 2030," and call for sustained nomic performance was weak, real per capita economic growth of 10 percent per annum over income contracted by an average of 0.5 percent the period. The intermediate Millennium Devel- annually, and social indicators worsened. In order opment Goals (MDGs) call for annual GDP to reverse the sustained economic downturn, the growth of at least 7 percent to reduce poverty by government prepared the Economic Recovery 50 percent in 2015 against 1990 levels. Strategy for Wealth and Employment Creation (ERS) in 2003, which laid out plans for economic Accelerated growth at this level will require a sig- and structural reforms needed for higher economic nificant increase in private investment and savings, growth. Subsequently, the Private Sector Develop- which will require a good investment climate. ment Strategy (PSDS) was prepared specifically to However, reforms and the recent improvements in address the concerns of the private sector and to economic performance have not altered the per- enhance business growth and competitiveness in ceptions of the Kenyan and international business line with the ERS. communities that the business climate in Kenya x WB206_RCRK.indd x 5/19/10 12:21:05 AM remains generally poor. The World Bank's Invest- is also essential that the capacity to make new ment Climate Assessment, carried out in 2004, regulations and to keep them up to date is identified a broad range of factors that contributed strengthened. The government has accepted rec- to a poor business and investment climate, includ- ommendations from its own Working Commit- ing (in order of perceived seriousness): tee on Regulatory Reforms for Business for building a regulatory management system by infrastructure (particularly electricity and adopting a broad policy on regulatory reform telecommunications); that establishes short and medium term objec- tives and focuses on implementation of better tax rates and administration; regulations and regulatory procedures. corruption; Regulatory reform in Kenya has exhibited sev- eral important strengths. First, it has benefitted cost of finance; from strong support within the Ministry of Trade and Industry (MTI) and the Ministry of Finance crime; (MOF). MTI was a crucial source of support for informal business practices; the reform of business licensing at the beginning of the process. Support from MOF was crucial at regulatory uncertainty; and the point where decisions on the report recom- mendations had to be made, when the existing macro-economic instability. machinery for budget decisions could be used. In addition, the importance of having the reform In the case of regulatory uncertainty, some aspects led at that point by a central economic ministry of this broad category, such as business registra- should not be underestimated. However, the tion, labor regulation, and customs administra- current situation where the Business Regulatory tion, did not rank highly on their own as serious Reform Unit (BRRU) has been established constraints on investment and operations. The under the MOF may also constitute a source of cumulative impact of regulations and policies weakness. was considered as high, and firms reported that these shifts in policy exacerbate the risks that they The emphasis given to the BRRU and its work associate with doing business in Kenya and create now depends to a considerable extent upon its a disincentive to invest. ranking in MOF's priorities, which are many. Without renewed pressure, there is a danger that Kenya has already responded to the challenge of the positive energy generated by the very favor- regulatory capacity and performance through a able reception (from both the business commu- broad range of programs and activities involving nity and donors) given to the Kenya government public sector and civil service reforms, decentraliza- when it adopted the licensing reforms could be tion and local government reform, anti-corruption dissipated. It can be argued that the decision to campaigns, competition and competitiveness pro- disband the Working Committee and not to grams, and legal reform. This report reviews the establish another inter-ministerial body to propel current state of regulatory capacity and perfor- the regulatory reform is a mistake that should be mance in Kenya, with a view to identifying weak- rectified. nesses that must be overcome and existing strengths upon which the regulatory management system Like the other East African countries, Kenya has could be constructed. Much of the regulatory succeeded in framing regulatory reform within its reform carried out to date has been directed to broader development planning documents, such solving existing problems and weaknesses, but it as Vision 2030, and drawing linkages between xi WB206_RCRK.indd xi 5/19/10 12:21:07 AM the various legal, public sector, decentralization, is recommended that an effective monitoring and corruption initiatives. However, to date, these system be put in place as a matter of priority so linkages do not appear to be well established at that the impact of the licensing reforms can be the program and operational level. Kenyan min- demonstrated. istries still have a tendency to operate in silos, and the role of the BRRU should be to break down Capacity building for regulatory reform should be these barriers in the formulation and operation of emphasized. BRRU should discuss with the Ugan- regulatory initiatives. However, until the BRRU dan government officials the training activities is staffed and has a clear mandate, it will be diffi- done under the Ugandan Regulatory Best Practice cult for it to play such a role. (RBP) program, and with the Tanzania Business Environment Strengthening for Tanzania (BEST) As to the future priorities for reform, imple- Advocacy component, in the course of develop- mentation of the licensing reforms should be ing a training, skills development, and capacity pursued aggressively. To date, the actions taken building strategy for the Kenya regulatory reform have generated positive opinions among the program. local and international business communities, but they have to be continued to avoid repeti- Finally, the fact that the Kenya government has an tion of many past reforms in Kenya that have established e-government program provides started well but ultimately lapsed. While efforts BRRU with the opportunity to push for imple- to reduce fees and the number of licenses should mentation of the e-registry as soon as possible, and be continued, it is important that emphasis is for further computerization to move to second- also placed on reducing business costs of com- generation information and communication tech- plying with license requirements. In addition, it nology (ICT) projects. xii WB206_RCRK.indd xii 5/19/10 12:21:08 AM REGULATORY REFORM IN A NATIONAL CONTEXT Economic development context scandal.2 However, throughout the 1990s, Kenya's economic performance was weak, real per capita For decades, Kenya has suffered from low and income contracted by an average of 0.5 percent volatile economic growth: per capita real GDP annually, and social indicators worsened. Poverty growth averaged 1.2 percent over the period and vulnerability disproportionately affected 1960-2000, but with wide swings.1 The country older people, children, female-headed households has had a reputation for being politically risky, and pastoral communities in the arid and semi- marked by corruption, policy uncertainty and arid lands. the importance of patronage and political con- nections in the business arena, added to struc- In order to reverse the sustained economic down- tural weaknesses in infrastructure and public turn, the government prepared the ERS in 2003, administration. Kenya began economic liberal- which laid out plans for economic and structural ization in the late 1980s, and the speed of reform reforms needed for higher economic growth. The accelerated in the 1990s after reduction of aid main instruments for bringing it about were to be flows on governance grounds. Reform was also improved law and order, a fight against corrup- used as an attempt within the government to re- tion, and priority for infrastructure investment. establish credibility following the Goldenburg Subsequently, the Private Sector Development 1 The standard deviation was 4.8 percent over that period. 2 Goldenberg International was set up in 1990 to export gold Following independence, Kenya enjoyed relatively strong and diamond jewelry from Kenya in return for a 35 percent economic performance until the late 1970s. Thereafter, the premium on the exchange rate in contrast to the normal pre- economy slowed down significantly. The average GDP mium of 20 percent for exporters. Little or no gold was actu- growth was 6.5 percent between the 1960s and the 1970s. In ally exported; a scheme was established to round-trip the the 1980s, it fell to less than 4.5 percent and then to about sale of export dollars to the Central Bank of Kenya (essen- 2.2 percent in the 1990s. High population growth rates tially, buy dollars at the official exchange rate, sell them back throughout the period resulted in very low growth of per at a 35 percent premium as "gold exports" and then repeat capita income. the process). 1 WB206_RCRK.indd 1 5/19/10 12:21:09 AM Strategy (PSDS) was prepared specifically to The reforms and the recent improvements in address the concerns of the private sector and to economic performance, however, have not enhance business growth and competitiveness in altered the perceptions of the Kenyan and inter- line with the ERS. The government's national national business communities that the business development agenda as articulated in the various climate in Kenya remains generally poor. The policy documents is grounded on alleviating Inward FDI Potential Index of the United poverty, creating wealth, and improving the wel- Nations Conference on Trade and Development fare of the common person. To achieve this, there (UNCTAD), for example, not only places is a general need to return to integrity and Kenya towards the bottom of all countries (126th accountability in the management of public out of 141 countries), but, in contrast to many resources, efficient and fair administration of jus- of its regional competitors, Kenya's ranking has tice, institutionalization of democratic govern- not improved in recent years. Similar conclu- ment, respect for and enforcement of human sions are drawn through the Heritage Founda- rights and the development of strong and stable tion's Index of Economic Freedom. The World institutions of governance. Bank's Investment Climate Assessment,3 carried out in 2004, identified a broad range of factors In recent years, Kenya has done better on GDP that contributed to a poor business and invest- growth: over the 2003-2006 period, growth aver- ment climate, including (in order of perceived aged 4.9 percent in contrast to virtual stagnation seriousness) infrastructure (particularly electric- between 1991 and 2002, and growth has contin- ity and telecommunications), tax rates and ued at even higher levels in spite of the political administration, corruption, cost of finance, turbulence of the last few years. Nevertheless, crime, informal business practices, regulatory Kenya, with a per capita income of $640 in uncertainty, and macro-economic instability. 2007, remains one of the poorer countries in Africa. About 56 percent of households were More than 50 percent of respondents to the sur- estimated to be below the poverty line in 2003, vey considered all of the above issues to constitute with a Gini index of 43 (the poorest 20 percent serious or very serious impediments to business. of the population received only 6 percent of In the case of regulatory uncertainty, some aspects national income, while the richest 20 percent of this broad category, such as business registra- took nearly 50 percent). tion, labor regulation, and customs administra- tion, did not rank highly on their own as serious The government's long-term development objec- constraints on investment and operations. The tives, expressed in Vision 2030, are to create "a cumulative impact of regulations and policies was globally competitive and prosperous nation with considered as high, and firms reported that these a high quality of life by 2030," and call for sus- shifts in policy exacerbate the risks that they asso- tained economic growth of 10 percent per annum ciate with doing business in Kenya and create a over the period. The intermediate MDGs call for disincentive to invest. annual GDP growth of at least 7 percent to reduce poverty by 50 percent in 2015 against These findings on regulatory constraints are gen- 1990 levels. Accelerated growth at this level will erally corroborated by the Doing Business indica- require a significant increase in private invest- tors. DB 2009 ranks Kenya as 82th globally in the ment and savings over current levels, which "ease of doing business" synthetic indicator, and themselves represent some improvement over the levels of the 1990s, when private investment fell as a percentage of GDP. Increased private invest- 3 "Enhancing the Competitiveness of Kenya's Manufacturing Sector: The Role of the Investment Climate," World Bank, ment will require sustained improvement in the KIPPRA and Center for the Study of African Economies, investment climate. Oxford University, 2004. 2 WB206_RCRK.indd 2 5/19/10 12:21:10 AM 5th in Sub-Saharan Africa.4 The report identifies law was also applied, and in addition the Hindus permitting/licensing, getting credit, and closure who emigrated from India were also allowed to of businesses as areas where Kenya compares practice Hindu customary law, while Muslims favorably to its neighbors, and business start-up, and Arabs, largely restricted to the coastal region, property registration, paying taxes, cross-border practiced Islamic law. trade procedures and contract enforcement as areas where Kenya's performance lags. DB2009 In terms of the hierarchy of legal, administrative confirms that Kenya has gradually improved its and regulatory instruments, the Constitution5 is standing in comparison to other SSA countries, the supreme law, and any law or custom in conflict but also shows that it lags well behind interna- with it is null and void to the extent of its incon- tional best practice, although the reforms that it sistency (Article 3). The second tier of the hierar- has made in the last year should improve the situ- chy is statute law or Acts of Parliament, which are ation considerably. published in the Official Gazette. The third source of law is specific acts of Parliament from the UK Red tape and excessive government interference and India. The fourth source is decree law.6 The in private sector activities remains one of the fifth source is case law, comprising judgments main constraints to private sector development. from the Court of Appeal and the High Court, One indicator of this is the large share of GDP which serve as precedents for lower courts. The generated in the informal sector and its continu- fifth source of law is customary law. The sixth ing growth. Some 50 percent of GDP is estimated source is Islamic customary law. Finally, interna- to be generated within the informal sector, and a tional treaties and conventions are a source of very large proportion of enterprises are estimated domestic law as long as they have been ratified by to be informal to some degree. In turn, the impact Parliament. (For further details, see Appendix C) of the large informal sector on formal sector enterprises can be gauged by the fact that "prac- The Republic of Kenya is described as a "multi- tices of the informal sector" was the seventh larg- party, democratic state" (Article 3 of the Consti- est constraint to enterprise investment, according tution). Chapter 5 defines a "bill of rights" for to the World Bank ICA survey. the population. The government has three branches: Legislature, which is headed by the speaker of the National Assembly (established under Chapter 3), the Executive, which is headed Administrative and legal environment by the president (established under Chapter 2), and Judiciary, which is headed by the chief justice The Kenyan legal system is based closely on that (established under Chapter 4), whose functions of England and Wales, and Kenyan courts widely and powers are laid out in the 1996 Constitu- apply principles of English common law. How- tion. The Constitution provides for legislative ever, the legal system of Kenya is complicated by supremacy of Parliament and independence of the fact that settlement by the British was direct the Judiciary. and indirect ­ direct in the sense that the settlers came straight from Britain, and indirect in the Executive power in Kenya is vested in the presi- sense that there were settlers who came from dent (Article 23). The president, who may serve India. The settlers imported laws from Britain and British laws that had been codified in India to 5 The current constitution was adopted in 1963 and amended apply to the east African Protectorate. Customary in 1999. Kenya has been involved in a constitutional review process for the last three years, the population having rejected the latest amendments in a referendum in 2007. 4 Rankings in Africa for Kenya's regional competitors were 7th 6 Decrees may be issued under the name of the president, but for Zambia, 10th for Uganda, 14th for Tanzania and 17th for have to be submitted to Parliament for ratification at its next Rwanda. session. 3 WB206_RCRK.indd 3 5/19/10 12:21:11 AM for no more than two terms of five years each secretary for the Office of the President, and they (Article 9), is elected by universal suffrage through are officials of the public service. Finally, the pres- secret ballot, and can be elected by a simple ident is responsible (article 54) for appointing majority of votes cast (Article 3).7 Kenya has a the attorney general, who is the government's Parliamentary president: he/she is both head of legal adviser, whose office is in the public service state and government, and also a member of par- (Article 26) and who is an ex-officio member of liament.8 Article 15 authorizes the president to the National Assembly (Article 36). The presi- appoint a vice president9 from the members of dent also appoints the controller and auditor the National Assembly. As part of the power general (Article 110), the director of personnel, sharing deal that followed the disputed 2007 the secretary to the Cabinet and ambassadors, election, the positions of prime minister and following consultation with the Public Service deputy prime minister were established.10 This Commission (Article 111). was formalized in 2008 through amendments to the Constitution, which allowed Parliament to Local government is part of the Executive branch. create the positions of prime minister and deputy The Republic of Kenya is a unitary state, adminis- prime minister (Article 15A). tratively divided into seven provinces ­ Central, Coast, Eastern, North East, Nyanza, Rift Valley, Article 16 authorizes the president to appoint Western ­ and one area (Nairobi). The provinces ministers, also from the members of the Assem- and the one area are further divided into 69 dis- bly; and article 19 permits the president to tricts, which have administrative responsibilities appoint assistant ministers (whose role is to assist under the De-concentration Initiative, the District the ministers) also from the membership of the Focus for Rural Development (DFRD), which was National Assembly. The Cabinet, whose respon- introduced in 1983. Under Districts, there are sibility is to "aid and advise the President" (article divisions, locations and sub-locations. Kenya has 17), consists of the president, vice president, 175 local authorities, including 67 county coun- prime minister, deputy prime ministers and min- cils, 43 municipal councils, 62 town councils, isters.11 According to article 17, the Cabinet is and three city councils. collectively accountable to the National Assem- bly. Article 22 authorizes the president to appoint It is notable that the current Constitution makes permanent secretaries, including a permanent no mention of the structure and functions of local government. The main piece of legislation 7 Each political party contesting a general election can nomi- governing local authorities in Kenya is the Local nate one candidate for president, the nomination being sup- ported by at least one thousand registered voters. Where Government Act (Cap 265) of 1977, which has there is more than one candidate for president, there are been subject to a series of amendments over the separate ballots for the president and for members of Parlia- years.12 Under the provisions of the Act, the min- ment. The candidate for president who is elected as a mem- ber of Parliament in his constituency and who receives the ister of Local Government is responsible for local most votes, subject to receiving at least 25 percent of the authorities. The minister's remit covers the con- votes in at least five of the eight provinces is declared presi- dent. Should the election not produce a winning candidate, stitution of local authorities, power to establish a fresh election is held, contested by the candidate receiving and extinguish local authorities, and oversight of the most votes and "one among the remaining candidates their policies, by-laws, staffing, administration, who has the highest total of votes cast" (Article 4). 8 The whole government can be dismissed by adverse vote in operations, budgets and financial management. Parliament. 9 Whose role is to "be the principal assistant of the President." 