By Atim Joan Apuun of Atim Apuun & Co Advocates
It’s often said that an emergency fund is not an investment but insurance with the purpose of protection from eventualities and their effects.
Global humanitarian needs have quadrupled over the years, leaving more than 128 million people in need of direct assistance today. The ever-increasing scale and intensity of emergencies demonstrate the need for a larger, more robust Central Emergency Response Fund. This urgent need has been demonstrated across the world today with the novel Coronavirus (Covid-19) that has ravaged even the best healthcare systems and brought economies to their knees. No one could have predicted with certainty how the pandemic would alter lives and economies around the globe. Containment measures and rallying cries to help “flatten the curve” have been broadcast across all media outlets and on social media.
In response to the pandemic, financial institutions like the International Monetary Fund (IMF), World Bank and African Development Bank (AfDB); intergovernmental organisations like the United Nations; national governments, and private sector agents, amongst others, have rallied financial support and continue to do so to help cushion countries in need.
Kenya is among the countries that have received emergency funding from the different development partners. For instance, in May 2020, the IMF approved the disbursement of $739 million, drawn under the Rapid Credit Facility, to support Kenya’s response to the Covid-19 pandemic. Similarly, the World Bank Group (WBG) approved $50 million in immediate funding to support Kenya’s response to Covid-19.
Generally, an emergency fund is a readily available source of assets to help people navigate financial dilemmas. The purpose of the fund is to improve financial security by creating a safety net of cash or other highly liquid assets that can be used to meet emergency expenses. This calls for emergency preparedness.
Emergency preparedness and the activities it entails are well known. They entail hazard and risk analysis; resource allocation and funding; coordination, information management and communication; contingency, preparedness and response planning; training and simulation exercises; emergency services, standby arrangements and prepositioned institutions.
The goals of emergency preparedness are to strengthen local, national and global capacities to minimise the loss of life and livelihoods, and to ensure an effective response that enables rapid recovery and increased resilience to all hazards and diseases.
In Kenya, Article 208 of the Constitution establishes the Contingencies Fund, which is for urgent and unforeseen expenditure for which there is no other authority.
The Public Finance Management Act contains further provisions on the Contingencies Fund. The regulations i.e., the Public Finance Management Regulations (2020), established the Covid-19 Emergency Response Fund. The fund consists of monies appropriated by the National Assembly; grants, donations, subscriptions; voluntary contributions from public officers and private persons; and other gifts made. The fund shall be wound up when the President directs so after confirming that Covid-19 is no longer a threat to socio-economic and political stability in Kenya.
On March 26, a fund of Ksh10 billion was announced and later increased to Ksh12 billion to assist older people, the severely disabled, orphans and vulnerable children. However, thousands of the vulnerable groups continue to be at risk of destitution. A number of people have stated that they have since not received the emergency funds. Thus, there is an urgent need for the government to account for these funds.
Being aware that this crisis could create a loophole for corruption, there have already been instances of mismanagement of the Covid-19 emergency funds.
NTV Kenya recently did an exposé on Covid-19 millionaires; uncovering corruption going on within the system. Joining civil society organisations, this is a call and need for the fund to be utilised for the purposes for which it was established; in a transparent and accountable manner.
The government should disclose its Covid-19 response plan, estimated budget, and spending data audits to facilitate the tracking and reporting of emergency response expenditures at the national and county government levels. The expenditure information disclosed should thus detail:
- How the finances were spent under different projects towards curbing the spread of Covid-19;
- The revenue-raising measures and the amounts of funds raised and managed under the Covid-19 Emergency Response Fund Board;
- The funds allocated and disbursed to counties to aid in dealing with the virus crisis; and
- The amount used in cash transfers to cushion Kenyans from the effects of the pandemic and the method of identification of the cash transfer beneficiaries.
Culprits or those engaged in misappropriation should be dealt with accordingly and with the full force of the law.
Emergency funds are very critical in times of crisis. Therefore, there is a need for proper management of the fund, and a need to ensure complementarity in expenditure across various sources, i.e., between the budget (allocations made towards emergency preparedness) and any emergency fund to avoid double-dipping of funding for the same transaction from multiple sources to enhance accountability.
There is also a need to ensure that financial reporting arrangements link outputs to outcomes; carry out audits; and have strong credible oversight in the management of the funds. The more we leverage funding, the more prepared the world and Kenya will be for emergency situations like the Covid-19 pandemic, floods, and drought, while continuing to fund and support other crucial sectors within the economy. By doing so, Kenya can fulfil its overall objective of Financing for Sustainable Development.
The writer is an Advocate of the High Court of Kenya, practising at Atim Apuun & Co Advocates, and Mentorship Coordinator at the Committee on Fiscal Studies