IMPACT OF THE CONSTITUENCIES DEVELOPMENT FUND

(CDF) ACT ON SOCIAL AND ECONOMIC RIGHTS IN KENYA-

Presented as part of clinicals.

1.0 INTRODUCTION
The CDF Act was passed into law in 2002 by Kenyan Parliament. It provides that at least
2.5 per cent of all collected ordinary government revenue in every financial year shall be
paid into the fund. This amount shall be disbursed under the direction of National
Constituencies Development Fund Management Committee (NCDFMC).1 75 per cent of
the amount is disbursed equally across the 210 constituencies while the remaining 25 per
cent is disbursed on the basis of the poverty index.2 At the constituency level, the Act
specifies that upto a maximum of 3 per cent of the total annual allocation may be used on
office running expenses, 5 per cent shall be set aside for emergency while not more than
10 per cent shall be allocated to the education bursary scheme annually. Several
committees are established as management structures to oversee the implementation of
CDF projects. These are; the Constituency Development Fund Committee (CDFC),3
National Constituency Development Fund Management Committee (NMC),4 Districts
Project Committee (DPC)5 and the Constituencies Development Committee (CDC).6

Over the last two decades Kenyans have suffered serious reverses in economic and social
well being. In its early years of independence, Kenya was the most prosperous country in
East Africa, its GDP per capita rising by 38 per cent between 1960 and 1980. The
following two decades to 2000, however, recorded a zero increase in per capita GDP,
while per capita income in 2003, at US $ 360 was lower than in 1990. Poverty incidents
rose from 49 per cent in 1990 to 55 per cent in 2001. Kenya’s social indicators have
declined in tandem with the economy; infant mortality rose from 63 (per 1000 births) in
1990 to 78 in 2002. Life expectancy declined from 57 to 46 years, in part due to the
HIV/Aids epidemic. The persisting hunger of children is evidence in the 19 per cent
under fives who are underweight and almost one in three (31 per cent) who are wasting. 7
These are averages, but Kenya is a highly unequal society, with exclusion and
disadvantage reflecting stratification by class, gender and region. For example, the richest
10 per cent of Kenya’s households controls more than 42 per cent of the country’s total
income, while the poorest decile make do with well under one percent. Regionally, more
than twice the proportion of children die in the first year of their lives in Nyanza
province compared to the Rift Valley (133 versus 61 deaths per 1000 live births), a
person born in Nyeri district can expect to live 17 years more than one born in Siaya,
while a person born in Meru district can expect to live twice as one born in Mombassa
(67 versus 33 years).8
The state of human rights report 2003 – 2004 (published by the Kenya National
Commission on Human Rights) makes the observation that one of the most progressive
pieces of legislation from the 9th parliament is the Constituencies Development Fund Act.
This is based on the premise that the human rights approach to development stands in
1
Section 5 of the Act
2
Section 19 of the Act
3
Section 27 of the Act
4
Section 5
5
Section 39
6
Section 23(1)
7
Central Bureau of Statistics, 2004. Kenya Demographic and Health Survey, 2003, Central Bureau of
Statistics, Nairobi, July 2004.
8
SID, 2004. Pulling Apart: Facts and Figures on Inequality in Kenya. Society for International
Development, Nairobi.
1
good stead to enhance the realization of economic, social and cultural (ECOSOC) rights.
A positive aspect of the CDF is the statutory requirement for the use of a poverty index in
allocating part of the funds. It also has a high impact potential for addressing historical
and systemic wrongs such as regional disparities both across the country and within
constituencies, enhancing participation at the point of project identification and
implementation, providing space for experimentation of poverty reduction initiatives, and
creating the much needed impetus for establishing systems and developing an
opportunity for citizens to engage in social accountability. These aspects provide a central
pathway towards enhancing the realization of economic and social rights.

Critics of the Act argue that whichever way it is viewed, the Act confers upon Mp’s a
fourth tripartite function, namely legislative allocation of finance, expenditure of public
finance and implementation of legislator – proposed projects.9 The Kenyan constitution
neither vests nor contemplates performance of this function by either parliament as a
body or Mp’s in their individual capacity as legislators.10 Moreover, the vesting of this
fourth function on Mp’s could well be politically legitimate. It nevertheless raises the
question whether such a blatant violation of the doctrine of separation of powers is
constitutionally permissible.11