12 Other laws that affect the management of local authorities 10 The position of prime minister existed after independence and their revenue base include: Local Government Loan but subsequently the powers of the prime minister were Authority Act (Cap 270); Land Planning Act (Cap 303); subsumed into the presidency. Trade Licensing Act (Cap 497); Rating Act (Cap 267); Valu- 11 Currently the Parliament has decided that there should be ation for Rating Act (Cap 255); and Agriculture Act (Cap two deputy prime ministers. The Constitution does not 218). The minister of Local Government is responsible for specify how many there should be. the administration of these Acts. 4 WB206_RCRK.indd 4 5/19/10 12:21:11 AM Other sector ministries also directly affect the provincial government, district (local) govern- operation of local authorities, particularly in the ment, and a fourth tier at local level. Although areas of health, education, water and roads. the government has accepted the need for struc- tural reform of local government and the passage Local government elections are held at the same of new legislation, work on a draft bill to substan- time as those for the president and the National tially amend the legislation has been suspended Assembly, local councils being dissolved after the until a new constitution has been enacted.14 dissolution of the National Assembly. Two-thirds of the councillors in each authority are directly The Parliament exercises its legislative powers elected in single-member wards for a five-year through passage of bills by the Assembly and by term. The minister of Local Government the president assenting to them within 21 days of appoints the other one-third, with nominations receiving the bill (Article 46). Bills introduced made by the political parties or coalitions on the into the National Assembly have to be published basis of their representation within each council. in the Official Gazette 14 days before introduc- The district commissioner (or their representa- tion. The bill is given a first reading, followed by tive) is also a councillor, providing a link between a second reading, which is when a debate takes the local authority and district activities. The place on the bill's general principles. Subse- system is uniform across the country. Senior staff quently, the bill is referred to a Committee of the to local government is recruited through the Assembly for discussion of the detailed provi- Public Service Commission (PSC), with the sions. In the event of a favorable report out of minister of Local Government having full discre- committee, the third reading takes place and the tion over the most senior appointments. bill is voted. If approved, the bill is submitted to the president for assent. Should the president There have been long-standing attempts to cre- choose not to provide assent, the bill is returned ate an effective devolved system of local govern- to the Assembly for reconsideration. If the bill is ment in Kenya. As far back as 1959, local passed again, with or without amendment, on a authorities established an Association of Local vote of no fewer than 65 percent of all members Government Authorities (ASLAG) to facilitate of the Assembly, the president is required to pro- the development of an effective and viable local vide his assent (Article 46). government system.13 The Kenyan Local Gov- ernment Reform Programme (KLGRP) has Parliament also plays a role in the financial autho- worked since the mid-1990s to strengthen the rization and control of government expenditure. local government system, to enable local author- Its control over revenue and expenditure is ities to deliver services and to increase local secured by the establishment of Consolidated accountability. In 1996, the Omano Commis- Fund, into which all revenue of the government sion of Inquiry on Local Authorities pointed to has to be paid. Parliament has the discretion to a large number of small and non-viable local authorize establishment of other funds for spe- authorities. In September 2003, a Devolution cific purposes, and can also allow revenue to be Committee proposed a four-tier government retained by the authority receiving it rather than structure, composed of central government, being paid into the Consolidated Fund. 13 Currently, the official objectives of the ALKAG are: to Parliament also can act as a control and moderat- lobby for a strong local government system and the devel- ing force over the government, insofar as it can opment of appropriate policies; to promote solidarity and good governance among local authorities; to promote sus- 14 In recent years, ALKAG has been active in the constitu- tainable development; and to strengthen the operational tional review exercise. It has developed a local authority capacity of local authorities. ASLAG is a voluntary organi- position statement, The Local Government we want in zation funded by member contributions. No local govern- Kenya, in which the demands of the various local authori- ment authority is required to be a member. ties have been stipulated. 5 WB206_RCRK.indd 5 5/19/10 12:21:11 AM pass a "vote of no-confidence," which can bring handling political issues for and on behalf of about the dissolution of Parliament or the resig- the legal and justice sector at the cabinet and nation of the government. In situations where the parliamentary levels; and size of the Executive is large and where there are also many assistant ministers, a large number of championing sectoral reforms. MPs are in the government, and the scope for Parliament to exert a restraining force on the gov- Currently, the Ministry of Justice has a staff com- ernment is weakened. plement of 196, excluding the Semi-Autonomous Government Agencies (SAGA's) such as the Kenya The Judiciary in Kenya comprises various institu- Anti-Corruption Commission (ACC), Kenya tions concerned with the provision of legal ser- School of Law, Kenya National Commission for vices, enforcement of laws, and administration of Human Rights, and the Public Complaints justice. The main institutions include the Court Standing Committee (PCSC). The ministry has of Appeal, the High Court, and Subordinate jurisdiction over legal matters, including the Law Courts, comprising magistrate's courts, the Development Commission. The Ministry of Jus- Kadhi's Court, Children's Court, Industrial Court, tice has two chambers ­ namely the Attorney- and Tribunals. (For further details, see Appendix General's Chambers and the Director of Public E). The Constitution also provides for the cre- Prosecutions, both established under the Consti- ation of posts of the director of Public Prosecu- tution. tions (Article 56) and an investigator-general (Article 90).15 The Kenya Law Reform Commission was estab- lished on May 21, 1982, as a primary agency to Within the Executive, the Ministry of Justice, spearhead law reform and review processes in the National Cohesion and Constitutional Affairs16 country. Its mandate as contained in Section 3 of has jurisdiction over legal matters. The mandate Chapter 3 of the Laws of Kenya is: "to keep under of the ministry is: review all the laws of Kenya to ensure its systematic development and reform, including in particular the determining legal policy in Kenya with regard integration, unification and codification of the law, to administration of justice, constitutional the elimination of anomalies, the repeal of obsolete matters, law reform, anti-corruption strate- and unnecessary enactments and generally its simpli- gies, integrity and ethics, legal education, fication and modernization." The vision of KLRC political parties legal aid and advisory services is: "the realization of a contemporary, simple, and elections; coherent legal system that is founded on social needs, justice, equity and good governance. Its promoting the efficient and proper function- mission is: "to contribute to socio-economic, legal ing of the legal and justice sector; and political development by simplifying, harmo- nizing and reforming the laws of Kenya through coordinating and facilitating reform inter- research and consultations." Its specific responsi- ventions in the justice sector; bilities are to: back-stopping the legal and justice sector at receive and consider any proposals for reform- the policy level; ing laws that may be made or referred to it; 15 The investigator-general is the chairman of the Commis- sion for Investigations. prepare and submit to the AG programs for 16 The Ministry of Justice and Constitutional Affairs was cre- examining different branches of the law, ated through Presidential Circular Number 1 of 2003. The addition of "National Cohesion" was made following the including recommendations of the agency installation of the coalition government. that should carry out the examination; 6 WB206_RCRK.indd 6 5/19/10 12:21:11 AM undertake, pursuant to any program approved regulation, which has itself been an important by the AG, the examination of particular component of private sector reform. branches of the law and formulation of draft bills to implement reforms; The Governance, Justice, Law and Order Sector (GJLOS) reform program is Kenya's most ambi- prepare, at the request of the AG, comprehen- tious effort at reforming its governance, justice, sive programs of consolidation to facilitate the law and order sectors to date.17 It seeks, with a exercise by him of his powers under the revi- sector-wide approach, to implement far-reaching sion of laws act, and to undertake the drafting reforms in the public sector. In total, 32 govern- of bills pursuant to any program of consolida- ment institutions and ministries are involved in tion approved by him; and this ambitious program, which attempts to strengthen anti-corruption legislation and insti- provide advice and information to ministries tutions, support the process that will give Kenyans and departments about reform or amend- a new constitution, build mechanisms that per- ment of a branch of the law relevant to that mit greater openness and transparency, and ministry or department. reform Kenya's investment and commercial laws by supporting the simplification of complex legal rules and procedures.18 Recent regulatory reforms The Ministry of Justice, National Cohesion and Kenya has been engaged in reforms for the past Constitutional Affairs (MoJNCCA) has a twin 20 years, as outlined briefly in section 1.1, includ- role in the program. First, it is an implementing ing several reforms that have implications and institution with a mandate to provide leadership consequences for regulatory activities. Starting in in the formulation of legal policy, management the early 1990s, in response to a long-term and directing of law reforms, development of decline in economic fortunes, Kenya imple- legal training and education, and the overall man- mented stabilization and structural adjustment agement of the constitutional review process. It reforms designed to introduce a market-based also has overall responsibility for the legal and and private sector-driven economy in place of the judicial sectors' performance, and coordinates state-enterprise-dominated system of the previ- and facilitates the programs and activities of the ous two decades. Increasing attention in recent sectors' institutions. Second, it is the coordinating years has been given to structural, legal, and reg- ulatory reforms, responding to the breakdown in 17 Legal reform started in 1982 with the establishment of the law and order, systemic and institutional failure, KLRC, and was intensified in 1992 when the attorney gen- the legacy of authoritarian rule, human rights eral established 15 reform task forces to review and update Kenya's laws in various areas. In 1998, The Kwach Report abuses, and widespread corruption that had proposed several far-reaching recommendations, including tainted government institutions including the proposals to increase numbers of judicial personnel, and Judiciary in the late 1990s. The reform agenda has improve employment terms and conditions; implement a code of conduct for judicial personnel backed by an inspec- been broad, involving a mix of establishing a mar- torate unit; improve facilities within the judiciary; reorga- ket-based economic system and reforming past nize case handling and systems; simplify court procedures mechanisms; introduce Alternative Dispute Resolution policies, which included constraints and disincen- (ADR); and split the High Court into four divisions tives on private sector activities and continued namely: the Family, Commercial, Civil and Criminal Divi- application of out-dated laws and regulations. sions. However, in the political environment of Kenya in the 1990s, little progress could be registered. The government has adopted reform programs 18 See http://www.gjlos.go.ke/default.asp for details of the for the public sector, including local government, program. See also http://www.gjlos.go.ke/gjlos_policies_ assesments_report.pdf for "Policies, Laws and Regulations and the legal sector, each of which has implica- Assessment Report," GJLOS Reform Program, September tions and consequences for reform of business 2007. 7 WB206_RCRK.indd 7 5/19/10 12:21:11 AM ministry for the overall GJLOS Reform Program, public service. Ministerial Management Units, and is responsible for technical leadership of the consisting of three or four persons, have been program, broad, sector-wide coordination of the established in a number of ministries to take program implementation, and monitoring and charge of the reform process. Examples of these reporting on the overall GJLOS reform pro- rapid response initiatives include the company gram. The GJLOS reform program is scheduled registry,20 ID cards and passports. Some institu- to run until 2009, by which time the reforms tions are already involved in broad performance are supposed to have been fully internalized in improvement programs. Kenya Revenue Author- the governance, justice, law and order sectors in ity (KRA) introduced the Revenue Administra- government. However, given the size of the tion Reform and Modernization Program agenda and the limited progress made to date, it (RARMP) in 2004/05 with the objective of trans- is expected that it will continue to operate forming KRA into a modern, fully integrated and beyond 2009. client-focused organization. The RARMP pro- cess is managed through a Program Management The government has been pursuing public sector and Business Analysis Office (PMBO) under the reform for several years, generally with an empha- Office of the Commissioner General. RARMP sis on financial management and budgeting. In has now entered its second phase, which will run 2004, the Cabinet approved "Results for Kenya," until 2008/09 with seven key projects: a Public Service Reform Program under which the Public Service Reform Secretariat was given customs reforms and modernization; the mandate to support improvements in public services for the population.19 The initiative is domestic taxes reform and modernization; centered on six dimensions: road transport reform and modernization; ensure that government institutions deliver services to citizens through a "rapid response" investigation and enforcement reform and approach; modernization; increase capacity to deliver; KRA infrastructure development; institute a communications strategy; KRA business automation; and introduce consultation with citizens and human resource revitalization. stakeholders through a ministerial stakehold- ers forum; The rapid response initiative is also being sup- ported by the introduction of institutional per- design and implement a human resources formance contracts for each fiscal year, whereby strategy for civil servants based on skills and ministers and permanent secretaries commit to ethics training; and meeting a set of goals. The intention is to push the performance contracting process to the produce a draft strategy for public service departmental and divisional level in each minis- improvements. try, and to introduce a rewards/penalty system, but these are developments for the future. There The rapid response approach has involved the adoption of a 100-day time horizon for designing and implementing reforms in the delivery of a 20 Company registration has been reduced to a single day through the reforms. However, there are questions as to whether the system is robust enough to be able to maintain 19 "Huduma bora ni haki yako" ­ public service is your right. this level. 8 WB206_RCRK.indd 8 5/19/10 12:21:12 AM has been considerable public support for perfor- development of revised service delivery mance contracting and the decision to publish manuals.22 league tables for ministerial performance. But there has also been a lot of criticism in early 2009 Current priorities for reforms include: of the rankings, especially since the criteria for good performance have not been announced by decentralization and policy development the government. consistent with constitutional reform; The rapid response initiative has been intro- reform of the Local Government Act and duced at local government level, insofar as the other legislation, again consistent with con- Nairobi City Council has been participating. stitutional reform; Kenya has also been pursuing a broader local government reform program (LGRP) since institutional restructuring and capacity build- 1996. Currently, the LGRP is part of the Office ing at local government levels; of the Deputy Prime Minister (ODPM) and Ministry of Local Government (MOLG), led by introduction of financial management a program coordinator reporting to the perma- improvements; nent secretary. The reforms are designed to address the major weaknesses in local govern- improved community participation in service ment: poor governance and capacity to deliver delivery planning and implementation; services; inadequate revenue mobilization; weak financial management; low level of partnership implementation broadly of results-based with citizens; and an unclear policy on devolu- management; and tion21 and decentralization. Over the past few improvements in capacity to deliver develop- years, the reform program has delivered various ment programs.23 improvements: The proposed reform of local government will introduction of the Local Government Trans- inevitably require broad changes in the legal and fer Fund (LGTF) as a main conduit for cen- regulatory framework within which local govern- tral government transfers; ment authorities operate, and therefore it offers an development of a participatory planning pro- opportunity for principles of regulatory best prac- cess, called the Local Authority Service Deliv- tice to be applied in the process. One area where ery Action Plan (LAS-DAP); local government issues have already been infil- trated into the regulatory agenda concerns the improved financial management through Single Business Permit (SBP), a business license budget reforms and revised financial regula- that is one of the major vehicles for revenue-raising tions, financial accounting systems compliant at the local government level. Introduced in 2000 with international accounting standards, and as a way of consolidating a myriad of licenses and audit and inspection manuals; and permits required by businesses into a single pay- ment and registration process with the local 21 Devolution is mentioned in Vision 2030 as a key mecha- nism for meeting the social and economic pillars. The First 22 "Kenya Local Government Reform Program: Service Char- Medium Term Plan for the implementation of Vision 2030 ter," brochure published by the Office of the Deputy Prime identifies the major issues that have to be addressed: a basic Minister and Ministry of Local Government, June 2008. legal and policy framework, a political and administrative 23 "Improving Efficiency and Accountability in a Devolved framework; local government financing; local government System of Local Government," brochure published by the human resource policy; and coordination mechanisms Office of the Deputy Prime Minister and the Ministry of across government levels. Local Government, November 2008. 9 WB206_RCRK.indd 9 5/19/10 12:21:12 AM authority, the SBP has been regarded as an A Working Committee for Regulatory Reform additional burden by the business community. for Business Activity in Kenya (WCRR) was The Working Committee on Regulatory formed by the government26 in February 2005, Reforms recommended the abolition of the with a mandate to provide input to government SBP (as well as a number of the specific licenses decisions on the following issues: that the SBP had been intended to eliminate) in the longer term, and the introduction of review of all business licenses in Kenya; alternative revenue-raising instruments to per- mit local government to finance its activities. creation of an electronic regulatory registry The committee suggested that consideration for all business licenses; also be given to transforming the license into a local business tax.24 establishment of a BRRU; and As an interim measure, pending completion of a preparation of a medium term regulatory broad review of local government financing reform strategy. options, the government introduced in late 2008 modifications to the SBP. The number of fee cat- The Committee carried out its work in two egories was reduced to 10, and it is no longer phases: phase I commenced in March, 2005, and required for businesses to apply for separate SBPs ended in June, 2005, after review of 86 licenses, in each of the jurisdictions in which they operate while phase II started in July, 2005, and ended in (see Appendix E). These changes were introduced March, 2006, after review of 1,325 licenses. without the benefit of review by the BRRU, The recommendations of the WCRR were pre- despite the explicit recommendation in the Work- sented in a final report,27 which recommended ing Committee on Regulatory Reform's report that, of the 1,325 licenses identified and reviewed that "it is necessary to subject the discretionary by the Working Committee, 424 should be elim- powers of local authorities to enact by-laws to not inated, 607 simplified and 294 retained without only the MOLG but also the BRRU."25 In addi- modification. The report also identified broad tion, according to interviews carried out in early findings that are extremely relevant for future 2009, the modifications of the SBP were intro- regualatory reform: duced without very much review by the MOLG Reform Program personnel. the network of government bodies involved in business regulation is extensive and complex;28 Assessment of the SBP was carried out as part of the most extensive and explicit regulatory reform their responsibilities are often vaguely defined to date in Kenya. Following numerous studies with overlapping and often contradictory and investigations in the early 2000s, the gov- responsibilities; ernment acknowledged that the business com- munity was very upset about licensing, which was deemed to be an onerous administrative 26 Through a Ministry of Finance Circular Ref. No. burden, financially costly and a strong disincen- Conf.262/02/(3) of 24 February 2005 as read with Kenya Gazette Notice No. 7521 published in the Kenya Gazette tive to investment and operation of enterprises. of 23rd September, 2005. The government subsequently continued the committee's mandate until 31 December, 2006 (subsequently extended to 28 February, 2007). 