President William Ruto assents to the Supplementary Appropriation (No.3) at State House, Nairobi in November 2023.
The year 2024 will present defining moments for President William Ruto’s government after some of his key legacy-driven plans were halted by courts and their fates will be decided this year.
The latest is a push by seven petitioners to have the courts declare as wage slavery a bid by the government to collect in taxes more than 20 per cent of an employee’s salary.
Led by Fanya Mambo Kinuthia and backed by the Mt Kenya Jurists Association, in a case argued by lawyer Kibe Mungai, the petitioners want the court to slam the brakes on President Ruto’s introduction of new taxes “with reckless abandon”.
Key among the initiatives that have been halted by the courts is the housing levy, through which the Kenya Kwanza administration targets to put up 250,000 units every year.
The government’s plan for Social Health Insurance Fund (Shif), privatisation of 11 parastatals, among them the Kenyatta International Convention Centre, roll out of Maisha Namba and the planned leasing out of the Lamu and Mombasa ports have also been put on hold by the courts.
Kenyans will be keen to see how the courts will handle the matters.
Housing Levy
The Housing Levy, which took effect in July, is collected by the Kenya Revenue Authority (KRA), with every employee contributing 1.5 per cent of gross salary, matched by the employer.
It was quashed by the High Court last month for being discriminatory as it only targets 3.2 million Kenyans in formal employment, while leaving out the rest. However, the court suspended the implementation of the decision following a request by KRA and the Attorney-General.
Dr Ruto is, however, determined to implement the project arguing that Kenyans are already benefiting from it.
In the judgment on November 28, a bench of three judges said the introduction of the Housing Levy through amendment of the Employment Act by Section 84 of the Finance Act, 2023 lacked a comprehensive legal framework, in violation of several articles of the constitution.
The case will be mentioned on January 10.
“The imposition of the Housing Levy against persons in formal employment to the exclusion of other non-formal income earners to support the national housing policy is without justification, is unfair, discriminatory, irrational, and arbitrary and in violation of Articles 27 and 201 (b)(i) of the Constitution,” justices David Majanja, Christine Meoli and Lawrence Mugambi said.
The judges observed that in the absence of a rational explanation for the manner in which the housing tax was enacted, the only conclusion left is that the government took the path of least resistance because collecting taxes from employees in formal employment is easier.
The court said that although it is the government’s constitutional responsibility to create a broad-based, efficient, and fair tax system, taxing persons in formal employment to the exclusion of all other non-formal income earners to support the national housing policy was without a clear justification, unfair, discriminatory, irrational and arbitrary.
The judges also quashed sections 76 and 78 of the Finance Act, 2023 which amended Section 7 of the Kenya Roads Act, section 87 that amended section 28 of the Unclaimed Assets Act, and sections 88 and 89 of the that repealed section 21 of the Statutory Instruments Act, saying they we all unconstitutional.
Although the three judges said there was evidence that the National Assembly conducted sufficient public participation in respect of the Finance Act, 2023, it they indicated that it is desirable for Parliament to give reasons for rejecting or adopting proposals tabled before the House.
“There is no express obligation on Parliament to give written reasons for adopting or rejecting any proposals by members of the public. Nonetheless, we think that in enhancing accountability and transparency, it is desirable that the relevant committee, after conducting public participation, gives reasons for rejecting or adopting proposals received,” said the judges.
Health fund
The government plan to make it mandatory for every household to contribute 2.75 per cent of its income to the Shif—which is the replacement for the National Health Insurance Fund—was stopped for seeking to deny Kenyans who are not registered key government services.
High Court Judge Chacha Mwita put a freeze to the implementation of the Act after Joseph Enock Aura argued that it is illegal for the government to deny Kenyans who are not registered with the fund key services.
Mr Aura further said the digitisation and storage of children’s biometric data (without their consent) would be in breach and violation of their rights to privacy and exposes them to higher risks of online invasion, trade in and attrition of their personal digitised information without their say.