However, in the final analysis, the CDF is one of the indigenous innovations of the
National Rainbow Coalition (NARC) government of Kenya. Unlike other development
funds that filter from the Central Government through larger and more layers of
administrative organs and bureaucracies, funds under this programme go directly to local
levels and thus provide people at the grassroots the opportunity to make expenditure
decisions that maximize their welfare consistent with the theoretical; predictions of the
decentralization theory.12

2.0 OPERATIONAL STRUCTURES FOR THE MANAGEMENT OF

THE FUND

The CDF Act was conceived primarily in response to the general failure of the framework
for development planning and financing in Kenya over the last over two decades. By
1999/ 2000, over half of the Kenyan population was living in poverty. As a result, poverty
reduction, equality and economic growth have been of great concern to Kenyans and the
Kenyan government.13The CDF Act was designed to enable balanced development across
the country. The fund, totaling Ksh. 20 million is put aside to send to each constituency
every year. It is approved and disbursed by: the NMC established under Section 5 of the
Act. The NMC has overall management of the fund; ensures the allocation, disbursement
and prudent management of the fund; reviews annual reports to parliament and releases
the funds. The main committee is however the Constituencies Development Fund
Committee (CDC) established under section 23. This is the committee this is the
committee that selects and prioritizes projects; monitors implementation of projects and
consults with relevant government departments to ensure realistic project estimates.
9
See CDF, The Constituency Fund, for Development or Campaigns? Edited by Jackson Mwalule and
Danny Irungu, published by the Youth Agenda p.10
10
Ibid
11
Ibid
12
See Journal of Economic Literature Classification: D21, D70, H60.Abstract. University of Connecticut.
Department of Economics Working Paper Series: Efficiency and Efficacy of Kenya’s Constituency
Development Fund: Theory and Evidence by Mwangi K. Kimenyi
13
See Kenyan’s Verdict, A Citizens Report card on the CDF IEA Research paper series No.7 Sept. 2006
produced in collaboration with KNCHR, Executive summary.
2
The other two committees are the District Projects Committee (DPC) and the
Constituencies Fund Committee. The DPC is established under section 39 of the Act. It is
charged with harmonization and ensures that there is no project duplication. It approves
proposals to be submitted to CDC and coordinates implementation of projects financed
through the fund. The CFC established under section 27 considers project proposals from
constituencies; scrutinizes and forwards these proposals to the minister of Finance; makes
recommendations to the National Assembly clerk or Minister of Finance; submits bi-
annual report on CDF to parliament and oversees legal, regulatory, policy framework
related to fund.

Part IV of the Act outlines the kinds of projects earmarked for the fund. All projects are
to be community based development projects that ensure the benefits are enjoyed by all.
The funds may be used to finance the setting up or equipping of a constituency project
office. Obviously a member of parliament’s political office is not one such project office.
A constituency office project and furniture and equipment shall be considered as a
development project. An education bursary scheme will be considered as a development
project but will not be allocated more than 10 per cent of annual funds allocated to a
constituency. It is therefore clear that the funds are not for supporting political bodies
except where these serve as an agency.

3.0 IMPLICATIONS OF THE CDF ON ECONOMIC AND SOCIAL

RIGHTS

Although the CDF takes a relatively small amount of national resources – 2.5 per cent of
the government’s ordinary revenue collected every year, its impact has been significant.
Joseph Kinyua, the Permanent Secretary, Ministry of Finance and chairman of the
National Management Committee has commented that:

The constituency Development Fund has had a major bearing on the development and
rehabilitation of the socio-economic infrastructure in the entire country.14

CDF is helping provide services to communities that for many years did not benefit
substantially from government services. In particular, the poor have in the past
experienced serious problems accessing basic services that are now made available
through CDF. Take the example of Kitonyoni Dispensary located in the interior
Makueni constituency. The locational site is characterized by relatively low access to
health facilities. On average, households spend more than 1-2 hours to access the nearest
health facilities, which are in deplorable states and administer first aid only. The main
prevalent diseases in this area include Malaria, Typhoid, Amebiosis, Intestinal
parasites/worms, Respiratory Tract Infections, TB, HIV/Aids e.t.c. health is a human
rights issue, it is a social right. In this constituency; health is a basic need and the main
objective of the CDF project was to provide access to medical services, both dispensing
and curative to the communities within a 4 Kilometre radius. The first phase of the
project is already completed.15

