1. By Kubai Khasiani and Phyllis Makau
Decentralizing Public Functions to public agencies, entities and bodies -The case of Kenya
By Kubai Khasiani and Phyllis Makau

2. Lay out of presentation
Introduction
Types of Entities and agencies in Kenya
Objectives/reasons for decentralization in Kenya
Benefits of agencies
Pitfalls/complexities in the management of agencies and bodies
Way forward and Conclusion

3. Introduction
Kenya got independence in 1963 and by then there were a number of agencies and bodies delivering public services and goods
The independence government adopted the original objective underlying the creation of these agencies by the colonial government
The number of these agencies increased mainly due to the belief that through these agencies there would be more access to services by the Kenyans.

4. Introduction
These agencies were also seen as avenues to increasing employment opportunities to Kenyans.
As a result by the late 80’s there were more than 200 agencies and over 100 semi autonomous bodies many of them drawing resources from exchequer directly or indirectly.

5. Type of agencies and entities
Three types of entities exist in Kenya and these are:
(i) Autonomous bodies which are completely de-linked from the central government,
(ii) Semi-Autonomous ones which are established either through an Act of Parliament or through Government decision
(iii) Fund type of organizations that are established through an Act of Parliament or through government administrative rules.

6. Type of entities……. continued
Autonomous bodies which are completely de-linked from the central government
- Produce goods and services
- Are self sufficient i.e. they fully meet their operations costs
- Are established through an act of parliament
- May be exempted from payment of taxes e.g. corporate tax
- Are charging the service or goods i.e. they have authority to commercialize their products.
- The agencies in the production and installation of power, and printing of educational materials

7. Type of entities……. continued
Semi-Autonomous entities
-Established through an act of parliament
- May be getting direct subsidy from government i.e. direct release of funds
- Are producing public goods and services but must get authority from central Government for policy decision
- These are such as the Universities and other non-commercial institutions.

8. Objectives/justifications for set up of these institutions
Better services to the citizenry: The kenya government has remained centralized since independence and hence decentralization through creation of agencies was seen as a framework for enhanced service delivery. For this one reason regional bodies were created and well as the local authorities

9. Objectives/justifications for set up of these institutions--- continued
Incentive to mobilize resources to fund provision of public services: The introduction of cost sharing in agriculture and health in Kenya lead to the creation of a veterinary fund with a body to manage it and all those livestock services that the farmers had to pay for were/ are funded through this body through revolving funds
This is the same case with the Health fund which was established after the introduction of cost sharing in Health.

10. Objectives/justifications for set up of these institutions--- continued
To attract and retain professional and skilled manpower: As the terms and conditions in the civil service deteriorated most of the skilled manpower started leaving the service. In some of the specialized areas the government had to create agencies so as to ensure the curved out group could get their terms and conditions improved. This was the case in areas in research in agriculture and health.

11. Objectives/justifications for set up of these institutions--- continued
Secure funding commensurate to services provided. A number of agencies created in Kenya managed to ensure their establishment included earmarking of revenues meaning that their funding was secure. The Case of Kenya revenue authority which is 1.5 % of ordinary revenue, the case of the Kenya roads board which gets a specific amount from fuel tax, the case of local authorities transfers which is 5% of income tax and now the recent constituency development fund which is a 2.5% of ordinary revenue

12. Objectives/justifications for set up of these institutions--- continued
Creation of employment opportunities. Soon after independence the government attempted to empower kenyans economically through creation of jobs for them by creating SAGAs and other entities
Lack of a developed private sector soon after indepedence to perform some commercial activities and also to undertake huge projects such as railways, postal telecommunications and others

13. Benefits/advantages of decentralization of agencies
Mobilization of resources: The change from a regular government department into an agency automatically gives the agency an incentive to collect more resources as they are able to utilize the resources that they collect. This was experienced in particular when the Kenya Airports Authority and Civil Aviation Authority were created.

14. Benefits/advantages of decentralization of agencies.
Mobilization of additional resources to fund government operations: The creation of some of the agencies have had an impact on the amounts of the revenues realized due to the incentives which are in build in the acts establishing them
Creation of jobs for Kenyans especially soon after independence

15. Benefits/advantages of decentralization of agencies
Development to the people in particular the people in rural areas. Due to formation of regional bodies some rural areas did receives services. The recent introduction of Constituency fund is a major boost to development of rural areas in Kenya as many rural projects are started and completed on time

16. Benefits/advantages of decentralization of agencies
Specialization and efficiency: in some cases the creation of agencies promoted efficiency in the particular areas. Especially in cases where the oversight of the boards were effective
Attraction and retention of skilled manpower through better terms and conditions of service

17. Pitfalls/complexities in the management of agencies and bodies
Burden to the exchequer: Substantial resources are transferred to these agencies directly to fund the operations of these agencies. The total burden to exchequer is estimated to be more than 2% of GDP and more than 20% of total budget. In all circumstances where they incur liabilities and fail to meet, the exchequer is expected to take on the contingent liability.

18. Pitfalls/complexities in the management of agencies and bodies
Duplication of activities:
Limited Accountability:
Limited financial skills capacity:
Inflexibility within central government to shift the resources in particular the earmarked resources.
There is often no exit plan when the funds established or bodies established are no longer relevant .

19. Wayforward
Parastatal Reform: In 1990 Kenya embarked on an ambitious reform which to date is continuing.
Introduction of performance contracts.
Review and rationalization of agencies and abolish the non performing ones and also to reduce duplication

20. Conclusion
The case of Kenya is that of partial decentralization which is completely not matched by financial or fiscal decentralization and for this reason there has been a lot of inefficiencies and sub optimal application of available resources.