Cabinet Secretary, National Treasury & Economic Planning nominee John Ng'ongo Mbadi before the Appointments Committee chaired by Speaker of the National Assembly Moses Wetag'ula on August 3, 2024.
Re-looking at sections of the rejected Finance Bill, 2024, reforms at Kenya Revenue Authority and transparency in the management of the country’s public debt ranks top on the priority list of Treasury Cabinet Secretary nominee John Mbadi.
For two hours and 40 minutes —much longer than the other CS nominees—Mr Mbadi faced a barrage of questions from the vetting panel that wanted clarity on how the country could come out of its current financial hole.
With the rejection of the Finance Bill 2024, the declaration of the Finance Act 2023 as illegal by the courts and the huge public debt that is gobbling up the country’s collected revenue, Mr Mbadi told Parliament that all was not lost, centring his presentation on proper communication by the National Treasury; ensuring taxes are easy and not costly to comply with; and ensuring all non-contentious tax-raising measures are revived in fresh amendments.
If confirmed by the committee, it would be interesting to see how a man who has been one of the foremost critics of Kenya Kwanza administration’s fiscal regime—and especially one that heaps one tax on a lot more, each year—will adjust and implement it.
Public participation
Leveraging on his 16 years’ experience as an MP all those serving as a member of the Budget and Appropriations Committee and two years of stints at the helm of the Public Accounts Committee (PAC), Mr Mbadi outlined his vision for the country’s purse.
Top of the agenda of the 53-year-old Certified Public Accountant, Mr Mbadi said he will hive off some of the non-contentious proposals in the rejected Finance Bill, 2024 and bring them to parliament for consideration to get in some income for the government.
“The good provisions that are not contentious, in this (withdrawn Finance) Bill, which can still help Kenya, we can bring specific amendments to those acts with proper public participation. The public felt there was no proper participation, which we had, but probably they felt they were not listened to. The Bill became bad in the eyes of the public and it had to be rejected in total because of lack of clear communication,” Mr Mbadi told the Speaker Moses Wetang’ula-led Committee on Appointments.
The next stop for Mr Mbadi will be at the Kenya Revenue Authority (KRA) which he pointed out requires a comprehensive re-engineering and support to boost tax collection.
Revenue mobilisation
“The solution should be targeting the tax collector. KRA is like a cow that we milk without feeding. The system KRA is using at the moment needs re-engineering,” Mr Mbadi said.
“We must reform KRA. Without that. We are not going to succeed in revenue mobilization. I will sit down with KRA as my first task if approved,” he added.
Mr Mbadi pointed out that current systems used by KRA are porous and have contributed to tax leakages running into billions that affected the country’s income.
Mr Mbadi also has his eyes fixed on the country’s debt accountability where he promised to make public all the country’s debt and the rates.
He said the move will clear doubts that Kenyans have been having over the country’s debt.
“If Kenyans owe people money, why can’t people know and how much because it is not the government or treasury that owes them, it is the people of Kenya,” Mr Mbadi said.
Mr Mbadi regretted that billions the country has previously borrowed have always been treated as a secret leaving many Kenyans questioning the exact amount Kenya owes.
“Which are these secret agreements stopping us from knowing who we owe money to? Kenyans should know who they owe and at what rate. I will make this public,” Mr Mbadi told the vetting panel.
He said due to a lack of transparency in the debts, the billions borrowed have never been utilized for the intended purpose, causing Kenyans to pay back what they did not benefit from.
Mr Mbadi said if approved, there is a need to reduce borrowing and link the money borrowed to specific projects hence reducing wastage.
He lamented that the government has over-relied on commercial borrowing that has pushed the lending rates by banks to over 20 percent, locking out many Kenyans from taking loans.
“In fact, if you go to most banks today, the managers are just taking tea, there are no Kenyans borrowing,” Mr Mbadi said.
Accounting officers misusing Article 223 of the constitution have also been put on notice with Mbadi warning that their time is up in the government if approved.
The provision allows the government to spend on emergency and other critical matters and then seek parliamentary approval later. However, Mr Mbadi said it has been abused by the accounting officers.
“Now that I will be the one to sign approval for such expenditure if any accounting officer misuses this article, they are no longer fit to be government officers,” Mr Mbadi said.
On confronting the complex question of pending Bills, Mr Mbadi said he would introduce a system where the government cannot pay the current debt without clearing the previous ones.
He says when the Bills are left to accumulate, it causes some of them to be doubtful, hence prompt payment is key to addressing pending bills' menace.
“I will put up a system that automatically locks you out if you want to pay the current debt without settling the previous one, we must go this route if we are to deal with this issue of pending bills,” Mr Mbadi said.
International Monetary Fund
On Kenya being a captive of the International Monetary Fund's (IMF) unfavourable lending rates, Mr Mbadi defended the institution saying they never dictate their way in the country but always invited.
“There was a time in this country when we operated without the IMF, we can do the same. The IMF does not invite themselves to our country, they are invited and everything is agreed upon. We can however agree on modified rates that do not burden the taxpayers,” Mr Mbadi said.
Confronted on how he will implement the Bottom-up Economic Transformation Agenda (BETA) championed by the Kenya Kwanza administration while he is coming from the opposition, Mr Mbadi told the vetting panel that both is ODM and the ruling party are social democrats who had almost similar agenda.
“Bottom-up approach is basically talking about job creation, cost of living, and agricultural productivity. On the other hand, the ODM manifesto which I participated in crafting talks about value addition and puts emphasis on agricultural manufacturing. So, semantics,” Mr Mbadi said.
On his oft-quoted statement that Parliament should give President Ruto ‘his skunk’ to mean unqualified Cabinet Secretaries during the September 2022 vetting, Mr Mbadi defended himself, saying it was his job, and that he was required by law to do—and say—what he did.
“I am moving to the other side of the executive, I will not have the mandate anymore. It is now the duty of honourable members and others to determine whether John Mbadi is a skunk or not," Mr Mbadi said in an answer to a question by Samburu West MP Naisula Lesuuda.
He however said that in order to navigate out of politics, he will be strictly guided by the Constitution and the Public Finance Management Act while discharging his mandate.