Justice Mwita granted orders stopping the implementing of the Shif Act, as well as the Primary Health Care Act and the Digital Health Care Act.
“That in the meantime, a conservatory order is hereby issued restraining the respondents, their agents and or anyone acting on their directives from implementing and or enforcing the Social Health Insurance Act, 2023, the Primary Health Care Act and the Digital Health Act, 2023 until 7th February 2024,” the judge ruled.
The court directed Mr Aura to serve the court documents upon all the respondents immediately to enable them to file their responses.
The case will heard on February 7, 2024.
Section 26(5) of the Shif Act provides that, “Any person who is registerable as a member under this Act shall produce proof of compliance with the provisions of this Act on registration and contribution as a precondition of dealing with or accessing public services from the national government, county government or national or county government entities”.
Privatisation
The planned privatisation of 11 parastatals was halted following a case filed by Raila Odinga’s ODM party. The party argued that the State firms are of strategic importance to the people of Kenya and can only be privatised with the consent of the people through a referendum.
Apart from KICC, other parastatals earmarked for privatisation are Kenya Pipeline Company, New Kenya Cooperative Creameries, Kenya Literature Bureau, National Oil Corporation of Kenya and Kenya Seed Company Limited.
Others are Mwea Rice Mills Ltd, Western Kenya Rice Mills Ltd, Numerical Machining Complex, Kenya Vehicle Manufacturers Ltd and Moi University-owned Rivatex East Africa Ltd.
The opposition party said the significance of the national principles and values of governance are not and cannot be subordinate to subjective economic perspectives of privatisation.
Pursuant to section 21 (1) of the Privatisation Act, Treasury Cabinet Secretary Njuguna Ndung’u published the privatisation programme that outlined the parastatals earmarked for sale as part of revenue raising measures.
“The Petitioner is particularly apprehensive that the impugned Act (Privatisation Act) arrogates near absolute powers to the Cabinet Secretary, National Treasury and Economic Planning and by extension the Executive in the privatisation of sovereign assets and further elevates subjective economic perspectives of privatisation above entrenched and non-derogable values and principles of governance under the Constitution, including sovereignty of the people, democracy and accountability,” ODM said in the petition.
Maisha Namba
Another case to watch in the coming year is the implementation of Maisha Namba, which seeks to replace the stalled Huduma Namba that was introduced by former President Uhuru Kenyatta’s administration and that had gobbled more than Sh10 billion.
The High Court halted the rollout after the process was challenged over lack of data protection impact assessment and meaningful public participation before implementation.
The court stopped the rollout of Maisha Namba, a unique personal identifier number assigned to the Maisha Card—a third-generation digital identity card—as well as the implementation of the National Master Population Register, which is expected to consolidate existing and independent databases into a single register.
The rollout was challenged by Katiba Institute, which argued that the government does not have a legal basis for the implementation for lack of a data protection impact assessment. It added that the process was being undertaken without meaningful public participation or publishing important information relating to the rollout.
Katiba Institute said that section 31 of the Data Protection Act requires the government to conduct a data protection impact assessment before processing data required for digital identification.
“I find that the application is not frivolous nor vexatious. It raises an arguable case that should be heard and determined on merit within the Fair Administrative Action Act framework,” Justice John Chigiti said.
If implemented, Kenyans would be required to provide biographical information and biometric data, including date of birth, gender, facial image, parentage information and contact information.
The case will be mentioned on February 6, 2024.
CASs
Another case Kenyans will be watching keenly is on President Ruto’s appointment of 50 Chief Administrative Secretaries (CASs), which the High Court found illegal.
An appeal by the government, through Attorney-General Justin Muturi to have the CASs serve as the case continues was rejected recently by the court.
A bench of three judges of the Court of Appeal ruled that Mr Muturi and the 50 CASs had not demonstrated any “devastating consequences that will suddenly befall Kenyans” if they are not allowed to assume office as they await the determination of the appeal.