24 Because the fee structure is loosely linked to the gross turn- 27 "Final Report of the Working Committee on Regulatory over of the business, it essentially is a progressive corporate Reforms for Business Activity in Kenya: Review of Business income tax much more than it is a regulatory process for Licenses and Fees," March 5, 2007. which a standard fee would be paid. However, under 28 More than 60 central government ministries and agencies, Kenyan law, only the KRA is authorized to levy taxes. and 175 local government authorities have legislative powers 25 Para 2.78 of the Working Committee's report. to issue licenses. 10 WB206_RCRK.indd 10 5/19/10 12:21:12 AM licensing has been used for revenue purposes the regulatory system in Kenya was virtually rather than legitimate regulatory purposes out of control, lacking checks and balances to and that licensing, even when justified in avoid discretionary and arbitrary behavior by terms of regulatory need, often fails to assure government agencies and personnel. proper regulation because of deficiencies in manpower and information; and 11 WB206_RCRK.indd 11 5/19/10 12:21:12 AM NATIONAL POLICIES AND INSTITUTIONS FOR REGULATORY REFORM Regulatory reform principles ensure that the reforms are mutually consistent and policies and supportive of each other. Currently, pursu- ant to a commitment made by the Minister of Governments should be clear about why they are Finance in the 2006­2007 Budget Speech, the pursuing private sector development and reform- BRRU is developing a regulatory reform strategy ing regulation. They should also be clear about the that will establish explicit principles and objec- principles and objectives of reform and the respon- tives of regulatory reform. A draft strategy is sibilities of the groups involved in reform. The being circulated for stakeholder consultation most effective way to do this is to establish an within the next few months. The government explicit regulatory reform policy, including a set of has already established one clear institutional best practice principles against which reform poli- principle ­ that the MOF has lead responsibility cies can be measured. An example of these prin- for regulatory reform. ciples is provided by the 1995 Recommendation of the OECD Council on Improving the Quality of Government Regulations (see Appendix A). Institutions and drivers to promote regulatory reform As detailed in the previous sections, Kenya has been pursuing numerous policy reforms that have Mechanisms with explicit responsibilities and legal, administrative and regulatory implications. authorities for managing and tracking reform There are several projects within various ministries inside the administration are needed to keep reform that involve review and reform of laws, regulations, on track and on schedule, and to ensure regulatory policies and institutions affecting the investment quality standards continue to improve. It is often climate and business environment. However, to difficult for ministries to reform themselves, given date, Kenya has not promulgated an explicit policy countervailing pressures and deficient financial statement for regulatory reform and the principles and human resources. Initiating and taking up a and objectives of regulatory reform, in order to reform agenda, maintaining its consistency and 12 WB206_RCRK.indd 12 5/19/10 12:21:12 AM pursuing systematic approaches across the entire of regulatory proposals, and providing recom- administration is necessary if reform is to be mendations to decision-makers; and promoting broad-based. This requires the allocation of spe- good regulatory processes across government.32 cific responsibilities and powers to agencies at the center of government. Considerable experi- Functioning of the BRRU has been inhibited to ence across the OECD has shown that central date by the fact that it does not have a full-time oversight units are most effective if they have the head and that it has few staff. One officer is desig- following characteristics: nated as the head of the unit but she has a number of other responsibilities and so cannot devote her independence from regulators (i.e. they are not full attention to regulatory reform. She is sup- closely tied to specific regulatory missions); ported by one member of staff who is dedicated to regulatory reform and 3-4 other staff members operation in accordance with a clear regula- who are utilized by the BRRU on an ad-hoc basis. tory policy, endorsed at the political level; The report of the Working Committee also recom- horizontal operation (i.e. they cut across gov- mended creation of a Regulatory Reform Com- ernment); mittee (RRC) to provide political leadership of the reform, to take policy decisions on regulatory pro- expert staffing (i.e. they have the information posals, and to provide a platform for dialogue with and capacity to exercise independent judg- private sector business organizations. The report ment); and also raised the possibility of the creation of a Busi- links to existing centers of administrative and ness Advisory Council (BAC) to institutionalize budgetary authority (centers of government, consultation on regulatory issues.33 So far, there has finance ministries). been no progress on the creation of either the RRC or the BAC. In the 2006/2007 budget speech, the minister of finance proposed to establish in the ministry a A Regulatory Reform Working Committee has BRRU to monitor all regulatory regimes in been constituted to work in this area pending the Kenya, to ensure that new regulations, licenses, promulgation of the business regulation bill. It fees, and charges did not create unnecessary bur- has begun to work actively in this area. A number dens on businesses, and to liaise with regulators of ministries have been instrumental to date in to ensure that all future regulations conform to promoting and supporting regulatory reform in international best practices.29 The BRRU has general and licensing reform in particular. The subsequently been set up through administrative Ministry of Trade, Commerce and Industry order30 within the Ministry of Finance, and is in (MCTI) was the champion for licensing reform, the process of establishing its staffing and admin- and has remained actively engaged even after the istrative procedures and its work program. In leadership of that effort moved over to the Minis- principle, the BRRU will have three core try of Finance. The other two ministries that have functions:31 providing support and advice to reg- been actively championing the licensing reform ulators in preparing RIAs and in developing have been the Ministry of Justice, through the training and capacity-building; reviewing quality 32 Including leading work on preparation of the Medium- 29 The final report of the Working Committee on Regulatory term Regulatory Reform Strategy, development of a system Reforms for Business Activity in Kenya: Review of Business for RIA, and supporting the establishment of the Elec- Licenses, March 5, 2007, made this recommendation. tronic Regulatory Registry. 30 The intention is for BRRU to receive legal authorization 33 The Committee also recommended that the proposal for a through passage of the business regulation bill. BAC should be evaluated in terms of other advisory and 31 BRRU will also serve as the secretariat for the Task Force consultative bodies that might be set up as part of the on Doing Business Indicators. PSDS. 13 WB206_RCRK.indd 13 5/19/10 12:21:17 AM Solicitor General's Office, and the MOLG. MOLG that are constitutionally empowered to make and the Office of the Prime Minister (OPM) have decisions over a specified range of government now taken an active interest and are expected to be functions and services. Rather, the country has supporters of this process going forward. For multiple subordinate levels of the same govern- instance, the prime minister recently chaired a ment (e.g., central, provincial, district). The round table on private sector development issues current legislation gives all local authorities ­ and emphasized the government's commitment to City, Municipal and Town Councils ­ similar regulatory reform in a number of areas.34 responsibilities. In practise, however, the estab- lished municipal councils are able to provide a wider range of services than the cities, towns, Coordination between levels and some newer municipalities. of government In terms of management, the districts are headed It is good practice for governments to support by the district commissioners, appointed by the reform at all levels. This difficult task is increas- president and assisted by divisional officers, chiefs ingly important as regulatory responsibilities are and sub-chiefs. Divisional officers, chiefs and sub- shared among many levels of government, includ- chiefs have responsibility for the divisions, loca- ing supranational, international, national, and tions, and sub-locations. The district commissioner sub-national levels. High quality regulation at one is accountable through the provincial administra- level can be undermined by poor regulatory poli- tion to the Office of the President. The City and cies and practices at other levels, while conversely Municipal Councils are led by a mayor, whereas coordination can vastly expand the benefits of the Town and County Councils fall under the lead- reform. The policies and mechanisms for coordi- ership of a chairperson, elected by the councillors nation between levels of administration are thus following the local elections. A town clerk, becoming increasingly important for the develop- appointed by the PSC, is the head of the paid serv- ment and maintenance of an effective regulatory ice in the city, municipal and town councils; a framework. country clerk, also appointed by the PSC, is the chief officer in the country councils. National-Local The business licensing reform demonstrated in practical and specific terms the need for coopera- In the 1990s and the current decade, the Kenyan tion between central government and local gov- government, similarly to many other African gov- ernment in carrying out consistent regulatory ernments, initiated a series of market-orientated reform. Initially, the Working Committee did economic reforms, followed by a comprehensive not contain representation from the MOLG, pri- program of reforms also in the public sector and marily because licensing was considered to be a local government. However, Kenya's governance central government issue (the introduction of the model of "democratic centralism" has constrained SBP several years previously having been thought the country's ability to undertake comprehen- to have rationalized licensing at the local author- sive political decentralization whereby effective ity level). power and autonomy are transferred to sub- national levels. Given the unitary structure of However, the review carried out by the Working the state, no sub-national governments exist Committee revealed, first, that the SBP violated good licensing practice, in that many of the 34 "Statement by the Prime Minister during the press confer- licenses issued by local authorities were for reve- ence held on 18th May 2009 at the KICC following the 3rd nue-raising rather than regulatory purposes, and, Round Table meeting between the government and private sector" second, that the adoption of the SBP had not 14 WB206_RCRK.indd 14 5/19/10 12:21:22 AM prevented introduction of other licenses by local procedures. In addition, attention is being paid authorities. Consequently, the committee invited to non-tariff barriers (NTBs), which have been the MLG to participate in its work and discus- identified as serious hindrances on trade and sions. MLG's participation in the licensing reform business operations. was important because it provided a forum for discussing the implications of licensing reform Following the signing of the Customs Union in on local governments' revenue position. 2004, the East Africa Business Council36 commis- sioned a study to identify the scope and severity of NTBs. The study found that NTBs have evolved National ­ International around business registration and licensing, cus- Kenya is a member of the East African Commu- toms procedures, police road checks, road axle nity and the Common Market for Eastern and regulations, and standards and certification require- Southern Africa (COMESA). ments. Between November 2006 and February 2007, a follow-up Community Business Climate The Treaty for the Establishment of the EAC was Index Survey was conducted to assess the business signed on Nov.30, 1999, at Arusha, Tanzania, by climate and to estimate the impact on business the three partner states: Kenya, Tanzania, and operations. Subsequently, the NTB Monitoring Uganda. It entered into force on July 7, 2000, Mechanism was developed as a joint initiative of after the necessary ratification. It rose from the the EABC and the EAC Secretariat to identify, ashes of the former Community which was for- report on, and monitor the status of NTBs.37 It is mally dissolved in 1977 in an atmosphere of to be expected that the Kenyan government, and mutual recrimination, barely 10 years after its in particular the MCTI, will be examining more creation in 1967. The first step has been to create closely the harmonization of its policies and regu- a Customs Union, the protocol for which was lations with those to be adopted by the EAC. signed in 2005. A common tariff was adopted in 2007. Currently, a draft protocol for the creation Kenya is also a member of COMESA, which is of a Common Market is being finalized.35 planning to introduce formally a Customs Union at its next Head of States meeting in mid-2009, Kenya has created a Ministry of East Africa Com- with the first step being an agreement on the munity Affairs. The ministry has a senior level Common External Tariff (CET), a set of taxation position for regulatory reform, which has not yet rules, which will be binding to all countries in the been filled. trading bloc. There will be implications for national Kenyan regulations in the future as the Regulatory reform in Kenya has not yet been Customs Union is implemented. driven by the demands of the EAC, since the EAC has yet to devise formal regulatory stan- One issue that has emerged as these international dards for its members. However, there are a num- agreements are discussed within Kenya is whether ber of regulatory reform areas that are now being the MCTI has a clear mandate for negotiating developed as a result of the Customs Union and treaties. Calls have been made for Parliament to the Common Market. In the case of the Customs formally endorse the Ministry's rights to negotiate Union, each of the member countries is carrying these treaties. out customs modernization projects, which are 36 A consortium of traders from the member countries. meant to lead to harmonization of customs 37 For details, see "Proposed Mechanism for the Elimination of NTBs in EAC," a study carried out for EAC and EABC 35 The draft protocol is being presented to the 7th meeting of by Simon Ngatia Ihiga (Trade and Investment Consor- the Sectoral Council on Legal and Judicial Affairs, sched- tium, Nairobi) and ICON Institute, under the GTZ Proj- uled for April 16-24, and then to the Summit of Heads of ect "Support of Regional Business Organizations in East EAC Governments, scheduled for April 29-30, 2009. Africa (SRBO-EA)." 15 WB206_RCRK.indd 15 5/19/10 12:21:22 AM ADMINISTRATIVE CAPACITIES FOR MAKING HIGH QUALITY REGULATION Administrative transparency and Kenya does not have specific requirements or predictability procedures for making laws and regulations. However, the Constitution provides a basic Transparency of the regulatory system is crucial framework for the law-making process. Section to establishing a stable and accessible regulatory 30 of the Constitution gives Parliament the right environment that promotes competition, trade, to make laws, and stipulates that no other person and investment, and helps ensure against undue or body has this right, except when conferred by influences by special interests. It reinforces the an Act of Parliament, and allows the Cabinet and legitimacy and fairness of regulatory processes, individual MPs to propose bills to Parliament. but it is not easy to establish in practice. Trans- parency involves a wide range of practices, Procedures in Kenya for policy- and law-making including standardized processes for making and are well established, but there is no unified policy changing regulations; consultation with inter- process, or minimal standards that must be ested parties; plain language in drafting; publica- adhered to. Each ministry tends to develop its tion, codification, and other ways of making own procedures. Government policy is ordinarily rules easy to find and understand; and imple- formulated within a ministry, with policy propos- mentation and appeal processes that are predict- als submitted to Cabinet for deliberations by the able and consistent. originating ministry. Policy proposals must be discussed and formally adopted at Cabinet meet- Provisions for law-making procedures ings, reflecting the principle of collective respon- sibility, which is enshrined in section 17 of the Transparent and consistent processes for making Constitution. Subsequently, policy papers may or and implementing laws and regulations are fun- may not be translated into law. One of the criti- damental to ensuring public confidence in the cisms of policy- and law-making in Kenya is that rulemaking process. the policy development is too often truncated, 16 WB206_RCRK.indd 16 5/19/10 12:21:22 AM and it is left to the legal drafting to establish the advice on the proposed legislative action before the policy principles. Policies that need to be trans- proposal is submitted to the Cabinet for approval. lated into law are subjected to the legislative Before the bill is drafted, the relevant ministry process,38 which is summarized below and detailed should submit a memorandum to the Cabinet in Appendix D. The administrative process of seeking its approval and outlining the purpose of originating legislative proposals from government the proposal (see Box 1 for details of the contents ministries, in principle, permits no exceptions or of the memorandum). This request must be pre- short-cuts. The proposals must be presented at sented by the sponsoring minister under cover of a the Cabinet level, defended by the relevant minis- letter to the Secretary to the Cabinet. try and discussed and adopted by the Cabinet.39 The Cabinet will consider the memorandum and When a ministry identifies a need for legislation if it approves, the approval shall be communi- on a particular issue, the ministry concerned pre- cated to the sponsoring ministry in a letter signed pares a non-legal draft paper setting out the by the secretary to the Cabinet and copied to the objectives of the legislation and the problems it AG. This letter gives directions for the prepara- seeks to solve. The Attorney General's (AG) tion of the formal legislation concerned. The office40 is supposed to offer its legal comment and communication from the Secretary to the Cabi- net authorizes the sponsoring minister, through 38 Section 30 of the Constitution vests legislative power in the schedule officer of the ministry, to issue full Parliament, which consists of the president and the National Assembly. Under section 31 of the Constitution, drafting instructions to the legislative Drafting the National Assembly comprises elected and nominated Division of the AG's office. Drafting instructions members of Parliament and ex officio members - attorney- are in the format shown in Box 2. general and the speaker of the National Assembly. Parlia- ment exercises its legislative power through bills passed by the National Assembly. A bill is the formal expression of the will of the National Assembly and becomes law upon receiving a formal assent from the president. 39 Some exceptions to the general process, however, exist: Private members' bills: Private members are permitted Box 1: Cabinet Memorandum to originate bills for discussion in the House, although it uncommon due to the technical aspects of drafting a The Cabinet Memorandum should specifically set bill and because procedures are stricter and more time- consuming than for public bills. out the following: Combining the readings: Under Standing Order no. (a) the purpose of the memorandum; 108, a vote can permit more than one stage of a bill to be considered in one sitting. (b) the background of the proposed legislation; Period between publication and debate: A bill must be (c) issues for consideration by Cabinet; published in the Kenya Gazette before it is introduced in the House, and after publication, 7 days (for consolidated (d) inter-departmental or inter-ministerial consulta- fund bills, appropriation bills or supplementary appro- tions that have been held with bodies or agen- priation bill) and 14 days (for other bills) must lapse before the bill is introduced in the House. This can be cies of relevance; shortened by a House vote under Standing Order no. (e) financial considerations of the proposed legisla- 107. tion supported by a statement that the Ministry of Subsidiary legislation: Under the provisions of the Inter- pretation and General Provisions Act (Cap. 2), certain Finance has been consulted; officers in government, including ministers, may pro- (f) employment considerations, if any; mulgate rules, regulations, orders and directives that derive their force of law from parliamentary legislation. (g) whether or not there is existing legislation based Delegated legislation is designed to save time of the leg- on the same policy; islature and to cater for matters that are too detailed to be specified in a bill; matters that require flexibility; and (h) whether amendment or new legislation is those in which future developments cannot be foreseen. required, and 40 The AG is the principal legal advisor to the government and is also an ex-official member of Parliament under sec- (i) the action recommended (by the Minister) to be tion 36 of the Constitution. His/her role in Parliament is taken by Cabinet. advisory and non-voting. 