One of the major activities planned by the HAC is preparation of a Kenya joint assistance strategy (KJAS) for 2007-2012. All the members of the HAC discussed the KJAS initiating memorandum at a full day workshop in October 2005. All expressed the desire that the KJAS would replace their agency strategy document, and offered their commitment to the process. Development partners who wish to participate in the KJAS must join the HAC. All decisions regarding the KJAS process and final document will be reached through consensus. However, members of HAC who feel that the KJAS does not adequately reflect their concerns and their agency strategy can voluntarily withdraw from the process.

The KJAS will be developed with extensive input from the donor sector groups, which are active in nearly all major sectors in the country. These groups have already started to prepare matrices showing activities of the various donors in Kenya, agree with the GoK on partnership principles for donor engagement in the sector, and discuss ways of reducing transactions costs for the government. GoK (at the central and the sectoral levels) is being consulted on the draft document through all its stages. Civil society and the private sector are also being consulted regularly.

The KJAS will draw on various documents (including Sweden’s Power Analysis, DFID’s Driver of Change, the UN Millennium Project Report, the UNDP’s Human Development Report, a participatory Poverty Assessment), indicators of governance compiled by World Bank Institute (WBI) and the International Country Risk Guide, and the results of surveys carried out by Transparency International, the African Peer Review Mechanism, GoK, and others.

The timetable for the preparation of the document is as follows: Concept paper: (March 2006), Draft KJAS (October 2006), and Final KJAS presented to the ”Forum for Development Results for Kenyans” in April 2007.

GoK has established a comprehensive framework for M&E in the IP-ERS.

In 2004, Germany (BMZ) initiated and commissioned through GTZ, a study on PRSP monitoring in five selected countries (viz. Albania, Burkina Faso, Kenya, Nicaragua and Vietnam).

The first Annual Progress Report (APR) of the IP-ERS was prepared in March 2005 with support from development partners, stakeholders and representatives of civil society (including DFID, EU, UNICEF, WB and Action Aid Kenya). The report identified key continuing problems such as the existing bottleneck to accelerated expenditure due to the weak procurement system; poor translation of strategies and policies into effectively managed programs; and the need for greater capacity building in the ministries. The solutions are already being pursued in on-going initiatives including the reform of the budget process and accelerated reforms in public expenditure management. The second APR was scheduled for September 2005.

An independent assessment of donor-government relations is underway.

Budget support is the preferred form of donor assistance for GoK and the government is taking actions to create the conditions for direct budget support, e.g. in revising the budget cycle/process.

The reorganization of budget preparation functions was effective by a Presidential Circular in Sept. 2004. Key budgetary functions (Budget Monitoring Department and MTEF Secretariat) were transferred from the Ministry of Planning to the Ministry of Finance. A commitment control system has been developed and the scope for in-year budget reallocations (virements) has been limited (See Treasury Circular of July 29, 2004).

GoK has adopted a SWAp in the Governance, Justice, Law and Order sector (GJLOS), and initiated development of SWAps for other sectors, notably education. In the GJLOS SWAp, seventeen bilateral donor countries and agencies have pooled resources in a basket fund arrangement under the overall coordination of the Ministry of Justice and Constitutional Development.

For the education SWAp, the Ministry formed a joint GoK-partner consultative working group on education that met regularly. The group agreed on the broad targets and performance indicators to monitor progress in the sector. The SWAP was successfully negotiated. Poverty maps and survey analysis were used in the design.

SWAPs are also being considered in the water, and roads and public works sectors.

Parliament has enacted the Government Financial Management Bill that clarifies the role of Accounting Officers and Treasury functions and formally enshrines the office of Internal Auditor General.

GoK is implementing a Results-Based Management (RBM) system for helping public sector organizations to focus on results, plan strategically and demonstrate clearly the contribution made by each organization to development. All Permanent Secretaries and Accounting Officers in ministries and agencies, including state-owned enterprises are expected to sign Performance Contracts.

A joint DFID-World Bank Country Financial Accountability Assessment (CFAA) was completed in 2001. A Public Expenditure Management Assessment and Action Plan (PEMAAP) was undertaken by the IMF and the World Bank in collaboration with the GoK, DFID and EC in May 2003. GoK prepared an action plan for enhanced financial management in the public sector that incorporates recommendations of the CFAA and of the PEMAAP. The focus of the Government and donors is on its implementation.

Kenya’s Public Financial Management (PFM) systems have been regularly assessed since 2003 using the sixteen standard benchmarks established under the PEMAAP framework.

A Country Integrated Fiduciary Assessment (CIFA) confirms that GoK meets five of these sixteen standard benchmarks. Specifically, one out of seven in the area of budget formulation, two out of four benchmarks on budget execution as well as on budget reporting.

The PEMAAP assessments and the CIFA have focused on budget formulation, execution, reporting and procurement. GoK is updating the Enhanced Financial Management Action Plan in the context of the PEMAAP update which was undertaken by development partners in collaboration with the government.

The roll-out of the Integrated Financial Management and Information System (IFMIS) has been delayed.

Between October 2004 and January 2006, the World Bank did not approve any lending operations for Kenya. It awaited the implementation, outcome and follow up of various audit activities on its existing portfolio of projects to ensure that it is adequately ring-fenced against possible corruption. These include a series of forensic audits commissioned by GoK on four WB-supported operations, enhanced requirements for routine financial reporting and independent audit of projects, and the Detailed Implementation Reviews (DIRs) conducted under the leadership of the Bank’s Department of Institutional Integrity (INT).

In January 2006, the WB approved an IDA credit for the Institutional Reform and Capacity Building (IRCB) project which will help strengthen public financial management systems, in order to enhance transparency, accountability, and responsiveness to public expenditure policy priorities. IRCB will also enhance public service delivery through the effective implementation of RBM. Many of the corruption risks identified by the forensic audits (e.g. inadequate audit capacity within GoK) are being addressed by IRCB.

The WB is taking a lead role in improving coordination at both the general and sectoral level.

GoK agreed to convene meetings with the donors every two months, to discuss and reach agreement on coordinated interventions in support of the implementation of the IP-ERS.

The development partners committed themselves to implement the harmonization agenda following a meeting of the SPA.

The Harmonization, Alignment, and Coordination Donor Group (HAC) was established in early 2004, to comply with a promise made at the CG meeting of November 2003. The group comprises of fifteen donors: Canada, Denmark, DFID (UK), EC, Finland, France, Germany, Italy, Japan, Netherlands, Norway, Sweden, UNDP, USAID, and the World Bank (WB). HAC is very active, meeting twice a month to discuss progress on the work program and developments with harmonization in the country.

One of the major activities planned by the HAC is preparation of a Kenya joint assistance strategy (KJAS) for 2007-2012. All the members of the HAC discussed the KJAS initiating memorandum at a full day workshop in October 2005. All expressed the desire that the KJAS would replace their agency strategy document, and offered their commitment to the process. Development partners who wish to participate in the KJAS must join the HAC. All decisions regarding the KJAS process and final document will be reached through consensus.

HAC has established with GoK a budget support coordination group and its supporting joint technical working group.

Donors have discussed common funding mechanisms, increased budget support aligned with the IP-ERS and budget and conditionalities.

A “Forum for Development Results for Kenyans” is scheduled to take place in Nairobi in 2006. It replaces the CG meeting in order to serve more effectively the development needs that Kenya currently faces. This forum will (i) take greater advantage of Kenyan’s broadened space for public dialogue, (ii) be more inclusive of all key stakeholders, (iii) focus intently on implementation issues and practical service delivery results, and (iv) promote accountability by all stakeholders.