A study conducted by the Institute of economic affairs (IEA Kenya) and the Kenya
National Commission on Human Rights (KNCHR) indicates that beneficiaries of the
14
See CDF National News. A Newsletter of the CDF “CDF: A Catalyst in our Development Agenda.” P.4
15
See Kenyan’s Verdict: A Citizens Report Card on CDF. IEA Research Paper series No.7 Sept, 2006.
Chapter 4 at p.39
3
 fund were very positive about the outcomes and impact of the CDF projects despite
reservations about how they were identified and managed.16 The study notes that some of
the contributing factors to this positive outcome are:
• The opportunities created have improved their livelihoods by creating jobs-unskilled
labour and community engagement where they are compensated.
• The opportunities created for nurturing supportive activities- evidenced by mushrooming
village trading centres and revival of projects situated in village shopping centres affords
them the opportunity to trade their wares hence creating market.
• The direct development of human resource as a result of massive investments in human
capital either in the health or education sector.17

Patrick G. Gichohi, the secretary to NMC says that to date there are over 5,000
projects.18 In the Financial years 2003/04 and 04/05, Joseph Kinyua reports that:

We saw three major sectors benefit from CDF funding. These areas include education,
health and water, with education recording the lion’s share. Similarly, small projects
involving roads reconstruction and rural electrification have also received a fair amount
of funding. These sectors are critical in addressing economic recovery strategies
objectives and attaining the Millennium Development Goals.19

The goal of providing adequate services to citizens is always elusive to most low-income
country governments. Two reasons that prevent people in developing countries from
graduating out of a vicious cycle of poverty, hunger and disease are under-investment in
basic social services and a failure to coordinate public action at a cross-sectoral level.20
CDF provides individuals with at the grassroots the opportunity to make expenditure
choices that maximize their welfare in line with their preferences and needs. It is a
decentralization scheme that provides communities with the opportunity to make
spending decisions that maximize social welfare. It is an example of Community-Driven
Development (CDD) initiative where the locus of decision making and financing for
development projects, infrastructure and delivery of public services is transferred from
national government to local communities. To the extent that the local population is better
informed about their priorities, the choices made can be expected more aligned to their
problems and circumstances. Project choices under CDF vary across constituencies as
communities prioritize those projects that have the highest marginal impact on their lives
within the budgetary constraints.

However, instances show that the process of project prioritization and selection as
enshrined in the CDF Act must be protected and enforced. Take the case of Chepkoiyo
Junction Electricity supply.21The project is situated at the Chepkoiyo shopping centre
on the way to Moi University, Eldoret. The area is densely populated and has a very high
potential for agricultural activities. The project is ongoing and funded exclusively by
CDF. The committees prioritized the extension of the power line even though the
16
Ibid p.34
17
Ibid
18
CDF National News. A Newsletter of the CDF. Jan – March 2006, found at cdf@wananchi.com. CDF
National News is a quarterly newsletter bringing an in-depth analysis of projects and allows the reader to
monitor progress through testimonies & pictorials on various projects.
19
Supra note 14
20
See Vandemoortele, Jan (2003). ‘Are MDG’s Affordable?’ Development Policy Journal 3, April 2003,
p.24 quoted in Celine Tan (2005)’Evolving Aid Modalities and their Impact on the Delivery of Essential
Services in low-income Countries,’ Law, Social Justice and Global Development Journal 5th October 2005.
21
Supra note 15 p.41
4
community was against it. The community felt that the project was going to benefit the
affluent members of the community and not the poor. The community felt that there were
other pressing needs, such as water, health and education. Here, the views of the
community appear to have been sidelined as the power supply project does not appear to
have been a priority. Further the community has no control over the project. Community
participation is effective not by mere attendance of meetings but rather by the ability to
voice views and question decisions. Also, socio-economic characteristics have a bearing
on community participation.

Other key factors are the factors that impact on social capital. The average level of
education in a constituency is expected to influence the involvement of the community
and also the extent to which they are able to monitor utilization of funds. CDF projects
will be more in line with priorities in areas where the average level of education is higher.

One of the predominant motives behind the enactment of the CDF Act is that a great
portion of development fund actually goes to supporting government bureaucratic
apparatus, including administrative and logistical planning for infrastructural and other
physical development, and hence scarcely resulting in concrete and tangible outputs, or
improved delivery of public goods and services. Thus the fund was concerned to not only
address the failure of development budget on the ground, but also to infuse some
rationality and regularity in the process of allocating development resources nationally.
The potential of CDF to positively impact on service delivery and contribute to
infrastructural investments is self evident.
The main priorities in most of the constituencies are education, health and water, using
over 75 per cent of the fund allocation. Others are agriculture, roads and bridges,
security and sanitation. The fund has seen the provision of services that were never
available to communities such as boreholes, health institutions and schools. CDF as a
concept represents a move towards increased local ownership of economic policies. It has
improved local participation in decision-making. The institutional and fiscal flexibility of
the fund is more responsive to the needs of local communities and enable the poor and
other vulnerable groups to have input into the provision of basic services.