17 WB206_RCRK.indd 17 5/19/10 12:21:24 AM AG's Office sends the bill to the government Box 2: Format of Legislative printer, where it is printed and published in the Drafting Instructions Kenya Gazette for 14 days, as provided by the Par- liamentary Standing Orders.41 The 14 day period Legislative drafting instructions follow the contents of gives members of Parliament, the public, and the Cabinet memorandum and include: professional bodies the opportunity to peruse the (a) objectives intended to be achieved by the bill; Bill and make any representations before it is (b) reports on the policy matter including any rele- debated. As an outcome of any representations vant legal opinions offered; made and emerging new factors, the responsible (c) references to relevant existing legislation; ministry may make amendments to the bill. The AG's office must then be consulted on the form of (d) indication of any consequential amendments, transitional or savings provisions required; such amendments and on whether those involve consequential changes to other provisions of the (e) prospective commencement date, if required, and bill. If any proposal to amend a published bill raises a matter of principle, it may be necessary (f) the name of the schedule officer in the sponsor- ing ministry, department or agency, who is to for the relevant minister to consult the Cabinet. liaise with the Legislative Drafting Division of the AG's department. Upon printing of the final draft bill, the required number of printed copies is sent by the government printer to the clerk of the National Assembly, the relevant ministry and to the attorney-general. The When drafting the bill, the legal drafters are clerk also distributes copies to members of Parlia- expected to make a thorough examination of the ment. After the expiry of the 14 days, or earlier in provisions of all the relevant domestic and inter- exceptional circumstances, the bill is tabled in Par- national legislation and to fit the provisions of liament by the sponsoring minister and goes each bill into the structure of statutes in Kenya as through the parliamentary process of passage into a whole. During this stage, there will be, if neces- an Act of Parliament. The fundamental stages sary, consultations between the Legislative Draft- before a bill becomes law are: presentation and first ing Division and the sponsoring ministry until reading; second reading; committee stage, report the drafting is finalized. stage, and third reading (for details of these stages, see Appendix D). After the third reading, a final Upon finalization, the draft bill is submitted to vote is taken and, if approved, the bill is deemed the sponsoring minister and the AG, who both successfully passed by the National Assembly. The ensure that it conforms to the original proposals clerk prepares the bill into a draft Act of Parliament agreed to, that personal liberties are sufficiently with the same name as the bill and submits it to protected, and that it is unlikely to face any pro- the AG for checking and onward transmission to cedural traps during its debate in Parliament. The the government printer for proofreading. The draft bill, accompanied by an explanatory memo- AG arranges for presidential assent, after which randum, is then submitted by the relevant minis- ter to the Cabinet for approval before it is tabled 41 According to the Standing Orders, all bills other than appropriation bills (Consolidated Fund bills) should be in Parliament for debate. If approved by the published in the Kenya Gazette not less than 14 days before Cabinet, the secretary to the Cabinet communi- their First Reading in the National Assembly. However, cates the approval to both the AG and the spon- where it is determined and certified by a Committee of Parliament that the subject matter of a bill is urgent, the soring ministry. bill may be introduced in Parliament without publication. A bill may also be laid in Parliament after it has been pub- lished in the Kenya Gazette, but before the fourteen day Upon communication of approval to the AG's period has elapsed if Parliament considers the matter to be Office, the Legislative Drafting Division of the urgent. 18 WB206_RCRK.indd 18 5/19/10 12:21:25 AM the Act is then published in the Kenya Gazette, a quality check on the administration's assess- as provided under the Constitution (Section ment of costs and benefits. Consultation can also 46(6)), without which the law cannot come into enhance voluntary compliance by creating a sense operation. However, Parliament may defer imple- of "ownership" of the resulting regulations, reduc- mentation of the law and can make laws with ing reliance on enforcement and sanctions. retrospective effect. Due to the large number of bills set for debate at Current policies and practices any time, Parliament is unable to discuss all of them. This is principally because the legislative ses- Consultation within government: Consultations sions in Kenya are very short. As a result, the Draft- among ministers and the relevant government ing Priorities Committee has to settle the order in departments must precede submission of propos- which bills are to be discussed in the House.42 als (by the responsible minister) for discussion at the cabinet level. The permanent secretary of the The concentration of government legislative sponsoring ministry is responsible for ensuring drafting in the AG's office ensures consistency. that other affected government departments are However, the department is woefully under- adequately consulted in advance and that other manned. There are few personnel in the AG's ministries are briefed for discussion at the cabinet office who are trained to draft legislation and level. Once the proposal is submitted to the cabi- those that do get trained tend to be recruited net, the cabinet office circulates all the support- away. This has left the department with 4-5 staff ing documentation to all the ministers before the members who handle work that used to be done issue is discussed at the appropriate cabinet com- by more than 10 people five years ago. mittee. After discussions at the cabinet commit- tee, the committee tables a report before the cabinet for approval by the entire cabinet. As a Provisions for consultation matter of practice, the cabinet and its committees Consultation is a systematic attempt to discover do not vote on issues presented before them for the opinions of groups affected by regulation and discussion. Rather, the president or the relevant to obtain data useful in regulatory development committee chairperson calls for consensus after and analysis. It may be general (e.g. advertise- ministers have been given an opportunity to ment for comment) or specifically targeted (e.g. express their views on the issue. Once consensus focus groups, working parties). Consultation can is reached, the Cabinet Office, which is the Sec- contribute to regulatory quality by bringing new retariat of the Cabinet, communicates the deci- ideas, perspectives and data to the attention of sion to the relevant ministry. regulators; helping to balance opposing interests Public Consultations: There is no requirement for and reduce the risk of capture; identifying unin- stakeholder consultations during the development tended effects and practical problems; gathering of the initial cabinet papers, but equally there is information on compliance issues; and providing nothing that prevents such consultations, and in 42 The bills are categorized as follows: practice, ministries usually hold stakeholder con- a) Absolutely necessary bills: these include finance and borrowing power bills requiring renewal before expiry sultations on matters that are highly technical or of previous legislation; are likely to have far reaching consequences. For b) Bills touching on treaty provisions; matters that would require technical input or c) Bills on government's main policies e.g. those concern- ing political pledges and administrative changes or investigations before a policy is developed, the gov- reforms; ernment often forms a task force, whose terms of d) Law reform bills; and e) Bills in reserve: these include those that can be brought reference include seeking views from stakeholders forward if a place becomes available for them. before presenting its report. However, even where 19 WB206_RCRK.indd 19 5/19/10 12:21:25 AM such stakeholder consultations are undertaken, the society activity has, however, not been matched by ministry involved is under no obligation to take opportunities for participation in the local gov- into account what stakeholders say. It is not ernment system. The law only guarantees political unusual, therefore, to have situations where the participation through civic elections, as is assumed government ignores stakeholder sentiments. that councillors effectively represent citizens. Yet the councillors rarely hold consultative meetings One of the avenues through which the business in their respective wards. The Local Government community, the civil service and other interested Act makes no reference to citizens' participation.44 groups can express their views on any proposed "It allows, but does not require the local authority legislation is through comments and representa- to publish a summary of a budget estimates in a tions after a draft law has been published in the local newspaper. Also, only for a fee must the local Kenya Gazette. authority provide a copy of the annual estimates if requested. Local citizens can attend full Council In the case of tax issues, the KRA has introduced meetings as observers. They cannot, however, procedures for consulting with clients/customers. attend any committee meetings as these are held The experience appears to be seen in a favorable behind closed doors as closed sessions. light by the stakeholders. PSF and other represen- tative groups are gaining experience in represent- ing their positions to government and dealing Communication of regulations with policy issues. Another dimension of transparency relates to the need for the authorities to effectively communi- However, there appears to be considerable variety cate the existence and content of all regulations in the extent to which stakeholders outside the to the public. This means that the regulations are government are involved in the process. The gov- available to the public at reasonable cost, in a ernment has introduced consultation with language that can be easily understood. Commu- selected stakeholders (civic society, business asso- nication is also essential to achieving effective ciations and donors) in the development of major compliance. strategy documents ­ such as ERS, Vision 2030, PSD Strategy and PSDS PIP.43 The Public Ser- Kenya has taken important steps to make its laws vice Reform Program (PSRP) has emphasized available to the population over the past 20 years. citizen/stakeholder consultation in the develop- In 1994, responding to inadequate infrastructure ment of reform programs, and the PSRP secre- for publication of legislation, the National Council tariat has developed its own techniques and for Law Reporting Act created the National Coun- methodologies for conducting consultations. The cil for Law Reporting (NCLR), which was given business licensing reform project also carried out an exclusive mandate for: "publication of the extensive consultations with both the regulators reports to be known as the Kenyan Law Reports45 and business associations through a series of which shall contain judgments, rulings and opin- workshops focusing on sectoral licenses. These ions of the Superior Courts of record and also consultations were important in establishing pri- undertake such other publications as in the opin- orities for reform. ion of the Council are reasonably related to or con- nected with the preparation and publication of the Kenya's transfer into a multi-party system of gov- Kenya Law Reports" (section 3 of the act). Although ernance has been followed by a rapid growth in civil society networks and groups. Growth in civil 44 The Local Government System in Kenya (http://www.clgf. org.uk/index_profiles.htm). 43 In the case of PIP, it was subjected to stakeholder consulta- 45 The Kenya Law Reports are the official law reports of the tion between January and March 2007, when three work- Republic of Kenya which may be cited in proceedings in all shops were held to confirm the priorities. courts of Kenya (section 21 of the act). 20 WB206_RCRK.indd 20 5/19/10 12:21:25 AM constituted in 1996, the NCLR46 did not start 2002. The Council has subsequently published effective operations until 2002, when the govern- 11 years of this backlog (1981­1991) and simul- ment provided staff and financial resources.47 taneously published law reports for four recent years (2001-2004). In 2006, the Council began The NCLR has established the following objec- publishing specialized law reports dedicated to tives: specific areas of law, beginning with Environment and Land Law reports. NCLR now publishes to accelerate the publication of the Kenya largely through its Web site (http://www.keny- Law Reports, in order to bring itself up to alaw.org/update/), which contains copies of all date with the courts' calendar in the shortest legislation and legal judgments of the various time possible; courts in Kenya. publish simultaneously both previous and An unofficial source of legislation and related mate- current law reports in book form and also rials is provided by a Web site (http://www.mza over the medium of the internet via the lendo.com/2006/05/), which is geared to publiciz- domain name: www.kenyalaw.org; ing the actions of Parliament and its members. liaise with the government printer in the While communication of legislation and court online publication of Kenyan statute law and cases is now well-established, it appears that, in other legal materials; general, communication of regulations and sec- ondary legislation is less adequate. Regulations publish monthly and weekly commentaries are required to be published in the Official on emerging legal issues as embodied in judi- Gazette,48 and this is the primary source of infor- cial opinions; mation for the business community, other than making use of the information-gathering activi- make representations to the Kenya Law ties of private lawyers. A computer-based registry Reform Commission in areas of law that may for business licenses is under construction as a be in need of reform; result of the business licensing reform program, but it is not yet functioning because of delays in assist the members of the public, learning appointing staff. institutions, non-governmental organizations and government departments in the acquisi- One general issue that affects the communication tion of case law and other relevant legal infor- of information from government agencies to the mation. population is the existence of the Official Secrets Act, which imposes a statutory obligation on all The first volume of the re-launched Kenya Law civil servants and officials not to release informa- Reports, the [1981] KLR, was released in January, tion obtained in the course of their duties.49 There 46 The NCLR, which is a corporate body, is managed by a 48 This does not appear to be the case of local government board comprising the chief justice; attorney general; two licenses. Para 2.78 of the report of the Working Committee judges, one each from the High Court and the Court of on Regulatory Reform states "most (licenses) have not been Appeal; a public-officer; two advocates representing the published in the Kenya Gazette and are actually not avail- Law Society of Kenya; the Dean of the Faculty of Law, Uni- able for inspection by the public or even by the business versity of Nairobi; the government printer or his represen- people who are affected by them. This has led to a lot of tative; and the person appointed as the editor of the Kenya confusion and misunderstanding amongst the private sec- Law Reports under the Act. tor while at the same time creating rampant opportunities 47 The affairs of the Council are presently managed from its of corruption for the licensing and enforcement officers." secretariat situated on the ground floor of the Milimani 49 There is a statutory requirement for each official to swear Commercial Courts Building, off Ngong Road in the and sign an oath that any information acquired in the Upper Hill area of Nairobi. course of official duties shall not be released to any person 21 WB206_RCRK.indd 21 5/19/10 12:21:25 AM have been instances when the Act has been used than the government would like to see. The size to conceal important governance, judicial, and of the informal sector is testament to the fact that law and order information from the public.50 businesses can avoid inspections and compliance These cases have lead to requests from the media obligations related to licensing and permitting. and the public for the Official Secrets Act to be This reflects the fact that many agencies have repealed or modified through the passage of a insufficient staff and resources to be able to cover Freedom of Information Act that would allow all enterprises. This compels them to adopt a "tri- public access to information and to impose an age strategy" whereby only the more significant obligation on government to publish informa- enterprises are covered. Another reason why com- tion. To date, there has been no progress in resolv- pliance is not as high as government intends may ing this issue. be costs, as is suggested by the extent of the infor- mal sector. The costs of complying may be high in absolute terms for many businesses or high in rela- Compliance and enforcement of tion to any benefits that flow from compliance. regulation The adoption and communication of a law or In addition, the fact that government agencies regulation is only part of the regulatory process. typically do not share information may mean The law can achieve its intended objective only if that a business that is part of the formal sector in it is adequately implemented, applied, complied one area of policy is not part of the formal sector with and enforced. A low level of regulatory com- in another area of policy.52 pliance threatens the effectiveness of regulations, public policies, and ultimately the capacities and Work conducted under the GJLOS Program has credibility of governments in taking action. Com- revealed that the most easily enforced laws and pliance and enforcement issues can be considered regulations are not those backed by compulsion in terms of processes and practices as well as insti- but those that are responsive to and have the tutional structures. backing of citizens, that is, are in tune with soci- ety's expectations and standards. Laws and regu- There are extensive requirements in the country's lations should therefore align themselves as much regulatory regime for inspection on a regular as possible to the societal realities; where pro- basis. According to the DB2009, these require- posed laws and regulations are not in alignment, ments for inspection often lead to significant they need to be backed by activities that are delays in completing regulatory processes, because geared to changing expectations and realities. of a shortage of inspectors or because the agency has insufficient transport.51 Inspections con- An area of concern has been the uneven enforce- ducted by different agencies are rarely coordi- ment of regulations. In part due to a shortage of nated, in part because of the difficulty of sharing staff but also corruption. It is reported that those documentation. who refuse to pay bribes can have their premises inspected on a Friday afternoon to be arrested In general, levels of compliance with basic busi- and kept in jail over the weekend. This is a source ness and investment climate regulations are less of concern for businesses in Kenya. The prime minister recently announced that that he will issue a directive to stop these practices. or body outside the government bureaucracy. Breach of this statutory requirement is punishable by imprisonment. 50 Such as in the Goldenberg and Anglo Leasing scandals. 51 During the preparation of the Administrative Barriers 52 For example, a small business in the rural areas may be pay- Study in 2003/4, IC learned that businesses frequently ing a license fee to the local authority for its single business were required to provide transport to officials in order to permit, but may be eluding the tax authorities because it is accelerate inspections. not registered as a taxpayer. 