Members of Parliament (MPs) on the Trade, Industry, and Cooperatives Committee have rejected a controversial plan by the State Department of Investment Promotion to reallocate Ksh.200 million initially allocated to the Export Processing Zone Authority (EPZA). The reallocation proposal, spearheaded by Investment Promotion Principal Secretary (PS) Hassan Abubakar, sought to divide the funds between EPZA, the Kenya Investment Authority (KenInvest), and the Special Economic Zones Authority (SEZA), but was met with resistance from lawmakers who condemned the move as a breach of parliamentary procedure.
The funds had originally been approved for EPZA in the Supplementary Budget 1 for the 2024/2025 fiscal year. PS Abubakar, while updating the committee on the progress of the department’s flagship projects, acknowledged that he had initiated the reallocation after consulting with the National Treasury. In his letter to Treasury, he had proposed that Ksh.50 million remain with EPZA, while Ksh.100 million would be directed to KenInvest, and the remaining Ksh.50 million allocated to SEZA.
The committee members, led by Chairperson Hon. James Gakuya (Embakasi North) and Vice-Chair Marianne Kitany (Aldai), rebuked the move, asserting that only Parliament has the power to reallocate or reappropriate public funds. Hon. Gakuya expressed frustration with the State Department’s failure to seek the committee’s input before initiating the reallocation.
“There is no other entity apart from Parliament that appropriates funds to State departments. You ought to have consulted this committee first. There is absolutely no justification to bypass this committee,” stated Gakuya.
Hon. Kitany reinforced this sentiment, explaining that proper procedures must be followed when seeking additional funds. “If there is a need for any appropriation of money, state departments come to Parliament. If the request is not captured during the budget-making process, there is a window to ask for the same during the supplementary budget process,” Kitany elaborated.
Justifications and Concerns
In his response, PS Abubakar acknowledged the lawmakers’ concerns about bypassing Parliament, though he maintained that his intention was to serve the “common good” of the state agencies. He explained that the reallocation was meant to provide much-needed support to KenInvest and SEZA, which had not received funding during the supplementary budget allocation process and required financial assistance to maintain operations, including staff salaries.
“During Supplementary Budget 1, we requested money for KenInvest and SEZA, but the two entities that are in actual need did not receive the finances,” Abubakar explained. “I requested the reallocation to enable the two bodies to stay afloat and pay salaries for their staff.”
The PS reassured the committee that no funds had been reallocated by the National Treasury, emphasizing that he would act promptly to halt the redistribution and ensure the funds remain with EPZA. “The good thing is that the cash has not yet been redistributed by the National Treasury. I will write to them and instruct that the cash be retained by EPZA,” Abubakar said.
Focus on Key Projects
Earlier, PS Abubakar had briefed the committee on EPZA’s ongoing flagship projects. Due to budget constraints, the State Department has decided to prioritize three out of six initially planned Export Processing Zone (EPZ) projects, which are set to serve as key industrial hubs. The prioritized projects, located in Busia, Murang’a, and Uasin Gishu counties, aim to stimulate local economies, create jobs, and attract foreign investment through incentives offered under the EPZ program.
Despite the focus on these three projects, the PS highlighted that funding shortages had posed a challenge in achieving the department’s broader objectives. The Ksh.200 million allocation was initially intended to support EPZA’s growth and development, and any reduction in the available funds would likely impact the authority’s ability to deliver on its mandate.
MPs’ Oversight Role
The MPs underscored the importance of maintaining the integrity of the budgetary process, emphasizing that government entities must adhere to established procedures to request and reallocate funds. They also expressed their commitment to ensuring that EPZA receives the necessary support to execute its projects without unauthorized interruptions to its budget.
The rejection of the reallocation proposal signals a firm stance by the Trade Committee on upholding parliamentary oversight over public funds, particularly for agencies like EPZA that play a crucial role in boosting Kenya’s industrial capacity. As lawmakers push back against unapproved fund reallocations, they seek to reaffirm the critical role of Parliament in financial oversight to ensure transparency and accountability within government departments.
Moving Forward
The decision by the Trade Committee to block the reallocation plan underscores Parliament’s determination to safeguard its constitutional mandate over budgetary matters. For EPZA, the Ksh.200 million allocation will remain intact, allowing it to proceed with its flagship projects in Busia, Murang’a, and Uasin Gishu.
As the department works to balance limited resources with ambitious industrialization goals, the resolution of this budgetary standoff may serve as a reminder of the importance of communication and adherence to established financial protocols in government operations.
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