This archive report was first published on 25 July 2019.
On July 25, 2019, President Uhuru Kenyatta made a bold move by removing both the National Treasury minister and Principal Secretary from office, effectively decapitating the institution.
According to Jaidi Kisero, this move was a long time coming, as Henry Rotich had lost control over the affairs of the National Treasury.
With this opportunity, President Kenyatta can now make significant changes to the National Treasury, giving it a new direction in economic policy-making.
One area that requires urgent change is the National Treasury's reckless appetite for expensive foreign commercial debt.
Instead of bringing in new technocrats, the new minister should crack the whip, invoking their powers under the Public Financial and Management Act (PFMA) to declare that ministries and parastatals will no longer sign MoUs and shady commercial contracts with dodgy foreign contractors.
Furthermore, all commercial agreements should emanate from the National Treasury, as seen in the Arror and Kimwarer dam scandals.
The current system allows for kickback-motivated projects to sneak into the government's spending plans, with the National Treasury only brought in at later stages.
President Kenyatta must not waste this crisis and should experiment with major institutional reforms at the National Treasury, such as establishing a Treasury management agency to issue and redeem government paper.
Additionally, the Treasury management agency should be tasked with minimising the risk-adjusted cost of public debt to a GDP level over a defined period.
Another area in dire need of reform is public procurement, which is currently in a mess across both county and national government departments.
The current system gives too much weight to meeting procedures, allowing mega corruption to occur despite following all procedures.
Therefore, institutional reform is necessary, and a new autonomous institution should be created to handle buying common user services for the government, ensuring bulk purchases at a discount off the market price.