22 WB206_RCRK.indd 22 5/19/10 12:21:26 AM Public redress and appeals cases, which may be either pecuniary or territo- rial. Pecuniary jurisdiction is determined by the Mechanisms to redress regulatory abuse must also value of the subject: magistrate's courts have a be in place, not only as a fair and democratic safe- pecuniary limit on the matters they can handle, guard in a rule-based society, but also as a feedback while the High Court has unlimited jurisdiction mechanism to improve regulations. The first stage and can handle any matter regardless of the mon- of seeking redress is to complain directly to the gov- etary value. Territorial jurisdiction depends on ernment agency that has taken the decision; the where the dispute has occurred; a dispute may second stage is to seek review by the courts; and only be instituted in the area where it has there may be other institutions for redress, such as occurred. The courts can deal with both cases arbitration, mediation or an Ombudsman. between businesses and also cases between busi- The first stage of seeking redress against adminis- ness and the government. trative and regulatory decisions in Kenya is to The High Court is empowered through law55 to request reconsideration by the agency that has check administrative excesses. Administrative law taken the decision. In a number of cases, legisla- relates to decisions of public officers or organs of tion defines the redress procedures; in other cases, central government or public authorities, which legislation may provide for such procedures with- may affect the rights or liberties of the citizens out necessarily providing clear guidelines for how and which are enforceable by the courts of law. the process should be structured. In 2006, the The High Court has power to grant the orders of Ministry of Public Service published a Service mandamus, prohibition, and certiorari to any Charter which, inter alia, provided guidelines for party that applies for judicial review of decisions. how the government should deal with complaints An order of mandamus is issued where there is a and enquiries.53 One agency that has been in the duty of a public or a quasi-public nature imposed forefront of recent efforts to set up complaint and by statute, and compels the fulfillment of a duty enquiry machinery is the (KRA).54 KRA has where there has been indolence on the part of the established a 24-hour Complaints and Informa- body or officer concerned. An order of certiorari tion Center under the office of the Commissioner is addressed to inferior courts and requires the General, equipped with hotlines, fax line, voice proceedings of that court to be transferred into a mails, and e-mail facilities to receive complaints higher court and examined for validity. An order and information on irregularities. of prohibition prevents implementation of an The second avenue for dealing with disputes order that has been issued where there is no valid related to business is to resort to court proceed- jurisdiction. ings under civil law. The main types of appeals in Kenya are appeals from subordinate courts and The process of applying for judicial review involves tribunals to the High Court, and appeals from two stages, namely, application for leave and the the High Court to the Court of Appeal. In Kenya, substantive application for judicial review orders. especially in Nairobi, there are specialized com- As the first step, the applicant, without giving mercial courts that deal exclusively with disputes notice to the administrative authority whose order of a commercial nature. is to be challenged, seeks permission from the court to apply for judicial review. During the Courts are accessible to all businesses as long as application for leave, the court's duty is to conduct they satisfy the requirements for institution of a preliminary view of the merits of the application, 53 "Service Charter," Ministry of State for Public Service, July 55 The substantive jurisdiction is found in the Law Reform 2006. See http://www.dpm.go.ke/index.php Act (Cap. 26), while the procedural aspects are provided 54 http://www.kra.go.ke/customercare/complaintsandinfor- for under Order 53 of the Civil Procedure Rules made mationcentre.html under the Civil Procedure Act (Cap.21). 23 WB206_RCRK.indd 23 5/19/10 12:21:26 AM on the basis of the relief sought and the grounds handles disputes touching on rental busi- upon which it is sought. If the court is satisfied nesses premises that fall under the Act.56 The with the application, it will grant leave to fill a Business Premises Rent Tribunal is estab- substantive application for judicial review. After lished to set out reasonable tenancy standards leave has been given to apply for judicial review, and to ensure that the landlords do not charge the second stage entails a formal, substantive appli- excessive rents for business premises. The cation, which is brought to the High Court by powers of this tribunal are set out in Section way of a notice of motion. The suit is heard in 12 of the Act. open court, and the court will adjudicate. (c) The Public Procurement Administrative Courts are considered to have both advantages Review Board: The Public Procurement and disadvantages. On the positive side, courts Administrative Review Board (PPARB)57 is a are open to all litigants, court orders are final and continuation of the Public Procurement enforceable, and specialized commercial courts Complaints, Review, and Appeals Board, are available to deal with commercial disputes. which was established under the Exchequer On the other hand, court cases are expensive, and Audit (Public Procurement) Regulations, especially for small and medium enterprises 2001 (now repealed). The PPARB was estab- (SMEs), and the courts tend to suffer from a lished to promote and uphold fairness in the backlog of cases. Public Procurement System through judi- cious and impartial adjudication of matters There are also various administrative tribunals in arising from disputed procurement proceed- Kenya. Established by acts of Parliament, tribu- ings. Any candidate to a procurement process nals are bodies that are given the powers of an who claims to have suffered or to risk suffer- administrative or quasi-judicial nature and which ing, loss or damage due to the breach of a may be regarded as a separate courts dealing with duty imposed on a procuring entity by the some specific rights and duties. Administrative Public Procurement and Disposal Act or the tribunals that deal with business-related issues Public Procurement and disposal Regula- include the following: tions, 2006, may seek administrative review. The Board is autonomous and has nine (a) Kenya Industrial Court: The Kenya Indus- members appointed by the minister; six of trial Court (KIC) is established in accor- the members are nominated by the Kenya dance with the provisions of the Labor Association of Manufacturers (KAM), Law Institutions Act. Its objective is to adjudi- Society of Kenya, Architectural Association cate on disputes between employers and of Kenya, Institute of Certified Public employees, such as those dealing with dis- Accountants of Kenya, Kenya Institute of missal and non-payment of dues to employ- Supplies Management, Chartered Institute ees. Decisions of KIC in any trade dispute 56 This Act defines a "controlled tenancy" as a tenancy of a can be appealed to the Court of Appeal: the shop, hotel, or catering establishment, which is in written appeal, however, is restricted to matters of form and is for a period not exceeding five years. The term law only and not facts. "shop" means premises used wholly or mainly for the pur- poses of a retail or wholesale trade, or business, or for the purpose of rendering services for money, or money worth. (b) The Business Premises Rent Tribunal: The This definition is wide enough to cover offices, clinics, etc. Business Premises Tribunal (BPT) is estab- A "hotel" is a place in which meals and/or accommodation; are supplied, or available for supply, to at least five adult lished under section 11 of "The Landlord and persons. A "catering establishment' means premises in Tenants (Shops, Hotels and Catering Estab- which food or drink is sold for consumption on the prem- ises by persons boarding on the premises. lishments) Act (Cap. 301). The Tribunal 57 Established through Section 25 of the Public Procurement and Disposal Act, 2005 (PPDA). 24 WB206_RCRK.indd 24 5/19/10 12:21:26 AM of Arbitrators, Kenya National Chamber of Tribunal handles all matters relating to Co- Commerce, Computer Society of Kenya, operative Societies in Kenya. Kenya Institute of Management, Pharmaceu- tical Society of Kenya, Federation of Kenya (g) Water Appeals Board: This is an adminis- Employers, and Central Organization of trative board established under the Water Act Trade Unions. The three other members are of 2002 to deal with disputes under the Act. appointed by the minister. (h) Sugar Arbitration Tribunal: This Tribunal (d) Restrictive Trade Practices Tribunal: It is is established under section 31 of the Sugar established under Section 64 of the Restric- Act. It arbitrates on disputes between parties tive Trade Practices, Monopolies & Price under the Sugar Act. Control Act, Chapter 504. The Tribunal falls administratively under the Minister for (i) Energy Tribunal: Established under the Finance, but operates independently as a Energy Act (Act No.12 of 2006), it deals with court of first appeal. Once constituted by appeals from decisions of the Energy Com- the Minister for Finance, the Tribunal is mission established under the Act. absolutely independent of the Office of the Minister and the Office of the Commis- (j) Capital Markets Tribunal: This Tribunal is sioner of Monopolies and Prices. The princi- established under section 35A of the Capital pal functions of the Tribunal is to arbitrate Markets Act (Cap.485) to handle disputes over competition policy disputes resulting arising under the Capital Markets Act. from ministerial orders made on recommen- dations made by the Commissioner for Administrative Tribunals in Kenya are consid- Monopolies and Prices under the Act. The ered to have both advantages and disadvantages. Tribunal has powers to overturn, modify, On the one hand, decisions are handed down confirm or refer back to the minister orders relatively quickly because the tribunals are not appealed against by aggrieved parties. It deals overburdened with cases, procedures are straight- with cases already handled by the minister forward and generate low costs to the appellants, where the parties are not in agreement. Such experts in their fields are hired, and the tribunals cases will normally have been investigated are accorded discretionary powers so that they and handled by the Commissioner for can be flexible. On the other hand, discretion Monopolies and Prices before being consid- may be so wide that decisions are inconsistent, ered by the minister. Orders and decisions of proceedings are sometimes held in private, and the Tribunal are subject to appeal to the parties are denied representation by lawyers, and High Court of Kenya.58 there are accusations that officials working on the Tribunal do not always act impartially. (e) Tax Appeal Tribunal: This Tribunal is estab- lished under section 32 of the Value Added Kenya has also established a number of institu- Tax Act to deal with disputes arising under tions that have the potential to provide redress the Act. The Tribunal's decisions may be against administrative and regulatory abuse. appealed to the High Court. These include: (f ) The Co-operative Tribunal: Established i) Anti-Corruption Commission (ACC). under the Co-operative Societies Act, the Established in 1980, it has three main func- tions: prevent corruption; investigate and 58 Such appeals are only feasible within 30 days following the prosecute offenders; and educate the public communication of the Tribunal's decisions/orders to the concerned parties. about corrupt practices and foster public 25 WB206_RCRK.indd 25 5/19/10 12:21:26 AM support in the fight against corruption. The the general revenues of the country and ACC consists of five part-time commission- expenditures appropriated by Parliament, ers who are answerable to Parliament and and accounts relating to the stocks and stores supervise the director-general who heads of the government. The OAG is also man- the directorate. The ACC has established dated to audit every statutory body, all pri- offices in all the provincial centers of the vate institutions that receive government country. A review of ACC's strategy and grants, subsidies or subventions, government organizational structure was conducted in ministries and departments, and to report to 2003, following which revisions were intro- Parliament on the results of the audit. The duced. Also in 2003, a National Gover- OAG also conducts environment, IT and nance Baseline Survey was carried out to performance audits. measure public perceptions of corruption and public service delivery, and to develop a Finally, Kenya has created an ombudsman func- comprehensive strategy to combat corrup- tion. The official name for the ombudsman is the tion and enhance public service delivery. PCSC, a public body established by the president The FNDP committed the government to a in June 200760 as part of the government's efforts follow-up National Governance Survey. to provide Kenyans with better public services. The PCSC is essentially a "one-stop-shop" (see ii) Commission of Investigations. Established Box 3) where any case of misuse of office, corrup- in 1973, the Commission is charged with tion, unethical behavior, breach of integrity, mal- redressing grievances from members of the administration, delay in provision of necessary public and employees in the public service services, any form of injustice, discourtesy, incom- which arise as a result of maladministration petence, misbehavior or any efficiency or inepti- or abuse of office by public organizations. In tude on the part of public officials can be reported, 2004, the Commission handled a total num- by fax, e-mail, by post or hand delivery.61 ber of 825 grievances, out of which 526 were concluded. In 1998, a strategic plan for restructuring the commission was developed Policy instrument alternatives for the following five years, but was never formally approved and implemented. A core administrative capacity for good regula- tion is the ability to choose the most efficient iii) Judicial Complaints Authority (JCA). and effective policy tool, whether regulatory or Established in 1999, the JCA began operat- non-regulatory. In the OECD, the range of pol- ing in 2003, with a mandate to investigate icy tools and their use are expanding as experi- complaints from the public on alleged mis- mentation occurs, learning is diffused, and conduct by judicial officers59 and to make understanding of the markets increases. Increas- recommendations for disciplinary action. ingly, guidelines for regulators in OECD coun- tries require ministries and agencies to consider iv) Office of the Auditor-General (OAG). whether "command and control" regulation is Established under the Constitution, the likely to be the most effective policy instrument OAG's function is to submit an audit report or whether other options might succeed in achiev- to the president on the accounts relating to ing policy goals at lower cost. But the use of regu- latory alternatives in OECD countries, while 59 Judicial officers are judges, including the chief justice, dep- uty chief justice, chairman and vice chairman of the Indus- 60 Gazette Notice No.5826 of June 29th,, 2007 and No. 6327 trial Relations Court, magistrates, Local Court justices, of July 13, 2007. and all persons who have the power to hold or exercise the 61 The complaints have to be written and signed by the judicial powers of a court. complainant. 26 WB206_RCRK.indd 26 5/19/10 12:21:26 AM Box 3: Public Complaints Standing Committee The PCSC is mandated to: receive, register, sort, classify, and document all complaints against public officers in ministries, Parastatals/ State Corporations, Statutory Bodies or any other public institution; enquire promptly1 into allegations of misuse of office, corruption, unethical conduct, breach of integrity, mal- administration, delay, injustice, discourtesy, inattention, incompetence, misbehaviour, inefficiency or inepti- tude, etc; help set up and build up complaint handling capacity in public service sectors registering high incidences of complaints, including but not limited to health, local authorities, police, lands, financial services, etc; oversee, coordinate, monitor and follow up specific actions on channeled complaints; promote alternative dispute resolution (ADR) through mediation; determine whether there is merit in a complaint and thereafter to act on the complaint appropriately, which may include channeling it to the responsible government department for action; review regulations, codes of conduct, processes and procedures in the public service and recommend neces- sary changes to avoid or reduce complaints; recommend appropriate legislative reforms, and to prepare advisory opinions or to recommend remedial actions, including where appropriate compensation, to be taken by government; and to publish quarterly reports on the number and nature of complaints received and the actions taken by the PCSC. increasing, is still at a relatively low level. At the and control" type. To the extent that the pur- same time, administrators, rule-makers and regu- pose of regulatory reform in Kenya has been lators often face risks in using relatively untried clearly stated by the government in its various tools. A clear leading role ­ supportive of innova- strategies, there is clearly scope for ministries to tion and policy learning ­ must be taken by take innovative approaches. However, there is reform authorities if alternatives to traditional little documentation of such approaches having regulations are to make serious headway into the been evaluated or considered. policy system. However, one area in which self-regulation has Government intervention should be based on developed within Kenya has been for NGOs. In clear evidence that a problem exists and that gov- the late 1990s, improvements in government- ernment action is needed. This should include NGO relationships resulted in changes in the assessments of the size of the problem, of likely government's perception of NGOs, enabling government effectiveness and of the likely costs of meaningful dialogue (including discussions government intervention. Good practice in this concerning the desire of NGOs to regulate area is increasingly seen as requiring consideration themselves) to be developed. In addition, donor of both regulation and alternative policy tools. pressures, particularly from the IMF and the World Bank, resulted in imposition of condi- In the absence of any policy guidelines in Kenya, tions for the grant of aid, the reform of laws, and ministries that are responsible for regulatory the introduction of regulatory frameworks that processes are not required to consider alterna- would improve the governance capacity. The tives to regulation of the traditional "command Kenya self-regulatory model has consisted of 27 WB206_RCRK.indd 27 5/19/10 12:21:26 AM internal rules that govern the operations of introduced gradually as part of the government's NGOs, rules of conduct for their boards, and their overall regulatory reform strategy. The PSDS internal financial practices, developed within a leg- Implementation Plan (PIP) for 2007-2012 takes islative framework62 that permits self-regulation. as a given that RIAs will be conducted, and stipu- Such delegation by the government of its powers lates that RIAs will include assessments of gender- was an attempt to strike a reasonable balance related business issues and impacts of environment between the freedom of NGOs to regulate them- policies and regulations upon businesses.64 selves without undue political interference, and the government's duty to protect its citizens from Intermediate steps have been taken to introduce a the activities of unscrupulous NGOs.63 broader concept of cost in the evaluation of regu- lations, through use of the Standard Cost Model (SCM), which seeks to estimate compliance costs Use of RIA for understanding regula- incurred by the businesses being regulated. The tory effects first effort was made during the licensing reform exercise,65 when an estimate of "administrative RIA provides a systematic basis for choosing the burdens"66 was made for two of the most impor- best regulatory (or non-regulatory) alternative to tant licenses in Kenya, the SBP and Electronic respond to a problem. A range of different Cash Register (ECR).67 A second effort was made approaches to RIA exist, depending on policy during 2008, when a study68 was conducted, preferences and administrative capacities. At the using the SCM approach, to measure the realized core of any RIA system, however, are the follow- and potential reductions in compliance costs for ing: 64 Chapter 5, Cross-Cutting Issues, pages 52 and 53, PIP. 65 "Administrative Burdens Arising From Complying with an assessment of selected types of impact of the Single Business Permit and Electronic Cash Registers in specific types of regulation; Kenya," December 2006. 66 Administrative burdens are all costs borne by private enter- assessment methodology according to pre- prise related to administrative obligations, and consist of administrative procedures and procedural operations in defined standards and procedures; and and by firms, which are mandatory to comply with legisla- tion. Administrative burdens constitute part of the regu- a process of quality control by an indepen- lated entities' compliance costs, and administrative costs comprise labour, cost of materials and cost of outsourcing. dent government agency/unit. Administrative burdens are of two types ­ structural or regular (or annual) and once-off costs. Structural burdens Currently, a particular approach to RIA has not form an integral part of those administrative costs that been developed for systematic application within recur regularly, for example every month or year. Once-off burdens occur only once in the life of an enterprise and fall the Kenyan government. However, the govern- into two categories. The first category applies when changes ment's statements over the past two years suggest within existing laws and regulations occur or when new laws or regulations are being introduced. An example of that introduction of an RIA methodology to such a category is the introduction of a permit to establish assess the costs and benefits of regulation will be a business. The second category of once-off burdens occurs as a result of event-driven obligations, for example apply- ing for VAT registration. Once these once-off costs are 62 The Kenya legislation covers a broad range of issues, includ- incurred, regular costs then kick in as part of ongoing com- ing: provision for the creation of the right environment for pliance. NGO activities; the maintenance of integrity of NGOs; 67 Although subject to criticism because of the heroic assump- the upholding of "core values"; provision for technical and tions required to carry out the calculations, the study had a financial management training for its members; strength- powerful impact, because it was able to show that the bur- ening communication channels between NGOs and gov- den of the ECT was some 28 billion shillings, including ernment; ensuring that NGO activities are consistent with once-off costs of 22 billion shillings and structural costs of national policy objectives; setting guidelines for NGO 7 billion shillings and that the burden for the SBP was 1.35 fund-raising and other programs; and improving NGOs' billion shillings annually. networking activities. 