Six out of eight Millennium Development Goals (MDGs)22 refer to improving socio-
economic such as reducing child mortality (Goal 4), promoting maternal health (Goal 5),
combating HIV/Aids, Malaria and other major diseases (Goal 6), halving the proportion
of people without access to safe drinking water (Goal 7), ensuring access to affordable
drugs for people in developing countries (Goal 8). Promotion and protection of socio-
economic rights is therefore seen by the international community as key to human
development and poverty reduction. CDF is a milestone step in achieving these goals in
Kenya.

CONCLUSION

It is crucial that CDF is not seen as core development. It should not be a substitute to
development by the executive. Roads, schools, bridges and health which form the core
development issues are matters of central government. There is the very real risk of
government taking a back seat and thereby undermining the achievement. Of socio-

22
Five years ago the millennium Declaration recorded the commitment of the members of UN to eliminate
poverty and build a secure and peaceful world conducive to human development. MDGs embody that
commitment. The goals have become widely accepted as a framework for measuring development
progress.
5
economic rights which CDF is proposed to help achieve. Channeling resources through
institutions other than the government,
Especially where the state is weak erodes an essential function of the government – that
is to determine national expenditure and provide public services. Removing this role of
the state takes away a mechanism through which many citizens can hold their
government accountable.23

Through CDF it is apparent that the government is committed to using poverty indices
and social indicators (e.g. population) to target the allocation of public funds for
earmarked programs. However, there is controversy on the efficiency of allocation
criteria, especially a criteria (that focuses on poverty only without weighting by the
respective constituencies population, given that there are no objective criteria in the
creation of constituencies. There is also no evidence that administrators at the grassroots
use objective criteria in the allocation of funds to the ultimate beneficiary individuals.

The abstraction of the state from the provision of essential services through mechanisms
such as CDF, may, if not properly implemented have a knock-on effect on the political
dimensions of poverty as the decline of the state as a service provider in education, health
and income-generation activities helps to reduce the presence of government functions
within the communities and removes an important impetus to democratic participation on
the part of the poor. Addressing political poverty means working to provide the poor with
the state and services they want.

It is important to remove the veneer of bureaucratic control locked into the CDF Act.
Given that there is a distrust of the government in the first instance, and that it is
perceived that the constituencies should prioritize their own development, government
should be removed from structure of CDF.

We must beware of trying to build a society in which no one counts but a politician. CDF
must seek to create an entrepreneurship culture. It must explore how entrepreneurship can
be promoted and developed. Kenya needs people who see opportunity, create and build,
initiate and achieve. In activating the entrepreneurial function, small businesses become
indispensable vehicles. CDF should be a source of funds for such businesses. In schools
the CDF should initiate young enterprise projects intended to develop pupil
understanding of how to run a small business, at the same time developing what have
been termed ‘enterprise competencies and aptitudes.’ The CDF as constructed id focused
on the consuming power. It must re-orientate towards the producing power.

CDF is a form of decentralization. However, unlike in pure fiscal decentralization which

is characterized by both revenues and expenditures, CDF is a one sided fiscal
decentralization scheme since expenditure are not linked to the local revenue sources or
fiscal effort. Such partial decentralization can associate with fiscal illusion which
minimizes the extent to which beneficiaries monitor use of funds, simply, beneficiaries
consider the funds as ‘free’ and thus are not motivated to monitor utilization of funds
since they do not take into account the costs of the projects.

23
For more, see Tan, C, ‘Evolving Aid Modalities and their Impact on the Delivery of Essential services in
Low-Income countries,’ 2005(1) Law, Social, Justice and Global Development Journal (LGD). Found at
www.go.warwick.ac.uk/ec/lgd/2005
6
Currently, there are weak mechanisms in place at the grassroots level to ensure equity in
access to CDF projects. Factors inhibiting participation include, lack of transition plans
for CDF committee members and lack of adequate knowledge of project planning among
community and committee members.

National progress in health, nutrition and education depends not on economic

development alone but on a sustained commitment to improvements in the well–being of
the poor. CDF helps to bolster protection of socio-economic rights of the poor through
services like safe water supply and building of schools and dispensaries.