“If, for example, after hearing the appeals this court finds that the offices were created constitutionally, there will be constitutional certainty and the applicants will assume office and start rendering service,” said justices Kathurima M’Inoti, Mumbi Ngugi and Francis Tuiyott.
The judges added that if, on the other hand, the court finds that the offices were created in violation of the constitution, they cannot imagine how the public can be compensated or how it can be comforting to tell the people of Kenya that, after all, service had been rendered in violation of the Constitution.
Some of the appointees, including Dennis Itumbi, argued that the appointments were a constitutional prerogative of the President to realise his policies and honour his political contract with the electorate.
They submitted that the public would benefit from the services offered as the CASs earn their keep. They added that they were deprived of the opportunity to render services and at the same time prevented from earning salaries.
Excise
The court’s decision on the contentious Excise (Excisable Goods Management System) amendment regulations, which would have seen prices of beer, bottled water and cosmetics rise, will also be of interest to Kenyans.
The regulations were published early this year and sought to adjust upwards the price of excise stamps applicable to excisable goods.
The High Court stopped KRA from implementing the amendments in May after the Law Society of Kenya challenged the regulations, arguing that their implementation threatened the survival of manufacturers engaged in the sale of consumables.
The lawyers’ body also argued that there was no justification in increasing the price of the stamps.
The taxman then moved to the Court of Appeal stating that it was bound to lose revenue in procuring the excise stamps as it will be forced to use taxes to procure the same.
But three judges of the appellate court disallowed the application saying the lower court did not stop the taxman from collecting revenue based on the old stamps, even as the petition awaits determination.
“Therefore, the claim that the appeal will be rendered nugatory on account of emasculation of its tax collection mandate is a far cry in the wild, and cannot hold,” justices Helen Omondi, John Mativo and Grace Ngenye ruled.
KRA had argued that the blocking of the regulations will interfere with revenue collection to the extent that it would not be able to recoup the excise tax for goods already sold during the intervening period. The taxman pleaded with the court to preserve the prevailing status quo in its favour.
In the political arena, a lawsuit filed by 12 voters on which of the coalition parties is the majority party in Parliament will also be heard in early 2024.
The petitioners argued that Azimio la Umoja One Kenya Coalition is the majority party in the house as it has 171 MPs, while Kenya Kwanza Alliance has 165.
The voters moved to court after National Assembly Speaker Moses Wetangula ruled on October 6, 2022, that President Ruto’s Kenya Kwanza was the majority party.
They want the court to quash Mr Wetang’ula’s ruling and declare Azimio the majority party in the National Assembly.
On corruption cases, Sirisia MP John Waluke and his business partner Grace Wakungu will also be waiting to see whether the Court of Appeal will quash the jail terms imposed on them by a Nairobi court and confirmed by the High Court.
Both were sentenced to more than 40 years each or pay fines in excess of Sh1 billion after they were found guilty of fraudulently receiving money from the National Cereals and Produce Board for maize that was never supplied.
Mr Waluke and Ms Wakhungu have maintained that they were wrongly convicted as the payments made arose from an arbitration and not a procurement award.
Former CS Raphael Tuju will be waiting to see whether his multibillion property in Karen will be auctioned by a bank over a loan of $9.3 million granted in 2015.
The loan was advanced to Dari Ltd, a company linked to the former Jubilee Party secretary-general and his children and the matter has been pending in court for the last four years.
Mr Tuju has contested the enforcement of a judgment in the United Kingdom made in 2019 that allowed East African Development Bank to recover the loan that fell due in 2017. The matter is pending at the Supreme Court.
The loan has since ballooned to more than Sh2.7 billion although the exact amount due is contested. Mr Tuju has also gone back to the High Court saying that he has found investors willing to repay the debt and successfully argued for the court to allow parties to maintain the status quo.