68 "Measuring Impacts: Monitoring and Evaluation of the 63 For details, see "An Experiment in NGO Self-Regulation in Government of Kenya's Business Licensing Reform," Kenya," Edward A. Adiin Yaansah, 1998. Jacobs and Associates, December 2008. 28 WB206_RCRK.indd 28 5/19/10 12:21:27 AM businesses resulting from the business license Kenya's reform impact has been on the cost side, reforms undertaken between 2006 and 2007.69 and implementation of a more complete RIA sys- This study extended the previous study's defini- tem would necessitate attention being given to tion of administrative burdens/costs, by including estimates of the benefits of regulation. first, the costs of submitting the licenses, second, the direct financial costs of enterprises incurred when they pay the fees, and third, the opportunity Building administrative skills for costs of waiting for replies. The study measured regulatory reform licensing costs at three points in time: first, before the reforms were started; second, in mid-2008, A skilled and well-trained civil service recruited when some reforms had been introduced; and on the basis of merit is a prerequisite for develop- third, a future time when all of the reforms in ing and maintaining high-quality regulations and licensing recommended by the BLRC and accepted regulatory policies. by government have been implemented. On the basis of the assumptions and calculations, the Civil service training in general is managed report estimated that licensing costs were approx- through the Human Resource Development imately 23 billion shillings before reform, 18.5 Division (HRDD), one of four main technical billion in mid-2008 and would be approxi- divisions in the Ministry of State for the Public mately 12 billion when all reforms have been Service (MSPS). HRDD has been placed in the implemented. Therefore, licensing costs would Office of the Prime Minister to coordinate mat- be almost halved at the end of the reform ters regarding the training of civil servants for the implementation, and in GDP terms, licensing current government. The policy objectives gov- costs would have fallen from 1.3 percent to erning HRDD's activities are: to ensure that 0.7 percent of GDP. training and capacity building activities under- taken within the public sector advance national The second report identifies an agenda for further goals and priorities; to manage the training func- elaboration of the SCM approach and the incor- tion in the public sector in a professional and poration of other costs. The report alludes to the systematic way; to develop and implement a sys- fact that reforms carried out to mid-2008 had tem in which training funds are targeted to train- resulted mainly in reductions in licensing fees ing the right people in critical areas; and to raise (rather than streamlining of processes and reduced the performance levels of the public sector by waiting time), and focuses on the fact that this designing training that is demand-driven, cost- reduction can be reversed by the imposition of effective, gender sensitive and proactive. HRDD's other taxes and charges on businesses. The SCM strategy has been described in the following approach captures a significant part of the regula- way: tory costs incurred by businesses, but there are to increase the training allocation to at least other costs, outside of the compliance costs, that 1 percent of the recurrent budget; may need to be identified and quantified. In addi- tion, the SCM approach does not capture the to operationalize and harmonize a compre- costs of administering the licensing system that hensive training policy for the public service; are incurred by the regulatory agencies themselves. And finally, the focus so far in the measurement of to integrate private sector contributions to human resource development in the public 69 The study estimated costs through two versions of the service; SCM: first, a "SCM-light" estimate of the compliance costs of the most costly 20 percent of licenses (which are assumed to generate 80 percent of total compliance costs); and a full to encourage ministries and departments to SCM estimate of "high priority" licenses. adapt modern Human Resources Information 29 WB206_RCRK.indd 29 5/19/10 12:21:27 AM Systems for effective and efficient manage- been involved in the Working Committee on ment of training; Licensing Reform have received on-the-job train- ing, and have been exposed to new skills through to develop client-centered training programs the local and international consultants who have for the public service; and been involved in the project. to promote career-long training and skills The final report of the Working Committee rec- development. ommended that one of the first priorities of the BRRU should be to "develop a plan for training The HRDD's policy for training is put into and capacity building of the Unit, and shortly effect through a range of civil service training thereafter of other regulatory reform stakehold- institutes.70 ers, including other business regulating minis- tries, private sector organizations, parliament."71 Currently, there are no courses for regulatory A training program for BRRU and key stakehold- reform and RIA being offered within the public ers was held last year and two BRRU staff attended sector training institutes. Individuals who have an RIA course in Brugge. 70 They include the Kenya Institute of Administration, the Kenya Development Learning Center, and four govern- 71 Chapter 5, page 67, "Final Report of the Working Com- ment Training Institutes at Baringo, Mombasa, Embu and mittee on Regulatory Reforms for Business Activity in Matuga. Kenya," March 5, 2007. 30 WB206_RCRK.indd 30 5/19/10 12:21:27 AM UPDATING REGULATIONS Revisions of existing laws agenda consisting of economic growth, equity, and regulations and poverty reduction and governance. Since then, the GJLOS reform program72 has been the Assessment of new regulation is not enough to central legal reform program, with a primary goal ensure a high quality regulatory structure. As tech- to "improve the quality of life for Kenyans, espe- nology, the economy and society change, existing cially the poor, marginalized, and the vulnerable."73 regulations often become less relevant and effec- The GJLOS started from the standpoint that tive. Regulatory management should involve peri- good governance is required for economic devel- odic reevaluation of whether existing regulations opment, and that without good governance all still constitute the best available solution to the other reforms would be difficult to achieve. problems they seek to address. A systematic Financed by a group of 15 donors, the GJLOS approach is required to ensure that all regulations program has been implemented in more than 30 are regularly subjected to this reassessment. government institutions. To date, the agenda for law reform has been There have been several programs and projects in dictated largely by the government. A semi- Kenya to revise and modernize the laws. Like the autonomous agency does exist in Kenya for other east African countries, Kenya is now defin- ing its legal reform programs within the broader 72 This five-year program was launched in November 2003, when a one-year Short-Term Priorities Program (STPP) context of poverty alleviation and growth, and to was started to establish quick wins. A year later, a four-year bring them into line with its current economic, Medium Term Strategy (MTS) was adopted, which was social and political priorities. The government designed to produce sector-wide reforms in priority areas of governance, ethics and integrity; to promote respect for that came to power in 2002 developed the Eco- human rights in government institutions, and to improve nomic Recovery Strategy for Wealth and Employ- access to justice; to promote crime prevention and police and penal reform ment Creation (ERSWEC), whose investment 73 GJLOS Reform Program, "Policies, Laws and Regulations program outlined a three-fold economic recovery Assessment Report," September 2007. 31 WB206_RCRK.indd 31 5/19/10 12:21:28 AM review of legislation: the Kenya Law Reform To further strengthen the role of the KLRC, a Commission (KLRC) was established in 1982 bill, The Kenya Law Reform Commission Bill, is with a mandate to spearhead law reform and currently being drafted. The bill seeks to give review legal and judicial processes in the coun- KLRC greater operational autonomy, to make it try.74 Its mandate as contained in Section 3 of more effective and to redefine its objectives, func- Chapter 3 of the Laws of Kenya is: "to keep tions and composition. This effort stems from an under review all the laws of Kenya to ensure its assessment made by the KLRC commissioners systematic development and reform, including in themselves that it is able to work only on govern- particular the integration, unification and codifi- ment priorities, and that the work program has cation of the law, the elimination of anomalies, been established in response to crises75 rather the repeal of obsolete and unnecessary enactments than a coherent reform program based on policy and generally its simplification and moderniza- analysis. There is also a concern that the need for tion." KLRC is expected to: KLRC to respond to these legal crises in a com- pressed period precludes effective consultation receive and consider any proposals for reform with stakeholders in the drafting of the laws and of the law that may be made or referred to it; results in the government facing problems in Par- liament. prepare and submit to the attorney general programs for the examination of different branches of the law with a view to reform, including recommendations as to the agency Reducing administrative burdens by which the examination should be carried Regulatory paperwork and government formali- out; ties can be unnecessarily burdensome on regu- undertake, pursuant to any program approved lated groups if coordination between regulators is by the attorney general, the examination of lacking, if new technologies are not used to assist particular branches of the law and the formu- in information gathering, and if unnecessary lation by means of draft bills or otherwise, of information is sought by regulators. Govern- proposals for reform therein; ments worldwide are adopting programs to reduce the administrative burdens associated with prepare, at the request of the AG, compre- regulatory requirements. hensive programs of consolidation to facili- tate the exercise by him of his powers under The Report of the Working Committee on Regu- the revision of laws act, and to undertake the latory Reforms for Business recommended that drafting of bills pursuant to any program of the government adopt a target for reducing by consolidation approved by him; and 25 percent the costs of compliance incurred by businesses in selected high-priority areas of regu- provide advice and information to ministries lation, with the objective of securing a serious and departments in the government with reduction in the administrative burdens facing regard to the reform or amendment of a enterprises. As part of the 2007­2008 Budget branch of the law appropriate to that ministry Speech, the minister for finance announced the or department. government's commitment to reduce red tape imposed on businesses by 25 percent in key regu- 74 The KLRC's Web site gives as its vision statement "the real- ization of a contemporary, simple, coherent legal system latory areas over the next three years. While these that is founded on social needs, justice, equity and good kinds of targets are useful to bring focus to reform governance," and defines its mission as "to contribute to socio-economic, legal and political development by simpli- fying, harmonizing and reforming the laws of Kenya 75 For example, money-laundering bill, international crimes through research and consultations." bill, witness protection. 32 WB206_RCRK.indd 32 5/19/10 12:21:30 AM efforts, they need to be translated into more pre- in government agencies as well as the private sec- cise measures, which also requires a monitoring tor and civil society. and evaluation capacity to generate the baseline and post-reform information that can be used to The institutional framework for e-Government judge whether targets have been met. There is includes: also one inherent danger in these targets, in that they can encourage reforms to be limited to the Cabinet Committee on ICT, chaired by the numerical target, even where more ambitious Minister of State for Provincial Administra- changes are feasible. tion and National Security, and containing the Minister for Finance, Minister for Tour- ism, Minister for Information and Commu- nications, Minister for Education, Minister Use of ICT to support regulatory for Higher-Education, Science and Technol- reform ogy, and Minister for Transport. The role of Once government procedures have been stream- the Committee is to oversee the implementa- lined and redesigned as part of regulatory reforms, tion of the e-Government Strategy. use of computerized databases and registries can lead to further improvements in regulatory per- The Permanent Secretaries Committee, formance, particularly for enterprises that are a chaired by the Head of the Public Service long distance away from the agencies with which and consisting of Permanent Secretaries and they have to deal. ICT can be used to provide Accounting Officers. This Committee is information to the users of government proce- charged with coordinating implementation dures, and can also enable users and applicants to of e-Government initiatives and ensuring submit requests for services in a structured and institutional support and resources for imple- consistent fashion. Moreover, use of ICT for reg- mentation of e-Government. The Commit- ulatory and administrative tasks within the pub- tee meets at least once a month. lic sector is increasingly seen as an important way Ministerial e-Government Committees, of combating corruption. which review the various ICT policy initia- Kenya established its e-Government Program in tives in the Ministries, undertake audit of June 2004, with the objective of providing bet- ICT capacity, identify technical and institu- ter and efficient delivery of information and ser- tional gaps and inadequacies, and make rec- vices to its citizens, promoting productivity ommendations for future activities. Each among public servants, and encouraging partici- Committee is chaired by the Permanent pation of citizens in the process of government.76 Secretary, and consists of the Head of the The e-Government program in Kenya is spear- Central Planning Unit, the Chief Finance headed by the Head of Public Service (HOPS) Officer, Senior Principal Personnel Officer, to coordinate the dispersed initiatives that exist Deputy Secretary/Administration and Head of ICT Unit. The Ministerial Committee 76 An earlier effort had been launched in 2000, when the meets once a month. Ministry of Finance and Planning prepared a Cabinet Memorandum to set up a National Council for ICT. However, the Memorandum was neither discussed nor The Directorate of e-Government (DeG), under ratified by the cabinet because by the time the report and the Head of Public Service, is the technical team memorandum were ready, the National Communications Secretariat (NCS) had been formed in the Ministry of which serves as the e-Government Secretariat, Information, Transport and Communications in accor- charged with the coordination and preparation dance with the Kenya Communications Act of 1998. The NCS was given responsibility for advising the Govern- of the overall e-Government Strategy, including ment on ICT policy matters. the implementation plan, and monitoring and 33 WB206_RCRK.indd 33 5/19/10 12:21:30 AM evaluation of the process.77 DeG was established computerization of registries at the Lands in June 2004, and is headed by the ICT Secretary Office, Company Registry, Pensions Depart- at the Presidency and Cabinet Affairs Office, ment and the Registration of Persons Office. To Office of the President.78 some extent, these activities have been "first generation" solutions, in that they allow only A major program of e-government has been to for one-way communication of information improve intra-government communications. from government agencies to the customers Public sector organizations at all levels have had without an ability to download forms, etc; how- problems with inter- and intra-agency communi- ever, KRA has introduced online tax filing and cations. With disparate departmental messaging customs applications as well as the ability to systems and use of different IT platforms (which download forms.81 The KRA ICT strategy has prevents sharing of records, documents and mate- been developed to serve as the blue print for all rials), most public sector organizations have future automation programs at KRA. urgent needs for an agency-wide collaboration strategy. An important step in this process has The Kenyan government is in the process of set- been introduction of an e-mail solution for all ting up an e-registry. In the first phase this will civil servants, EMACS (Enterprise Messaging and provide information on valid licenses, as well as Collaboration System).79 DeG is also involved in downloadable application forms. In the second numerous projects to improve interaction between phase applicants will have the facility to apply government agencies and the public, including on-line. There are also plans to link this into the several that relate to regulatory activities. To date, wider e-government network over time. activities have included e-Government solutions for customs, tax80 and corruption reports, and DeG is also pursuing research and monitoring and evaluation activities aimed at providing 77 The Directorate of e-Government has the following func- information about how people interact with gov- tions: to develop, coordinate and define ways so that elec- ernment in Kenya and overseas, how citizens use tronic and information technology business strategies assist government to operate more effectively and efficiently in government services and find government infor- delivering services to citizens; to provide coordination and mation over the Internet, and what citizens expect advice on issues pertaining to electronic business, telecom- munications and technology; to plan and develop strategies from government agencies. This research is and direct government-wide activities to support other designed to support the broader reform efforts agencies; and to participate in the development, analysis that require government agencies to be more and evaluation of government wide technology issues, pol- icies and legislation. people-oriented and results-oriented in the way 78 For details of the e-government program, see http://www they design services. It would be reasonable to .e-government.go.ke/ 79 EMACS includes the following features; E-mail, calendar assume that much of this research and monitor- and scheduling, personal information management (PIM) ing and evaluation findings would be useful input directory functions, discussion databases, team-rooms, and into the design of regulatory reform. reference databases (document library) with basic work- flow functions. 80 The Simba system was implemented to facilitate self-assess- ment, and the post-clearance audit (PCA) function was strengthened. There were significant hiccups in the imple- horizon for such reforms is long rather than short. Imple- mentation of Simba beginning in 2005. KRA's experiences mentation of an Integrated Tax Management System has in implementation of ICT may offer some lessons for other also been longer than planned. organizations, particularly in demonstrating that the time 81 http://www.kra.go.ke/rarmp/rarmp.html 34 WB206_RCRK.indd 34 5/19/10 12:21:30 AM ROLES OF DONORS AND IFIS In economies where public revenue is scarce, a common feature of legal, administrative and donors have often stepped in to finance the costs regulatory changes, are supported by individual of regulatory reform programs. The financing donors or groups of donors. horizon of donors has been variable: some donor- assisted programs have been relatively short, In general, it appears that these reform programs focused on achieving "quick wins," while others have adopted ad-hoc and variable approaches to have been geared to capacity building and cre- the process of policy making, legal drafting and ation of a new approach to making policies, laws preparation of secondary legislation or regula- and regulations that requires a long-term com- tion. All the donors in Kenya have emphasized mitment. Irrespective of the donor time horizon, the need for consultation and an orderly process the issue of an exit strategy and the transfer of for designing and introducing reforms, whether program costs to the host government remain they are for development goals, public sector important. In addition, there is often an issue of reform and governance, legal reform or anti- donor coordination and dialogue; increasingly, corruption programs. As a result, there are vari- donors are introducing jointly financed programs ous experiments that have been conducted in (often through donor pools) with "harmonized" the area of consultation with stakeholders. procurement and financing arrangements. However, it does appear that there has been rela- Current Situation As has been demonstrated in tively little interchange between donors or between earlier sections of this report, Kenya is imple- the government and donors as to how effective menting a wide range of economic, social and these experiments have been. An evaluation of political reforms that support improvements in reform processes and tools used for conducting governance and how the government deals with policy analysis and consultation might be very its citizens, whether as individuals or in civic or useful, and offer approaches that have worked well business groups. All of these reforms, which share and could be replicated in other circumstances. 