Government

Kenya, the East African region and Africa in general has seen tremendous growth over the last ten years.

Increased political stability, coupled with considerably enhanced systems of governance and public administration has spurred investor confidence and provided a strong foundation for all-round socio-economic development.

In Kenya, for example, constitutional, and related institutional reform has steadily progressed towards the establishment of functional devolved county governments, through which inclusive socio economic development has progressively been realised at the grassroots in line with the country’s national economic development blueprint, Vision 2030, the United Nations millennium development goals (MDGs) to 2015 and the the United Nations Social Development Goals (SDGs), thereafter.

Efficiency of growth, sustainability and capacity utilization will continue to be key areas of focus for the Government sector in the years to come.

The greatest amount of work we have done in the Government sector has been with the Government of Kenya, which over the last ten years has made considerable strides in transforming the country's systems of governance.

An estimated 48% (over 20 million) of Kenya’s 42 million people live in poverty, with up to 82% of these (over 17 million) living in rural areas and close to 4 million (18%) being urban poor. This distribution is not much different in across the rest of East Africa and the greater African continent in general.

Poverty across the country is characterized by difficulty in accessing health care; food shortages; high levels of unemployment; underemployment; inaccessibility of education and insecurities related to land ownership, with the worst hit being women, unemployed youth, orphans and people with disabilities.

High levels of poverty have consistently shown to be related to poor physical infrastructure, and in particular roads, resulting in poor access to markets, unemployment and inaccessibility of affordable credit. Environmental degradation through practices such as cultivation along river banks and the extensive use of wood fuel including charcoal is also closely linked to poverty. Rural poor, especially, also suffer high cost of farm inputs in agricultural areas, use of poor quality seeds resulting to low returns from agriculture, and in some areas such as West Pokot, Tana River, Wajir and Garissa, to insecurity.

These are areas in which well formulated, targeted and efficiently managed socio-economic development programmes can yield huge gains for the overall advancement of local communities.

Despite considerable economic growth in Kenya over the last ten years, with a USD 110.4B GDP the country remains relatively poor. The country has 55 million people, with 10% earning over 50% of the national income, whilst the bottom 10% earns less than 1%.

Economic inequalities in the country have for over fifty years shaped the character of the country’s education, healthcare, food security and social services, which global urbanization has only made more severe. Economic integration of a diversified citizen population is one of the major areas to which the country’s new constitution has made great impact.

According to the Kenya National Bureau of Statistics, as at the year 2013, low income earners in Kenya earn below Ksh. 23,671 (USD 283) middle income earners between Ksh. 23,672 (USD 283) and Ksh. 119,999 (USD 1,433) and high income earners above Ksh. 119,999 (USD 1,433) per month.

Current trends, however, suggest that by the year 2025 65.9% of Kenyans in rural areas will be living on USD 17.5 (Ksh. 1,500) per month in rural areas and 62.6% on USD 36 (Ksh. 3,100) per month in urban areas.

With over 50% of country’s population below 15 years of age, Kenya also faces a high dependency burden, which places pressing demands on social services, especially education and health care, as well as the need to provide gainful employment for the emerging youth population.

One of the areas in which Africa has achieved tremendous improvement is the accountability and transparency with which public affairs have been managed.

While this has greatly enhanced the efficiency and effectiveness with which African governments have addressed themselves to development concerns, it has also opened a new frontier.

Concern is now not so much about corruption and misappropriation of public funds, as it is of the tough decisions that governments are called to take to achieve various development objectives, and how they choose to go about these decisions.

Over the ten-year period ending 2012, for example, Kenya’s government spending increased from Ksh. 264.1B (USD 3.1B) to Ksh. 1.2 trillion (USD 14.3B), representing a 354% increase.

The country’s expenditure budget for the 2013 – 2014 financial year amounted to Ksh. 1.62 Trillion (USD 12B), which was an 11% increase on the 2012 – 2013 budget. Out of this, 11.5%, being Ksh. 114B (USD 1.36B) was funded from domestic borrowing.

As at March 2013, Kenya’s public debt stood at Ksh. 1.8 Trillion (USD 21.4B), with 55% of this funded from domestic borrowing. Looking ahead, further increase in domestic borrowing by government may crowd out private investment and threaten gains made by the Debt Initiative for Heavily Indebted Poor Countries (HIPC Initiative) and the Multilateral Debt Relief Initiative (MDRI) of the World Bank and the International Monetary Fund (IMF).

The increase in government spending recorded over the last ten years is largely attributable to increased recurrent expenditure, with little going into financing development activities in critical sectors such as health, education and infrastructure.

Investment in agriculture, for example, which currently accounts for 20% of the country’s formal employment, has only been funded at about 5%; yet, developing the agriculture sector would not only secure employment, but also reduce poverty in the country, curb food insecurity and give impetus to other sectors such as health and education.

Tourism, which employs 11% of the country’s labour and is a foreign exchange earner, earning the country over USD 1.17 billion in 2012, for example, only received USD 9 million the same year.

This is a trend to check as the devolved governments begin to take control of development at county level.

Our work with Government has largely focused on two areas:

• Strategy

Through our work in Corporate Advisory, we work with Government departments to develop government strategy at various levels, through which diverse interventions geared to obtaining sustainable socioeconomic development are obtained.

A key area in which we have achieved considerable success is strategic planning and assurance for constituency development through the constituency development fund (CDF) in Kenya.

Modeling of public-private partnerships (PPP) and Assurance on PPP projects is another area in which we work with Government clients.

• Assurance

Assurance on Government projects is another area of our engagement with Government. We work with Government to provide project assurance and risk assurance at various levels, aimed at ensuring that specific perforamnce objectives are achieved.