Government expenditure in Kenya (including expenditure by the Forest Department) is divided into recurrent expenditure and development expenditure. The budget for recurrent expenditure mostly contains expenditure on items such as: salaries; operations and maintenance; and minor capital expenditure (such as purchase of equipment). The budget for development expenditure contains capital investment, such as construction of infrastructure, roads and buildings.
The budget process used in Kenya has recently been revised and a description of the previous and revised budget processes is given below.
The previous planning and budgeting system started with the development of strategies and policies for each sector as part of the preparation of National Development Plans. This was followed by the preparation of a public investment programme and a three year rolling plan, setting out indicative resource allocation based on identified priority criteria (e.g. the National Development Plans), past expenditure trends and rate of implementation.
This was followed by the preparation of a forward budget and programme review, which set out indicative resources over a three years period. After the approval of the forward budget the Ministry then prepared the draft annual estimates, which had to fit within financial ceilings. In most cases, these ceilings were the same or lower than amounts indicated in the programme review and forward budget.
The draft annual estimates (for both development and recurrent expenditure) were then submitted by the Ministry to the Ministry of Finance. The Treasury imposed financial ceilings for total central government expenditure, based on the sum of estimated fiscal revenues, foreign grants and loans and budget deficit target. However, additional expenditures could be approved in supplementary estimates (at around the middle of each fiscal year).
Although this budgeting process was largely based on the government's strategy described in the 1986 Sessional Paper: "Economic management for renewed growth", achievement of sustainable economic growth remains problematic and the proportion of the population in poverty is unacceptably high and growing. The system also had several disadvantages, including the following:
• a lack of effective expenditure control;
• a failure to cost and define strategic priorities;
• inadequate provision of funds for operations and maintenance;
• a failure to link recurrent and development resource allocation; and
• dependence on the financial ceilings set by the Treasury.
It is critical for Kenya's growth and development that this trend be arrested and reversed and strong public sector support for sustained economic development should be achieved as soon as possible.
Since 1999, the government has been implementing a public expenditure reform initiative and has adopted the Medium Term Expenditure Framework (MTEF) as a tool to improve public expenditure management. The MTEF is designed to impose discipline in the planning and management of national resources, by establishing an explicit link between the policy framework, planning and budgeting process.
In the medium term, the government also aims to create an enabling environment for enhanced private sector participation in the economy as a result of improved public sector resource management. This is expected to attract foreign and domestic investment, which will contribute to economic growth and poverty reduction.
For the preparation of future budget proposals, financial ceilings will be set for each sector and Ministries and Departments will be required to categorise their activities in each sector. They will then prepare their proposals and submit these to sectoral working groups (comprised of representatives from the relevant Ministries and Departments). These groups will then review and agree on the sectoral allocations and these allocations will be itemised in each Ministry’s budget and submitted to the Treasury for financing.
To fund the activities of the FD, the government relies on both domestic fiscal revenue and donor loans and grants. Recurrent expenditure is financed mainly through fiscal revenue, while development expenditure is financed mainly from external donor contributions. A summary of recent budget allocations and expenditure of the FD is given in Table 10.
In principal, all revenue collected from the forestry sector and credited to the revenue account is submitted to the Consolidated Fund and all withdrawals from the Consolidated Fund have to be authorised by parliament through the Appropriation Act. Therefore, the FD is not allowed to keep or retain any revenue collected under what is usually refereed to as the retention scheme. But, the FD also collects revenue from the sale of minor forest products and licence fees, which is classified as miscellaneous revenue and is credited to the Ministry’s AIA account. Under current financial regulations, the Accounting Officer (the Permanent Secretary of the Ministry) is allowed to retain this money and spend it without authority from the Treasury. However, since this money is already incorporated into the annual budget of the Ministry (as the difference between the gross allocation and net provisions), the Accounting Officer has first to collect the revenue credited to the AIA account before it can be spent.