35 WB206_RCRK.indd 35 5/19/10 12:21:31 AM This might obviate the natural tendency to import be an insurmountable obstacle for them to from other countries processes for reform design deliver a long-term commitment to regulatory and implementation and to ignore successful reform support. Moreover, it is important for experiments locally. As Kenya begins to develop donors (and the government) to realize that an overall and systemic approach to regulatory regulatory reform will be successful in Kenya reform and design, it should be incumbent upon only if the major underlying problems of the donors to incorporate it into the programs that rule of law, corruption and public service ethics they are supporting. are dealt with effectively. For this reason alone, the development of the regulatory strategy and The experiences of other East African countries programs for implementing regulatory reform have shown that donor support for regulatory have to be linked to these broader legal and reform needs to be long-term, and not geared administrative issues, not only at the level of to a few "quick-win" projects. Donors in Kenya concept (as has been done in Vision 2030 and are already supporting long-term programs in the Private Sector Development Strategy, for the areas of corruption, public sector reform, example), but also at the level of specific imple- local government and the like, so it should not mentation. 36 WB206_RCRK.indd 36 5/19/10 12:21:33 AM CONCLUSIONS AND RECOMMENDATIONS Assessment of strengths and crucial at the point where decisions on the report weaknesses recommendations had to be made, when the exist- ing machinery for budget decisions could be used. Regulatory reform in Kenya has exhibited several In addition, the importance of having the reform important strengths. First, it initially benefitted led at that point by a central economic ministry from strong support within the MTI and MOF should not be underestimated. More recently the and more recently strong support from the prime minister and his office have made state- MOLG and OPM. MTI was a crucial source of ments in support of regulatory reform. support for the reform of business licensing at the beginning of the process. The support came from However, the current situation where the BRRU the permanent secretary and director levels, even has been established under the MOF may also though the minister was lukewarm. It was an act constitute a source of weakness. The emphasis of political courage for these individuals to place given to the BRRU and its work now depends to their name on the reform process, in part because a considerable extent upon its ranking in MOF's they faced internal ministry opposition82 and priorities, which are many. The head of the BRRU partly because of the prevalence of grand and is ranked at a deputy director level, which may be petty corruption. The support from MOF was too low to give the BRRU the necessary "clout" within the ministry, and BRRU's position has 82 David Nalo, Permanent Secretary, MTI, informed this certainly not been helped by the fact that the cur- author at the beginning of Phase II of the licensing reform that IC and the Bank did not comprehend how rent BRRU head has other important responsi- much resistance there was in the Departments of Indus- bilities which prevent a full-time concentration try and Trade to the proposed reforms because their staff on BRRU's start-up activities. would face unhappy consequences of reduced licensing procedures ­ both potential loss of jobs and probable loss of petty corruption opportunities. The MTI's success in managing this actual and potential opposition should be There is a danger that the positive energy gener- acknowledged. ated by the very favorable reception (from both 37 WB206_RCRK.indd 37 5/19/10 12:21:35 AM the business community and donors) given to the date, the actions taken have generated positive Kenya government when it adopted the licensing opinions among the local and international busi- reforms could be dissipated. It can be argued that ness community, but they have to be continued the decision to disband the Working Committee to avoid repetition of many past reforms in Kenya and not to establish another inter-ministerial body that have started well but ultimately lapsed. to propel the regulatory reform was a mistake. This While continued action on reducing fees and seems to be recognized as a Regulatory Reform reducing the number of licenses should be taken, Working Committee has been re-established. it is important that emphasis is placed on reduc- ing the costs to businesses of complying with Like the other East African countries, Kenya has license requirements that will continue in future. succeeded in framing regulatory reform within In addition, it is recommended that an effective its broader development planning documents, monitoring system be put in place as a matter of such as Vision 2030, and drawing linkages priority so that the impact of the licensing reforms between the various legal, public sector, decen- can be demonstrated. tralization, corruption initiatives. However, to date, these linkages do not appear to be well Capacity building for regulatory reform should established at the program and operational level. be emphasized. BRRU should discuss with the Kenyan ministries still have a tendency to operate Ugandan government officials the training activi- in silos, and the role of the BRRU should be to ties done under the RBP Program, and with the break down these barriers in the formulation and Tanzania BEST Advocacy component, in the operation of regulatory initiatives. However, until course of developing a training, skills develop- the BRRU is staffed and has a clear work pro- ment and capacity building strategy for the Kenya gram, it will be difficult for BRRU to play that regulatory reform program. role effectively. Finally, the fact that the Kenya government has an established e-government program provides BRRU with the opportunity to push for the Policy options and choices implementation of the e-registry as soon as pos- First and foremost, implementation of the licens- sible and for further computerization to move to ing reforms should be pursued aggressively. To second generation ICT projects. 38 WB206_RCRK.indd 38 5/19/10 12:21:36 AM APPENDIX A. PRINCIPLES OF GOOD REGULATION The 1997 OECD Report on Regulatory Reform includes a coordinated set of strategies for improving regulatory quality, many of which were based on the 1995 Recommendation of the OECD Council on Improving the Qual- ity of Government Regulation. These were: A. BUILDING A REGULATORY MANAGEMENT SYSTEM 1. Adopt regulatory reform policy at the highest political levels 2. Establish explicit standards for regulatory quality and principles of regulatory decision-making 3. Build regulatory management capacities B. IMPROVING THE QUALITY OF NEW REGULATIONS 1. Regulatory Impact Analysis 2. Systematic public consultation procedures with affected interests 3. Using alternatives to regulation 4. Improving regulatory coordination C. UPGRADING THE QUALITY OF EXISTING REGULATIONS 1. Reviewing and updating existing regulations 2. Reducing red tape and government formalities The OECD report recommended adoption of a set of regulatory quality standards based on the OECD principles as follows: "Establish principles of "good regulation" to guide reform, drawing on the 1995 Recommendation on Improving the Quality of Government Regulation. Good regulation should: (i) be needed to serve clearly identified policy goals and effective in achieving those goals; (ii) have a sound legal basis; (iii) produce benefits that justify costs, considering the distribution of effects across society; (iv) minimize costs and market distortions; (v) promote inno- vation through market incentives and goal-based approaches; (vi) be clear, simple, and practical for users; (vii) be consistent with other regulations and policies; and (viii) be compatible as far as possible with competition, trade and investment-facilitating principles at domestic and international levels." Source: OECD Report to Ministers on Regulatory Reform,1997. 39 WB206_RCRK.indd 39 5/19/10 12:21:37 AM APPENDIX B. DB INDICATORS, DB 2009 Prop- Investor Trade Ease of Business Constr. Employ- erty Protec- Paying across Con- Economy DB start-up permit ment Regist. Credit tion Tax borders tracts Closure Global Ranking Kenya 82 109 9 68 119 5 88 158 148 107 76 Zambia 100 71 146 135 91 68 70 38 153 87 80 Uganda 111 129 81 11 167 109 126 70 145 117 57 Tanzania 127 109 172 140 142 84 88 109 103 33 111 Rwanda 139 60 90 93 60 145 170 56 168 48 181 SSA Ranking Kenya 5 14 1 10 16 2 14 36 26 19 10 Zambia 7 7 32 26 11 6 11 5 30 15 12 Uganda 10 21 14 1 41 14 20 15 24 21 2 Tanzania 14 14 42 28 27 7 14 21 9 1 19 Rwanda 17 5 16 13 5 27 43 10 40 4 34 40 WB206_RCRK.indd 40 5/19/10 12:21:38 AM APPENDIX C. THE LEGISLATIVE PROCESS IN KENYA'S NATIONAL ASSEMBLY Legislative proposals go through a number of set for the Second Reading, the member-in-charge steps before being enacted as Acts of Parliament. of the bill moves a motion "That the (name of the They are as follows: bill) bill be read a second time," and makes a speech in favor of the bill, explaining the impor- tance/reasons for the introduction of the bill and a) Presentation and first reading expounding on the principles of the legislative This stage is a mere formality. The speaker of the measure. Since the bill is discussed as a whole, no National Assembly calls upon the clerk of the specific amendments to the bill itself can be moved. National Assembly who reads out the long title of The speaker calls upon the House to decide on the bill; at the request of the speaker, the member- whether the bill may be read a second time. If the in-charge of the bill (the prime minister or a House decides in the negative, an amendment is cabinet minister) names a day for the second made to the motion to read the bill a second time reading, usually the next available date on the after the expiration of a six month period, which is Parliamentary calendar. At this stage, no debate usually during the next session of Parliament. A on the bill takes place because there is no motion second reading debate on the bill may continue before the House; however, issues relating to the for several days and is formally closed by the sec- constitutionality of the bill or its objectives can ond speech of the member fronting the bill. be raised at this stage. c) Committee stage b) Second reading If the bill goes through the Second Reading, an This is the most important stage for a bill, when ordinary bill will be considered before a Com- detailed debate on the elements of the bill takes mittee of the Whole House, unless a member of place. Amendments are suggested, agreeable the House moves, immediately after the Second clauses approved and others rejected. On the day Reading, that the bill be committed to a Select 41 WB206_RCRK.indd 41 5/19/10 12:21:41 AM Committee. At this stage, the bill is scrutinized in of the whole House. The Select Committee detail, and may be amended, if necessary, by a reports to the House. majority of members voting. Every clause of the bill is considered separately by the Committee and must be agreed to or rejected, with or with- d) Report stage out debate.83 Since the fundamental principles of This involves reporting the deliberations of the the bill are agreed on at the Second Reading Committee to the whole House. This is done by Stage, any amendments which would negate the the chairman of the committee. When a bill is purpose of the bill cannot be considered at the reported with or without amendment, the report Committee Stage. It is also not permissible to may be adopted immediately, or the adoption move amendments which are inconsistent with may be deferred to the future. Ordinarily no what has been agreed in committee. amendment, adjournment or debate is allowed on the Motion for the adoption of the report. The clerk calls severally each part of the bill. If no However, a member may propose amendment to amendment is proposed or when all proposed add at the end of the motion the words, "Subject amendments have been considered, the chairman to the committal of the bill (in respect of some of the Committee proposes that the amendment specified part or of some proposed new clause or stands as part of the bill. Members speak on the new schedule)." If a motion is carried with such issue after which the chairman puts the question an amendment, the bill is "recommitted." to the Committee for decision. "Recommittal" of the bill is only allowed if, upon receiving a bill after its treatment in the Commit- On a motion to insert a new clause, the same is tee, the House feels that work still needs to be deemed to have been read the first time, and the done on it. In such a case, any member may suc- question is then proposed that it is read a second ceed in moving specifically that the bill be recom- time. If agreed, amendments may then be pro- mitted. Recommittal most often happens where posed to the new clause. The final question to be a bill is reported from a Select Committee, when proposed is usually that the clause (as amended) it may be the case that members of the House be added to the bill. who were not members of the Select Committee may have additional and valuable ideas to put At the conclusion of the proceedings in the Com- forward. Upon re-committal, members have an mittee on a bill, the member responsible moves opportunity of moving amendments to take into that the bill (as amended) be reported back to account new situations or government conces- the House, and the question thereon is decided sions in committee. At this stage, ministers can with or without debate. If the motion is carried, also make drafting corrections. the chairman of the committee forthwith leaves the chair and the House resumes whereupon he, or if the speaker has taken the chair in the com- e) Third reading mittee, the member-in-charge of the bill reports this to the House. Ordinarily, this stage usually follows immediately after the report stage. Debate on the bill is Where a bill is referred to a select committee, it is restricted, and discussions do not usually go out- considered in the same way as in the Committee side the parameters of the bill as it was discussed at the Committee stage, unless the legislative 83 The order of scrutiny of the various parts of the bill is as measure is one that invites controversy. follows: clauses as printed, excluding the clause for citation of the bill; new clauses; schedules; new schedules; pream- bles, if any; title; and clause providing for the citation of A final vote is taken and, if approved, the bill is the bill. deemed successfully passed by the National 42 WB206_RCRK.indd 42 5/19/10 12:21:45 AM Assembly. After that, the bill remains in the cus- the draft Act, to the AG, who arranges for presi- tody of the clerk of the National Assembly await- dential assent. ing Presidential Assent. The clerk prepares the bill into a draft Act of Parliament with the same f) Presidential assent name as the bill and submits it to the AG for checking and onward transmission to the govern- Upon assent by the president, the Act is returned ment printer for proofreading. to the clerk who arranges for the announcement of the assent by the speaker in the National The government printer will send back the proof Assembly. to the clerk, who, having satisfied himself that it is correct, sends it back to the AG for the produc- The Act is then published in the Kenya Gazette tion of what is known as a "vellum proof." The as provided under the Constitution (section government printer furnishes three copies of the 46(6)) without which the law cannot come into vellum proof to the clerk who scrutinizes it a final operation. However, Parliament may defer oper- time and forwards it, together with a certificate ationalization of the law and can make laws with confirming the authenticity and correctness of retrospective effect. 43 WB206_RCRK.indd 43 5/19/10 12:21:45 AM APPENDIX D. THE JUDICIAL SYSTEM IN KENYA The Court system of the High Court, who are appointed by the president. It is a superior court of record with The hierarchy of the judicial branch is as follows: unlimited original jurisdiction in civil and crimi- the Court of Appeal, the High Court, and Subor- nal matters. It has power under Section 65(2) to dinate Courts. supervise any criminal or civil proceedings before a subordinate court. It also has jurisdiction to The Court of Appeal hear cases relating to constitutional matters. The Court of Appeal is the highest court in the country. It is presided over by the Judges of Subordinate courts Appeal, who are appointed by the president. Article 64 of the Constitution stipulates that the Under Section 65, the Constitution of Kenya Court shall comprise the Chief Justice and at under Section 65 gives the Kenya Parliament least two other judges. The Court of Appeal deals power to establish courts subordinate to the only with appellate matters brought before it High Court. The jurisdiction of these courts is from the High Court or the Kadhi Courts. Its determined on a territorial and monetary basis. decisions are binding on all other subordinate They are presided over by magistrates. The mag- courts, including the High Court. The Court of istrate's courts are in order of hierarchy, with the Appeal sits mainly in Nairobi, the capital of Chief Magistrate's court being the highest, fol- Kenya, but travels on circuit to other principal lowed by the Senior Principal Magistrate's Court, towns in Kenya to hear appeals. Principal Magistrate's Courts, Senior Resident Magistrate's Courts, Resident Magistrate's Courts The High Court and the District Magistrate's courts. The High Court under section 65(1) of the Constitution Established under Section 60 of the Constitu- has power to give direction to these subordinate tion, the High Court is presided over by judges courts. 44 WB206_RCRK.indd 44 5/19/10 12:21:45 AM Kadhi's Courts ­ Established under the Commission. The Commission has responsibil- Kadhi's Courts Act, (Chapter 11 Laws of ity for appointing judges and for disciplinary Kenya), they are presided over by the Chief matters. Kadhi or a Kadhi. The court has jurisdiction to determine questions of Muslim law relat- ing to personal status, marriage, divorce and Sources of Kenyan law inheritance in proceedings in which all the parties profess the Muslim religion. Appeals The primary sources are enumerated in Section 3 from the Kadhi's courts lie to the High Court, of the Judicature Act (Chapter 8 Laws of Kenya), which sits with the Chief Kadhi or two other and include: Kadhis as assessors. The constitution The Children's Court ­ Established in 2001, it is a special court which deals with cases It is the supreme law of the land, taking prece- concerning children. It hears cases concern- dence over all other forms of law, written and ing parental responsibility, children's institu- unwritten. If any other law is inconsistent with it, tions, custody and maintenance, orders for the constitution prevails, and the other law, to the protection of children, and children in the extent of its inconsistency, is void. Many acts need of care and protection. It also hears cases of Parliament are made pursuant to particular where a person has been charged with an provisions in the Constitution. offense under the Children's Act. However, it does not hear cases where the child is charged with murder, or jointly with adults. Acts of Parliament These are passed by Parliament, and also include Tribunals ­ These are quasi-judicial bodies subsidiary legislation, that is, laws made under established piecemeal to deal with specific the authority of an Act of Parliament. matters. The more prominent tribunals are: The Industrial Court ­ Although called a "court," it does not form part of the Specific Acts of Parliament of the Kenyan Court structure. It is presided United Kingdom over by judges appointed by the presi- These are cited in the schedule to the Judicature dent and eight other members appointed Act, and include: by the minister of Labor. Its function is to settle trade disputes generally and The Admiralty Offences (Colonial) Act, 1849. trade disputes in essential services. The Evidence Act, 1851, Sections 7 and 11. Rent Tribunals ­ These deal with mat- ters concerning landlord and tenant rela- The Foreign Tribunals Evidence Act, 1856. tions. The Evidence by Commission Act, 1859. Part 3 of Chapter 4 of the Constitution also deals with the establishment and responsibilities of the The British Law Ascertainment Act, 1859. Judicial Service Commission (JSC). The JSC consists of the chief justice, attorney general, two The Admiralty Offences (Colonial Act), 1860. other judges from the High Court and Court of Appeal, and the chairman of the Public Service The Foreign Law Ascertainment Act, 1861. 