SPEECH BY MS.

ANNE WAIGURU, OGW, CABINET SECRETARY, MINISTRY OF DEVOLUTION AND PLANNING, DURING THE CORPORATE DINNER ORGANISED BY THE PRIVATE SECTOR ON PUBLIC-PRIVATE PARTNERSHIP ON 9TH AUGUST, 2013 Chairperson, Key Speakers, Members of the Private Sector, Ladies and Gentlemen, The English writer, W Summerset Maugham once said that At a dinner party one should eat wisely but not too well, and talk well but not too wisely. Ladies and gentlemen that is the balance I shall strive to achieve this evening. But before I proceed to far, permit me to thank the organizers of this dinner and for their wonderful reception. It is a privilege to be here. I was requested to speak on the theme: Understanding What Devolution Means to the Private Sector. But allow me to pitch the context in which we find ourselves and from where we can project the future direction of our country. Ladies and Gentlemen, The Kenyan concept of devolution contains a bundle of public goods transferred from the National government to County Governments. These goods include political power, financial and other resources, administrative and service delivery systems. This complex arrangement became necessary to respond to Kenyas take-off dilemma. For Kenya, the end the 20 th Century (1990-2000) marked a lost decade of sharp decline in growth, and political repression. In contrast, the 1 st decade of the 21st Century (2001-2010) ignited growth and civil liberties. The decade of success commenced with the NARC regime in 2002. Kenya under the framework of Vision 2030 prepared for

economic takeoff, first with the Economic Recovery Strategy. Ladies and Gentlemen, By 2007, the country had largely succeeded in setting the stage for take-off given the dramatic economic growth revival from -0.2 % in 2002 peaking at 7% in 2007. However, growth was unequal in many ways; across regions and age cohorts and across different social classes. The lack of political consensus on the future direction of the country and the instinctive mobilization of politics ethnic and geographical contours led to the dramatic near-collapse of the Country in the upheavals of early 2008. And the take-off failed once again. Ladies and Gentlemen, We find ourselves at a moment that provides opportunity for the Kenyan take-off but also one that carries its own perils. We find ourselves at a point of multiple transitions. The first transition is the transition from the old Constitution to the new Constitution, the Constitution of Kenya 2010. Through this Constitution the architecture of the Kenyan society has fundamentally been redesigned. The structure of Government has changed. The traditional relationships among the three arms of government have been reorganized creating greater separation of powers and functional autonomy. Hitherto marginalised groups have received recognition. The profile of women and youth in leadership has risen significantly. The second transition that is underway is a generational one. The leaders who took the helm at independence have receded and a younger generation has proceeded to take over control of the affairs of our society. Ladies and Gentlemen, The third transition which we face and, which is at the heart of this evenings function, is the transition from a centralised state to one

that has adopted the concept of devolution. Through this transition new relations between the National Government and the nascent County Governments, are emerging. The Constitution in Article 6 (2) provides that governments at both levels are distinct and inter-dependent and shall conduct their mutual relations on the basis of consultation and cooperation. Further Article189 (1) provides that the government at either level shall perform its functions, and exercise its powers, in a manner that respects the functional and institutional integrity of government at the other level. However, the Constitution, in its preamble, states that Kenya remains one indivisible whole thus our devolution is not based on the principle of absolute autonomy but on inter-dependence and cooperation. Ours is a system that combines a certain measure of autonomy and spheres of inter-dependence. The end result of this combination is what is referred to as cooperative system of devolved government. The thrust of this principle is that both levels of governments must function as a cohesive whole in order to achieve the aspirations of our people. Ladies and Gentlemen, In terms of the progress achieved in implementing devolution, it is important to note that the legislative framework is in place and mechanism for managing inter-governmental relations have to the better extent been established. There are on-going discussions on programmes for capacity building of County institutions as well the finalization of transfer of functions to County Governments. Like in all spheres of human endeavour, implementation of devolution is not without its challenges. The national and county budgeting processes have unfolded with teething problems with different institutions grappling with new roles and mandates. County executive committees in a number Counties are adjusting to the role of County Assemblies leading to delays in appointments and conduct of County business. There has also been an information deficit with regard to progress being made and challenges being addressed, as well an understanding of roles and responsibilities of the two levels of

government. Ladies and Gentlemen, The private sector needs to be aware of this progress and challenges but of far greater importance the private sector needs to be part and parcel of this historic transition. Due to the complexities involved in coordinating policy functions both horizontally across Counties and vertically between the levels of Government challenges relating to increased regulation or distortions in regulatory regimes will be accentuated in the coming days. To ensure that there is a harmonisation of policies, my Ministry is initiating sectoral consultative forums, involving line ministries and county sectoral counterparts. This will ensure that any challenges identified with regard to policy inconsistency can be addressed speedily and amicable to avoid any disruptions on service delivery. Further, the National Government on its part has initiated a one-stop-shop service delivery framework through which services offered by the National Government will be provided at a single nodal point (called Huduma Centre) at each administrative level. This will be in addition to a comprehensive business process re-engineering, that will ensure that accessing core government services is streamlined and hustle free. This will have a major positive impact with regard to the doing business environment, by reducing transaction costs and the time it takes to obtain key services. It is important to note that the Constitution, national laws and the judicial system will apply the laws with equal treatment. Sanctity of title and enforcement of contracts will continue to be critical pillars to the definition of rule of law under the Constitution. Ladies and Gentlemen, Counties will provide opportunities for new business as they aggressively compete for investors. Already we are witnessing impetus among Counties to hold investment conferences. This financial year alone KES 210 Billion has been allocated to County Government and while a significant part of this amount will go to recurrent expenditure, there is still a reasonable figure for

development activities. This transfer of resources will expand and diversify the scope for Public Private Partnerships. This will continue to grow in the coming years with the expected continued expansion of the resource base for Counties. As investors visit these counties, they are opening up new markets, and exposing potential. Tourism products for example will begin to diversify; people will begin to see opportunities where they previously hadnt. The early birds who will settle and provide services in some of these areas otherwise considered remote, will definitely benefit from the initiator advantage. Devolving resources, functions and authorities to 47 levels is no mean fete. This in essence constitutes devolution of business opportunities and an expansion of the economy by increasing demand in these counties. A big percentage of our GDP is consumption, and particularly public consumption, expanding demand therefore, has various consequences: First, by cascading resources downwards to devolved levels, we stimulate consumption at the local level; if we couple this with having senior officers working at the counties, we will witness the emergence of a bulge in the new middle/working class, with sophisticated consumption patterns. Private sector actors who are positioned to take advantage and provide middle class goods and services will therefore be much better placed in capturing this market. As you all know, government is the biggest consumer in our economy. The Private sector should seek to leverage on this. The government has put in place a policy to dedicate 30% of public procurement spend preferentially for women, youth and persons with disability. Just by doing this, it will mean that opportunities for participation as a supplier to counties will be greatly diversified. The range of options are numerous, construction, basic supplies, conferencing facilities, and provision of technical services, amongst others. These are some of the areas that we will see significant growth. Ladies and Gentlemen, Devolution is a new way of life. This calls on the Private Sector to adapt to this new way. It is a way of life that will address the persistent question of inequality and marginalization. If it achieves this end then there is no reason for Kenya not to have its economic take-off and with it the fortunes of generations to come.

Indeed in the words of Robert Frost we have chosen the road less travelled and I hope that in time to come we can share in his sentiment that by taking the one less travelled, will make all the difference and the meaning to the multiple transitions that are our generation to bear. I thank you all.