Table 10 Budget allocations and expenditure of the Forest Department from 1993-94 to 2000-01
Financial year |
Development expenditure |
Recurrent expenditure |
Total recurrent and development expenditure | ||||||
Approved estimates |
Actual expenditure |
Total development expenditure |
Approved estimates |
Actual expenditure |
Total recurrent expenditure | ||||
Government of Kenya |
Donor |
Salaries |
Operations and maintenance | ||||||
1993-94 |
547,165,480 |
51,098,840 |
417,073,920 |
468,172,760 |
604,257,640 |
594,966,400 |
12,589,100 |
607,555,500 |
1,075,728,260 |
1994-95 |
927,245,620 |
102,757,160 |
352,900,480 |
455,657,640 |
694,601,504 |
640,776,980 |
33,954,460 |
674,731,440 |
1,130,389,080 |
1995-96 |
683,026,780 |
65,311,660 |
392,683,980 |
457,995,640 |
709,361,640 |
625,591,980 |
54,027,420 |
679,619,400 |
1,137,615,040 |
1996-97 |
558,471,780 |
58,187,040 |
304,766,640 |
362,953,680 |
725,661,120 |
557,350,180 |
55,723,220 |
613,073,400 |
976,027,080 |
1997-98 |
252,701,900 |
60,306,720 |
165,241,140 |
225,547,860 |
689,026,000 |
647,744,780 |
46,855,580 |
694,600,360 |
920,148,220 |
1998-99 |
225,260,000 |
1,902,729 |
40,569,171 |
42,471,900 |
692,159,680 |
626,048,520 |
40,528,780 |
666,577,300 |
709,049,200 |
1999-00 |
167,212,200 |
693,610 |
15,695,890 |
16,389,500 |
909,927,940 |
675,527,280 |
257,939,060 |
933,466,340 |
949,855,840 |
2000-01 |
118,461,240 |
74,661,240 |
43,800,000 |
118,461,240 |
764,714,176 |
593,939,040 |
170,775,136 |
764,714,176 |
883,175,416 |
Notes: this expenditure includes expenditure of the Kenya Forestry College; all figures are in Ksh; figures for the years 1993-97 are from the Appropriation Accounts; figures for 1997-00 are from unaudited accounts; and the figures for the last year are printed estimates.
As noted earlier, the bulk of expenditure in the development budget of the FD is funded by foreign donors as either loans or grants. A study carried out by the Ministry of Environment and Natural Resources (1994) on the operations and maintenance budget indicated that during the period between 1990-91 and 1995-96, the donor contribution to the development budget was as high as 80 percent of the total. A second review of the situation between 1996-97 and 1990-00 showed that, although the amount of donor funding to the FD had declined immensely, it still accounted for over 90 percent of the total development budget.
Another critical observation is the high wage bill in the recurrent budget, compared to expenditure on operations and maintenance. This situation restricts the amount of resources available for productive work, which has resulted in the backlog of work required to implement necessary silvicultural and other management operations.
There are a number of other government institutions involved in education, training and research related to forestry in the country. Professional training is given by universities (such as Moi and Egerton universities), while sub-professional training is given by the Kenya Forestry College. For research and development, Kenya Forestry Research Institute (KEFRI) is the only well organized institution with a clear perception of the problems and research needs of the forestry sector.
The Kenya Forestry College is the only forestry training institutions that trains at the sub-professional level. It trains technical staff with a two-year forest assistant course and a three-year diploma course in forestry. It is not an independent institution, but a division within the FD.
The college has received development assistance from the German Agency for Technical Co-operation (GTZ) since 1985, which has been mainly for the construction of facilities, staff training and provision of equipment. Together with funding from the Government of Kenya (within the overall FD budget), this investment has lifted the Kenya Forestry College to become a major educational and training institution for the region.
Since 1997, the college has not received any donor assistance, because further assistance has been conditional on the college gaining autonomy, with an independent Board of Directors, who should run the institution on commercial basis. Table 11 shows expenditure by the college in recent years. It clearly shows that the funding of this institution declined greatly after donors withdrew, leaving a low and declining level of government funding. This situation has made the college reduce the level of training available to the forestry sector.
