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  • Writer's pictureIrungu Houghton

Five Challenges facing the PBO sector in Kenya

By Irungu Houghton[1]

As the issue of shrinking CSO space inevitably will come up again during the US Kenya talks this week, it is worth republishing this article that I wrote a few months back that summarises the major tensions between the Kenyan state and its Public Benefits Organisations. It was published by The Star Newspaper. The original paper was written in response to Dr. Alex Awiti’s February 24th article “Has Civil Society outlived its Use”

Dr Alex Awiti makes an important call for Public Benefits Organisations to reinvent themselves. Two years ago, the passing of the Public Benefits Organisations Act of 2013 by the National Assembly and its assent by H.E. Mwai Kibaki attempted to do just that.

The Act emerged from a consensus between the state and PBO sector on the need for a strengthened and revitalized sector. It also brought NGO law in line with the new Constitution and developments within the sector. Twenty four months later, it is yet to be operationalized with the Devolution Cabinet Secretary declining to commence the Act citing the need for amendments.

This week sees a crucial moment in the future of the sector. After ten regional consultations, the PBO Taskforce is set to conclude its public consultations on amendments to the PBO Act (2013). How it packages its findings and what eventually ends up in the National Assembly will place Kenya either on the path of trust and collaboration or the path of mistrust and confrontation between National Government, PBOs and County Governments.

Over 2013-2014, the National Government made five attempts to amend the PBO Act of 2013. They included two separate sets of amendments under Miscellaneous Amendments Bills (November 2013 and June 2014) and a Memorandum containing 54 amendments (October 2014). In November, the Ministry of Devolution and Planning gazetted a PBO Taskforce under the leadership of former Member of Parliament Sophia Abdi Noor and successfully amended the PBO Act through amendments to Security Act Amendment Bill (November 2014).

The five interventions have four similarities. They were brought to Parliament without prior public notice or consultation with the majority of Public Benefits Organisations. They have sought to increase executive power over the registration, regulation and funding of the sector. All with the exception of the Ministry of Devolution/Hon Moses Kuria memorandum of October 2014 have attempted to pass substantive amendments within Miscellaneous Amendments Bills. Lastly, all have revolved around five policy questions.

Strengthening the public accountability clauses within the Act is probably the issue that PBOs and the National Government can agree on. Like the Government, inefficiency, corruption and funding diversion is a curse to the sector. The PBO Act (2013) introduced a number of important new requirements. They include prohibiting governance boards from being paid and having to sign conflict of interest registers. Publishing audited accounts and making them available for citizens to see on request is another important step towards public accountability.

The issue that has caused most domestic and international controversy has been the proposal to cap foreign funding to 15% and channel all funding through the yet to be set up Government PBO Authority. It was probably singularly responsible for the rejection of the November 2013 amendments by the National Assembly. Notwithstanding this and the consultations over 2014, this proposal re-emerged in October 2014 coupled with the proposal that those organisations that receive more than 15% could be classified as foreign PBOs. There have been many arguments against this amendment ranging from the negative impact on development, poverty eradication and foreign exchange to the destruction of a 40 year sector. It may not be necessary to rehash them here.

The third policy issue relates to the treatment of domestic philanthropy and tax incentives for companies and citizens who may wish to contribute to development. The overreliance on overseas development assistance has been an active source of concern to the PBO sector. As far back as 1992, a consortium of NGOs had begun organizing the biannual East African Fundraising Conference that worked on diversifying income for NGOs through direct mail appeals, events and corporate social responsibility giving. These efforts intensified supported by the emergence of community foundations in the 1990s and then corporate foundations in the 2000s.

Prior to the PBO Act, there had been close to a decade of efforts to reform tax and fiscal law to create incentives for collaboration between the Government, private sector and the not for profit sector. The Act sought to enshrine and expand this option. With this in mind it was dismaying to see that the October 2014 Memorandum proposing to delete the entire schedule within the PBO Act that promoted corporate and citizens social responsibility. Taken with the proposals to cut foreign funding, the impact would be to starve the sector of both domestic and foreign resources.

The fourth tension revolves around executive regulation and self-regulation. In its current form, the PBO Act embraces both approaches to accountability. It proposes a Regulatory Authority, similar to the current NGO Coordination Board and a PBO Federation to replace the NGO Council. The Authority is largely appointed by the Cabinet Secretary while the Federation is the sector association. The Federation will have representation on the Authority.

The spirit of the amendments since the Act has been to weaken the principle and mechanisms of self-regulation and strengthen executive regulation. These amendments are backed by arguments that self-regulation has failed to hold the sector accountable to the common norms and standards in the NGO Code of Conduct. The problem with this argument is that it fundamentally shifts ownership and responsibility away from the sector to the Government. Rather than creating agreement on a set of common values and normative standards, the sector would inevitably come to be governed by rules and the regulatory capacity of Government. The size and the complexity of the sector does not lend to easy regulation by an external party, even one the size of the Government of Kenya. Successive autocratic Governments under former President Moi have tried and failed.

The Act seeks to bring more than 350,000 non-profit agencies acting in the public interest and providing benefits to the public under one legal umbrella. The Act contains various incentives for agencies currently registered under Trusts Act, Companies Act and the Societies Act among others, to voluntarily migrate to the new Act.

New amendments have sought to make migration to the PBO Act compulsory arguing that only compulsory migration will ensure accountability for handling funding in the public interest. While migration to the PBO Act is desirable, making this compulsory could have an negative impact. Trusts and Foundations have pointed out to potential huge capital losses as they transfer fixed assets and real estate to new legal regimes. Secondly, the lumping together of very diverse and historically distinctly different organisational types will not necessarily generate a more unified sector.

All five of these issues have dominated the various hearings. The failure to reach consensus in the amendments and the inordinate delay in commencement of the Act has also led to a consistent call in all the recent hearings for the immediate commencement of the PBO Act cited the two year delay. The treatment of these five issues and whether the country has to wait another two years for commencement will ultimately shape the future of the PBO sector and its relationship with citizens, the national Government and the 47 County Governments among others. Of the two paths; mutual trust and cooperation or mistrust and confrontation, as a long standing servant of this sector, I pray it is the former.

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[1] Irungu Houghton is currently the Associate Director for the Society for International Development having worked in the PBO sector for over 20 years. Email, Twitter @irunguhoughton


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