45 WB206_RCRK.indd 45 5/19/10 12:21:46 AM The Conveyancing (Scotland) Act, 1874 subject to such qualifications as those circum- Section 51. stances may make necessary. The Evidence by Commission Act, 1885. African Customary law Certain Acts of the Parliament of India This is applicable only in civil cases where one or more of the parties is subject to or affected by it, The Transfer of Property Act, 1882, of India con- insofar as it is applicable and is consistent with tains the procedural law applicable where the any other law. African Customary law differs Registration of Titles Act, the Land Titles Act from tribe to tribe. and the Government Lands Act are applied. Islamic law English statutes of general application in force in England on 12th August 1897 This is a very limited source of law in Kenya. It is applied in Kadhi's Courts when all the parties The English statutes of general application passed profess the Muslim religion, but only concerning before 12th August 1897 (the reception date) are questions relating to personal status, marriage, law in Kenya, unless a Kenyan statute, or a later divorce and inheritance issues. English statute made applicable in Kenya, has repealed any such statute. A statute of general appli- International instruments cation, if repealed by a later English statute, would still be law in Kenya. Statutes of general application Though not listed in the Judicature Act, interna- include public Acts of Parliament, that is, those tional law is a source of Kenyan law. The govern- which apply to the inhabitants at large and which ment is party to a number of international legal are not limited in their application to prescribed instruments, and Kenyans can use these as an persons or areas. The statutes are also applicable in additional tool for the advancement of their Kenya in the form that they had at the reception rights. However, such law only becomes enforce- date. Any subsequent amendments of such statutes able in Kenya after it has been incorporated into in England have no effect in Kenya. The only way Kenya's domestic legal system through imple- to alter such statutes is for the Kenya Parliament to menting legislation. amend these by independent legislation. Source: "Researching Kenyan law" by Tom Ojienda The substance of common law and and Leonard Obura Aloo, November 2006 http:// doctrines of equity www.nyulawglobal.org/globalex/Kenya.htm These are only applicable to Kenyan inhabitants insofar as the circumstances of Kenya permit, 46 WB206_RCRK.indd 46 5/19/10 12:21:47 AM APPENDIX E. KENYA GAZETTE SUPPLEMENT NO. 79 14th November, 2008 4. Where a person is issued with a Single Busi- ness Permit by one local authority to such (Legislative Supplement No. 53) permit shall be valid for the distribution of goods or provision of services within the area LEGAL NOTICE NO. 147 of any other local authority. THE LOCAL GOVERNMENT ACT 5. The form of registration for a Single Business (Cap. 265) Permit shall be in such form as the Minister may, from time to time, prescribe. IN EXERCISE of the powers conferred by section 271 of the Local Government Act, the Deputy 6. (1) The fees payable in respect of a Single Prime Minister and Minister for Local Govern- Business Permit in respect of the various ment makes the following Rules. classes of local authorities shall be as set out in the Schedule. THE LOCAL GOVERNMENT (SINGLE BUSINESS PERMIT) RULES, 2008 (2) The fees specified in the Schedule shall be applicable as follows: 1. These rules may be cited as the Local Govern- (a) for Cities, columns, 8,9 and 10; ment (Single Business Permit) Rules, 2008. (b) for Municipalities, columns 4,5,6,7, 8 and 9; 2. In these rules, unless the context otherwise (c) for Town and County Councils, col- requires ­"Single business permit" means a umns, 1,2,3,4 and 5 permit issued by a local authority under sec- tion 163 of the Act. (3) No local authority may base its fees and charges on a range which is higher than 3. These Rules shall apply to all local authorities. that specified for it in the Schedule. 47 WB206_RCRK.indd 47 5/19/10 12:21:47 AM (4) Notwithstanding paragraph (3), a local (a) in a newspaper of wide circulation in authority may base its fees and charges on its area of jurisdiction; a range which is lower than that which is (b) on a conspicuous part of the local specified for it in the Schedule. authority notice boards; and (c) in any other manner so as to bring it (5) Any local authority which, on the date of to the attention of the business com- coming into operation of these Rules, has munity and stakeholders. fees and charges at a range which is higher (2) The notice under paragraph (1) shall than that specified in the Schedule shall contain ­ adopt the charges specified therein at the (a) the proposed fees and charges and beginning of the financial year beginning their likely effect on business; on the 1st July next following that date. (b) an invitation to stakeholders to for- 7. (1) A local authority may select the appropri- ward their comments and recommen- ate range of fees to impose on business dations; and within its jurisdiction depending on the (c) the date, venue and time of a consulta- class under which it falls as indicated in tive forum which shall be held to dis- the Schedule. cuss the proposed fees and charges. (2) A local authority shall, upon selecting a 10. (1) A local authority shall forward its pro- range of fees and charges as provided in posed new fees and charges to the Minis- paragraph (1), impose its fees and charges ter for approval after the conclusion of in amounts only within that range. the consultative process set out in rules 8 and 9. 8. The selection of a range of fees and charges as required under these Rules shall be preceded (2) The Minister may approve the proposals by consultations held by the local authority forwarded where he is satisfied, that the with the business community and other local authority has observed all the proce- stakeholders within its area of jurisdiction in dures prescribed under these Rules. the manner specified in Rule 9. 11. Notwithstanding any other provision of these 9. (1) Where a local authority intends to adopt Rules, all local authorities shall hold consul- or change a range of fees and charges, it tative meetings with the business community shall publish a notice of the intention to and representatives of stakeholder organiza- do so ­ tions within their areas of jurisdiction once in every quarter. 48 WB206_RCRK.indd 48 5/19/10 12:21:48 AM WB206_RCRK.indd 49 SCHEDULE SINGLE BUSINESS PERMIT FEE SCHEDULE BRIMS CODE CATEGORIES OF BUSINESS 1 2 3 4 5 6 7 8 9 10 100 GENERAL TRADE, WHOLESALE, RETAIL, Base 250 300 350 400 500 600 700 850 1,000 1,200 STORES, SHOPS, PERSONAL SERVICES Value Such as: Distributors, Traders, Wholesal- ers, Hypermarkets, Department Stores, Supermarkets, Retailers, Shops, Bou- tiques, Chemists, Butcheries, Personal Service Providers, Kiosks 103 Mega Store, Hypermarket Large Multi- 60 15,000 18,000 21,000 24,000 30,000 36,000 42,000 51,000 60,000 72,000 Department Sore, Hypermarket Over 100 employees or Premises over 3,000 m2. Prime Location 105 Large Trader, Shop, Retail Store or Per- 20 5,000 6,000 7,000 8,000 10,000 12,000 14,000 17,000 20,000 24,000 sonal Service From 21 to 100 Employ- ees &/or Premises from 300 to 3000 m2. Fair Location 110 Medium Trader, Shop or Retail Service 10 2,500 3,000 3,500 4,000 5,000 6,000 7,000 8,500 10,000 12,000 From 5 to 20 employees &/or premises from 50 to 300 m2. Fair Location 115 Small Trader, Shop or Retail Service Up 5 1,250 1,500 1,750 2,000 2,500 3,000 3,500 4,250 5,000 6,000 to 4 employees &/or Premises less than 50 m2. Far away Location 120 Kiosk Light or Temporary construction 4 1,000 1,200 1,400 1,600 2,000 2,400 2,800 3,400 4,000 4,800 less than 5 m2 (Continued ) 49 5/19/10 12:21:48 AM WB206_RCRK.indd 50 50 BRIMS CODE CATEGORIES OF BUSINESS 1 2 3 4 5 6 7 8 9 10 195 Other Wholesale-Retail Traders, Stores, 4 1,000 1,200 1,400 1,600 2,000 2,400 2,800 3,400 4,000 4,800 Shops and Services 200 INFORMAL SECTOR Including: Hawk- ers, Street Vendors & Small Traders and Service Providers operating on the Base 250 300 350 400 500 600 700 850 1,000 1,200 street, verandah or temporary building. Value 205 Hawker with motor vehicle 1 person 5 1,250 1,500 1,750 2,000 2,500 3,000 3,500 4,250 5,000 6,000 with motor vehicle 210 Hawker 1 person without a motor vehi- 4 1,000 1,200 1,400 1,600 2,000 2,400 2,800 3,400 4,000 4,800 cle 215 Small Informal Sector Trader/Service 2 500 600 700 800 1,000 1,200 1,400 1,700 2,000 2,400 Provider Shoeshine, Shoe repair, Street Vendor (newspapers, sweets, soda, cigarettes) 220 Semi Permanent Informal Sector Trader 3 750 900 1,050 1,200 1,500 1,800 2,100 2,550 3,000 3,600 Up to 2 persons operating in verandah or temporary building 295 Other Informal Sector Operation 2 500 600 700 800 1,000 1,200 1,400 1,700 2,000 2,400 300 TRANSPORT, STORAGE AND COM- Base 250 300 350 400 500 600 700 850 1,000 1,200 MUNICATIONS Such as Maritime & Value Air Lines, International Carriers, Trans- portation Co-operating Taxis-Matatus- Buses-Lorries-Planes-Boats. Driving Schools, Tour/Safari Operators Petrol Stations, Storage Facilities, Cold Stor- age Facilities, Publishing Co ­ News- papers, Books, Texts ­ Telephone Co, Radio/TV Broadcaster, Internet Pro- vider 305 Large Transportation Company Over 80 20,000 24,000 28,000 32,000 40,000 48,000 56,000 68,000 80,000 96,000 30 vehicles 5/19/10 12:21:49 AM WB206_RCRK.indd 51 310 Medium Transport Company From 6 to 30 7,500 9,000 10,500 12,000 15,000 18,000 21,000 25,500 30,000 36,000 30 vehicles 315 Small Transport Company From 2 to 5 10 2,500 3,000 3,500 4,000 5,000 6,000 7,000 8,500 10,000 12,000 vehicles 320 Independent Transport Operator 5 1,250 1,500 1,750 2,000 2,500 3,000 3,500 4,250 5,000 6,000 325 Large Petrol Filling Station Over 6 20 5,000 6,000 7,000 8,000 10,000 12,000 14,000 17,000 20,000 24,000 pumps or with garage workshop & retail shop 330 Medium Petrol Filing Station From 4 to 10 2,500 3,000 3,500 4,000 5,000 6,000 7,000 8,500 10,000 12,000 6 pumps or with garage workshop or retail shop 335 Small Petrol Filling Station Up to 3 7 1,750 2,100 2,450 2,800 3,500 4,200 4,900 5,950 7,000 8,400 pumps and without garage workshop or retail shop 340 Large Cold Storage Facility Over 1,000 55 13,750 16,500 19,250 22,000 27,500 33,000 38,500 46,750 55,000 66,000 m2, insulated walls, cold production equipment 345 Medium Cold Storage Facility Between 25 6,250 7,500 8,750 10,000 12,500 15,000 17,500 21,250 25,000 30,000 100-1,000 m2 350 Small Cold Storage Facility Up to 100 12 3,000 3,600 4,200 4,800 6,000 7,200 8,400 10,200 12,000 14,400 m2 355 Large Storage Facility Over 5,000 m2. 50 12,500 15,000 17,500 20,000 25,000 30,000 35,000 42,500 50,000 60,000 Godown Warehouse. Liquid Storage Tanks Complex 360 Medium Storage Facility From 1,000 to 20 5,000 6,000 7,000 8,000 10,000 12,000 14,000 17,000 20,000 24,000 5,000 m2 365 Small Storage Facility Up to 1,000 m2 10 2,500 3,000 3,500 4,000 5,000 6,000 7,000 8,500 10,000 12,000 370 Large Communications Co Over 100 90 22,500 27,000 31,500 36,000 45,000 54,000 63,000 76,500 90,000 108,000 employees &/or Premises over 5,000 m2 375 Medium Communications Co From 16 55 13,750 16,500 19,250 22,000 27,500 33,000 38,500 46,750 55,000 66,000 to 100 employees &/or Premises from 1,500 to 5,000 m2 (Continued ) 51 5/19/10 12:21:50 AM WB206_RCRK.indd 52 52 BRIMS CODE CATEGORIES OF BUSINESS 1 2 3 4 5 6 7 8 9 10 380 Small Communications Co Up to 15 30 7,500 9,000 10,500 12,000 15,000 18,000 21,000 25,500 30,000 36,000 employees &/or Premises up to 1,500 m2 395 Other Transport, Storage and Communi- 7 1,750 2,100 2,450 2,800 3,500 4,200 4,900 5,950 7,000 8,400 cations 400 AGRICULTURE, FORESTRY & EXPLOITA- Base 250 300 350 400 500 600 700 850 1,000 1,200 TION OF NATURAL RESOURCES Such Value as: Production of Coffee, Tea, Fruits, Flowers, Cereals, Vegetables and horti- cultural products. Grain Storage and Processing, Mills & Posho Mills, Baker- ies, Forestry and Timber Production, Sawmills, Coal Production, Animal Breeding, Dairy Products Processing, Slaughter Houses, Mining and other Natural Resources Extraction Activities. 405 Large Agricultural Producer, Processor, 65 16,250 19,500 22,750 26,000 32,500 39,000 45,500 55,250 65,000 78,000 Dealer, Exporter Over 50 employees 410 Medium Agricultural Producer/Proces- 25 6,250 7,500 8,750 10,000 12,500 15,000 17,500 21,250 25,000 30,000 sor/Dealer/Exporter From 11 to 50 employees 415 Small Agricultural Producer/Processor/ 8 2,000 2,400 2,800 3,200 4,000 4,800 5,600 6,800 8,000 9,600 Dealer Up to 10 employees 420 Large Mining or Natural Resources 80 20,000 24,000 28,000 32,000 40,000 48,000 56,000 68,000 80,000 96,000 Extraction Operation over 50 employ- ees 425 Medium Mining or Natural Resources 45 11,250 13,500 15,750 18,000 22,500 27,000 31,500 38,250 45,000 54,000 Extraction Operation From 4 to 50 employees 5/19/10 12:21:50 AM WB206_RCRK.indd 53 430 Small Mining or Natural Resources 25 6,250 7,500 8,750 10,000 12,500 15,000 17,500 21,250 25,000 30,000 Extraction Operation Up to 3 employ- ees. Includes quarries & small mining operations 495 Other Agricultural, Forestry and Natural 8 2,000 2,400 2,800 3,200 4,000 4,800 5,600 6,800 8,000 9,600 Resources 500 ACCOMMODATION AND CATER- Base 250 300 350 400 500 600 700 850 1,000 1,200 ING Such as: International Hotels, Tour- value ists Camps, Lodging Houses, Restau- rants, Bars, Eating Houses, Tea & Coffee Houses , Butcheries with Meat Roasting &/or Soup Kitchen Facilities, Membership Clubs, Night Clubs & Casinos 503 Large-High Standard Lodging House/ 100 25,000 30,000 35,000 40,000 50,000 60,000 70,000 85,000 100,000 120,000 Hotel D Class. Over 100 rooms 506 Medium-High Standard Lodging 70 17,500 21,000 24,500 28,000 35,000 42,000 49,000 59,500 70,000 84,000 House/Hotel D Class. From 41 to 100 rooms 509 Small- High Standard Lodging House/ 50 12,500 15,000 17,500 20,000 25,000 30,000 35,000 42,500 50,000 60,000 Hotel D Class. Up to 40 rooms 512 Large Lodging House with Restaurant 45 11,250 13,500 15,750 18,000 22,500 27,000 31,500 38,250 45,000 54,000 &/or Bar B/C Class. Basic Standard. Over 15 rooms 515 Medium Lodging House with Restaurant 35 8,750 10,500 12,250 14,000 17,500 21,000 24,500 29,750 35,000 42,000 &/or Bar B/C Class. Basic Standard. From 6 to 15 rooms 518 Small Lodging House with Restaurant 25 6,250 7,500 8,750 10,000 12,500 15,000 17,500 21,250 25,000 30,000 &/or Bar B/C Class. Basic Standard. Up to 5 rooms 521 Large Lodging House B/C Class. Basic 40 10,000 12,000 14,000 16,000 20,000 24,000 28,000 34,000 40,000 48,000 Standard. Over 15 rooms 524 Medium Lodging House B/C Class. 25 6,250 7,500 8,750 10,000 12,500 15,000 17,500 21,250 25,000 30,000 Basic Standard. From 6 to 15 rooms 527 Small Lodging House. Basic Standard 15 3,750 4,500 5,250 6,000 7,500 9,000 10,500 12,750 15,000 18,000 B/C Class. Up to 5 rooms (Continued ) 53 5/19/10 12:21:50 AM WB206_RCRK.indd 54 BRIMS 54 CODE CATEGORIES OF BUSINESS 1 2 3 4 5 6 7 8 9 10 540 Large Restaurant with Bar/Membership 30 7,500 9,000 10,500 12,000 15,000 18,000 21,000 25,500 30,000 36,000 Club Over 30 customers/members 543 Medium Restaurant with Bar/Member- 15 3,750 4,500 5,250 6,000 7,500 9,000 10,500 12,750 15,000 18,000 ship Club From 11 to 30 customers/ members 546 Small Restaurant with Bar Up to 10 cus- 10 2,500 3,000 3,500 4,000 5,000 6,000 7,000 8,500 10,000 12,000 tomers 549 Large Eating House; Snack Bar; Tea 15 3,750 4,500 5,250 6,000 7,500 9,000 10,500 12,750 15,000 18,000 House "Hotel," no lodging. No alcohol served. Over 20 customers 552 Medium Eating House; Snack bar; Tea 10 2,500 3,000 3,500 4,000 5,000 6,000 7,000 8,500 10,000 12,000 House "Hotel," no lodging. No alcohol served. From 6 to 20 customers. 555 Small Eating House; Snack Bar; Tea 7 1,750 2,100 2,450 2,800 3,500 4,200 4,900 5,950 7,000 8,400 House "Hotel," no lodging No alcohol served. Up to 6 customers 558 Butchery with Roasted Meat and/or 10 2,500 3,000 3,500 4,000 5,000 6,000 7,000 8,500 10,000 12,000 Soup Kitchen Any size 561 Large Bar/Traditional Beer Seller Over 15 3,750 4,500 5,250 6,000 7,500 9,000 10,500 12,750 15,000 18,00 50 customers 564 Medium Bar/Traditional Beer Seller 12 3,000 3,600 4,200 4,800 6,000 7,200 8,400 10,200 12,000 14,400 From 16 to 50 customers 567 Small Bar/Traditional Beer Seller Up to 8 2,000 2,400 2,800 3,200 4,000 4,800 5,600 6,800 8,000 9,600 15 customers 571 Large Night Club/Casino Over 500 50 12,500 15,000 17,500 20,000 25,000 30,000 35,000 42,500 50,000 60,000 m2 574 Medium Night Club/Casino From 101 30 7,500 9,000 10,500 12,000 15,000 18,000 21,000 25,500 30,000 36,000 to 500 m2 577 Small Night Club/Casino Up to 100 20 5,000 6,000 7,000 8,000 10,000 12,000 14,000 17,000 20,000 24,000 m2 5/19/10 12:21:51 AM WB206_RCRK.indd 55 595 Other Catering and Accommodation 7 1,750 2,100 2,450 2,800 3,500 4,200 4,900 5,950 7,000 8,400 600 PROFESSIONAL & TECHNICAL SER- Base 250 300 350 400 500 600 700 850 1,000 1,200 VICES Such as: Firms &/or Individual value offering Services on Legal issues, Finan- cial, Management, Engineering, Archi- tecture, Valuing, Surveying, Accoun- tancy, Secretarial Support, Data Processing, etc. Stock & Insurance Bro- kering, Security- Protection, Clearing- Forwarding Goods, Book Making, Kenya Sweepstakes Charity included. Banks, Forex Bureau Money Lenders; Hire-Purchase Company; Insurance Company; Real Estate Developing- Financing Company 605 Large Professional Services Firm Over 90 22,500 27,000 31,500 36,000 45,000 54,000 63,000 76,500 90,000 108,000 10 practitioners &/or International affili- ation 610 Medium Professional Services Firm From 45 11,250 13,500 15,750 18,000 22,500 27,000 31,500 38,250 45,000 54,000 3 to 10 practitioners 615 Small Professional Services Firm. Up to 20 5,000 6,000 7,000 8,000 10,000 12,000 14,000 17,000 20,000 24,000 2 practitioners 620 Independent Technical Operator 1 per- 7 1,750 2,100 2,450 2,800 3,500 4,200 4,900 5,950 7,000 8,400 son acting individually (Typist, Accoun- tant, Book Keeper, etc) 625 Large Financial Services Over 25 95 23,750 28,500 33,250 38,000 47,500 57,000 66,500 80,750 95,000 114,000 employees or premises over 300 m2 630 Medium Financial Services From 6 to 65 16,250 19,500 22,750 26,000 32,500 39,000 45,500 55,250 65,000 78,000 25 employees 635 Small Financial Services Up to 5 45 11,250 13,500 15,750 18,000 22,500 27,000 31,500 38,250 45,000 54,000 employees 695 Other Professional & Technical Services 7 1,750 2,100 2,450 2,800 3,500 4,200 4,900 5,950 7,000 8,400 (Continued ) 55 5/19/10 12:21:51 AM WB206_RCRK.indd 56 56 BRIMS CODE CATEGORIES OF BUSINESS 1 2 3 4 5 6 7 8 9 10 700 PRIVATE EDUCATION, HEALTH AND Base 250 300 350 400 500 600 700 850 1,000 1,200 ENTERTAINMENT SERVICES Such as: Value Private Education Institutions, including Universities, Museums, Nurseries, Pri- mary and Secondary Schools, Profes- sional Training Centers/Polytechnic Institutes teaching computers-accoun- tancy-secretarial skills, etc. Private Heath Clinics and Doctor's Surgeries; Consult- ing Offices of Doctors, Dentists, Physio- therapists, Psychologists & other health professionals. Herbalists and Traditional Medicine Practitioners, Funeral Homes Entertainment Facilities including Cin- ema, Theatre, Video Show/Amusement Arcade, Juke Box Arcade, Games Machines Arcade/Sports Club, Gym 705 Private Higher Education Institution Any 45 11,250 13,500 15,750 18,000 22,500 33227,000 31,500 38,250 45,000 54,000 type of private University, College or higher education institution 710 Large Private Education Institution Over 30 7,500 9,000 10,500 12,000 15,000 18,000 21,000 25,500 30,000 36,000 100 pupils or fees over Kshs50,000 per year 715 Medium Private Education Institution 15 3,750 4,500 5,250 6,000 7,500 9,000 10,500 12,750 15,000 18,000 From 31 to 100 pupils or fees from Kshs 30,001 to Ksh50,000 per year 720 Small Private Educational Facility Up to 10 2,500 3,000 3,500 4,000 5,000 6,000 7,000 8,500 10,000 12,000 30 pupils of fees up to Kshs30,000 per year 725 Large Private Health Facility Hospital, 70 17,500 21,000 24,500 28,000 35,000 42,000 49,000 59,500 70,000 84,000 Clinic, Nursing Home, providing over- night accommodations. Over 30 beds Funeral Homes 5/19/10 12:21:51 AM WB206_RCRK.indd 57 730 Medium Private Health Facility From 11 45 11,250 13,500 15,750 18,000 22,500 27,000 31,500 38,250 45,000 54,000 to 30 beds Funeral Home 735 Small Private Health Facility Up to 10 30 7,500 9,000 10,500 12,000 15,000 18,000 21,000 25,500 30,000 36,000 beds 740 Health Clinic; Doctor's Surgery. Doctor 10 2,500 3,000 3,500 4,000 5,000 6,000 7,000 8,500 10,000 12,000 Dentist Physiotherapist-Psychologist-etc Consult office. No overnight accommo- dation available 745 Traditional Health Services Herbalist, 8 2,000 2,400 2,800 3,200 4,000 4,800 5,600 6,800 8,000 9,600 Traditional Healer, etc 750 Large Entertainment Facility Cinema- 45 11,250 13,500 15,750 18,000 22,500 27,000 31,500 38,250 45,000 54,000 Theatre-Video Show Over 100 seats Amusement Juke; Box Games Machines Arcades; Over 10 machines Sports Club Gym: Over 50 members 755 Medium Entertainment Facility From 50 25 6,250 7,500 8,750 10,000 12,500 15,000 17,500 21,250 25,000 30,000 to 100 seats/from 4 to 10 machines/ from 16 to 50 members 760 Small Entertainment Facility Up to 50 15 3,750 4,500 5,250 6,000 7,500 9,000 10,500 12,750 15,000 18,000 seats/Up to 3 machines/ Up to 15 members 795 Other Education, Health and Entertain- 8 2,000 2,400 2,800 3,200 4,000 4,800 5,600 6,800 8,000 9,600 ment Services 800 INDUSTRIAL PLANTS, FACTORIES, Base 250 300 350 400 500 600 700 850 1,000 1,200 WORKSHOPS, CONTRACTORS Such Value as: Manufacture, Process and Assembly of products, vehicles, machinery and equipment and Workshops servicing and repairing products, vehicles, machinery and equipment. Also Includ- ing Contractors of New Building Con- struction and Old Buildings Restoration and Service-Repair 805 Large Industrial Plant over 75 employ- 100 25,000 30,000 35,000 40,000 50,000 60,000 70,000 85,000 100,000 120,000 ees or premises over 2,500 m2 (Continued ) 57 5/19/10 12:21:52 AM WB206_RCRK.indd 58 58 BRIMS CODE CATEGORIES OF BUSINESS 1 2 3 4 5 6 7 8 9 10 810 Medium Industrial Plant From 16 to 75 70 17,500 21,000 24,500 28,000 35,000 42,000 49,000 59,500 70,000 84,000 employees or premises from 100 m2 to 2,500 m2 815 Small Industrial Plant Up to 15 employ- 40 10,000 12,000 14,000 16,000 20,000 24,000 28,000 34,000 40,000 48,000 ees or premises up to 100 m2 820 Large Workshop/Service Repair Con- 50 12,500 15,000 17,500 20,000 25,000 30,000 35,000 42,500 50,000 60,000 tractor over 20 employees or premises over 500 m2 825 Medium Workshop, Service Repair 20 5,000 6,000 7,000 8,000 10,000 12,000 14,000 17,000 20,000 24,000 Contractor From 6 to 20 employees or premises from 25 m2 to 500 m2 830 Small Workshop, Service Repair Con- 7 1,750 2,100 2,450 2,800 3,500 4,200 4,900 5,950 7,000 8,400 tractor Up to 5 employees or premises up to 25 m2 895 Other Manufacturer, Workshop, Factory, 7 1,750 2,100 2,450 2,800 3,500 4,200 4,900 5,950 7,000 8,400 Contractor Dated the 17th October, 2008. 5/19/10 12:21:53 AM