Table 11 Expenditure of the Kenya Forestry College from 1992-93 to 2000-01
Financial year |
Development expenditure |
Recurrent expenditure |
Total recurrent & development expenditure | ||||
Government of Kenya |
Donor |
Total |
Salaries |
Operations & maintenance |
Total | ||
1992-93 |
700,000 |
4,000,000 |
4,700,000 |
4,075,220 |
3,761,820 |
7,837,040 |
12,537,040 |
1993-94 |
940,000 |
4,000,000 |
4,940,000 |
5,738,480 |
2,949,440 |
8,687,920 |
13,627,920 |
1994-95 |
58,573,400 |
232,000,000 |
290,573,400 |
5,836,040 |
13,901,240 |
19,737,280 |
310,310,680 |
1995-96 |
6,035,440 |
32,000,000 |
38,035,440 |
5,783,360 |
15,322,320 |
21,105,680 |
59,141,120 |
1996-97 |
25,255,400 |
18,440,000 |
43,695,400 |
6,247,980 |
18,657,420 |
24,905,400 |
68,600,800 |
1997-98 |
10,400,040 |
18,440,000 |
28,840,040 |
5,283,360 |
21,317,440 |
26,600,800 |
55,440,840 |
1998-99 |
8,000,000 |
0 |
8,000,000 |
6,201,480 |
9,335,120 |
15,536,600 |
23,536,600 |
1999-00 |
200,000 |
0 |
200,000 |
6,362,040 |
10,677,460 |
17,039,500 |
17,239,500 |
2000-01 |
0 |
0 |
0 |
5,458,360 |
8,880,560 |
14,338,920 |
14,338,920 |
Notes: all figures are in Ksh; figures are taken from printed estimates.
Forestry research in Kenya started about the same time as the large scale expansion of forest plantations. Due to the experiences encountered with the regeneration of indigenous forests, the FD embarked on a programme of planting exotic tree species that required investment in research in order to identify optimal forest plantation practices. This research was to be the basis for policy prescriptions for optimal management of industrial forest plantations.
Forestry research was carried out under the FD and the East African Agriculture and Forestry Research Organization until 1976, when the East African Community broke up. The National Agricultural Research Institute then took up research activities until 1986, when the Kenya Forestry Research Institute (KEFRI) was created. KEFRI's strategic plan is to develop research and development programmes that will support sustainable forest management. These research programmes cover farm, natural, dryland and plantation forestry and, in support of these activities, a service programme that includes information documentation and dissemination.
KEFRI has received development assistance from the Japanese International Co-operation Agency since 1988. This contribution has been mainly in the construction of buildings and research facilities, staff training and procurement of vehicles and equipment. There are also a number of other donors funding the different research programmes highlighted above. The total funding for KEFRI for the last six years is shown in the table below.
Table 12 Expenditure by Kenya Forestry Research Institute from 1995-96 to 2000-01
Financial year |
Development expenditure |
Recurrent expenditure |
Total recurrent & development expenditure | ||||
Government of Kenya |
Donor |
Total |
Salaries |
Operations & maintenance |
Total | ||
1995-96 |
24,051,000 |
39,900,000 |
63,951,000 |
162,558,820 |
14,236,400 |
176,795,220 |
240,746,220 |
1996-97 |
8,671,320 |
0 |
8,671,320 |
173,009,920 |
9,055,520 |
182,065,440 |
190,736,760 |
1997-98 |
1,930,000 |
0 |
1,930,000 |
177,994,680 |
17,339,000 |
195,333,680 |
197,263,680 |
1998-99 |
200,000 |
52,760,000 |
52,960,000 |
232,843,840 |
22,467,400 |
255,311,240 |
308,271,240 |
1999-00 |
5,000,000 |
58,000,000 |
63,000,000 |
230,760,700 |
22,266,380 |
253,027,080 |
316,027,080 |
2000-01 |
11,000,000 |
18,800,000 |
29,800,000 |
242,592,000 |
23,408,000 |
266,000,000 |
295,800,000 |
Notes: all figures are in Ksh; figures are taken from printed estimates.
Data collection, processing and retrieval are currently deficient and this sometimes results in irrational decision making about the management and utilisation of the forest resource. Indeed, the current status of management of the forest resource is an indicator of the amount of essential data that is not at the disposal of the main forestry institutions.
Although database development in the FD is as old as the department, data for both research and management has been difficult to acquire due to the costs involved. As a result of these costs, the FD has often relied on donor projects that, in the course of project implementation, generate raw data. This data is usually tailored to each project, with an emphasis on project goals and objectives. Once the project is over, there is no organised data centre where this information is stored and can be accessed rapidly.
There is generally no specific financial provision for raw data acquisition by the FD, but KEFRI has established a data centre as a service programme with an independent budget for operational functions.
The government has at times extended subsidies to the PPM pulp and paper mill, in order to defend it from the impacts of cheap and subsidised imported paper products. This has been done through the reduction of royalty rates charged for pulpwood production. Concessions have also been given to PPM to compensate for its contribution towards afforestation of harvested areas and the extra costs the company has to incur on road construction before they can extract materials from the forest areas. The average annual contribution of PPM towards plantation establishment has been in the region on Ksh 10 million, but this is far less than the subsidies that the government has given to the firm.
