Mr. Deputy Speaker, Sir, I beg to ask the Minister for Finance the following Question by Private Notice. (a) Is the Minister aware that Ms Mastermind Tobacco (K) Limited has not been remitting taxes since 2007 and now owes the Kenya Revenue Authority (KRA) more than Kshs.12 billion? (b) Why has the company not paid the arrears despite several Tax Demand letters sent to them by KRA? (c) Can the Minister confirm that the failure by KRA to enforce the several tax demand notices is attributed to corruption and, if so, what measures will the Ministry take to ensure that all companies which have not remitted due taxes do so, with the appropriate penalties?

Mr. Deputy Speaker, Sir, I beg to reply. (a) I am not aware that Mastermind Tobacco Limited has not been remitting taxes for the last five years since the information available as tabulated in Appendix

Mr. Deputy Speaker, Sir, the Assistant Minister is misleading the House by saying that the arrears which are supposed to be paid by Mastermind Tobacco are subject to a court case. The court case which is there is only on the issues up to April, 2010. What about the rest of the unpaid taxes, penalties and interest before and thereafter? I want to table the court order to show that Assistant Minister is misleading the House on those issues.

Mr. Deputy Speaker, Sir, the cases are still going on in court. The rest of the unpaid taxes are actively being negotiated. Where there are audits and confirmed figures, the taxpayer is paying them accordingly.

Mr. Deputy Speaker, Sir, is it only the court case that is stopping collection of taxes or is it also political interference through a letter by the Right Honorable Prime Minister? Are you aware of such a letter by the Prime Minister’s Office?

Mr. Deputy Speaker, Sir, I am aware of that letter. That letter was simply transferring the responsibility of negotiations. This is a taxpayer who went to the Prime Minister to complain that he is being harassed and that there are figures that he is disputing. The Prime Minister then ordered that the KRA, the Treasury and the taxpayer should sit down - he even gave a date when they should sit down - and discuss on the figures he was disputing. That is all. This was a letter from the Prime Minister’s Office.

Mr. Deputy Speaker, Sir, we know that matters of taxation are guided by law. Now, the Assistant Minister has said that it was a letter resulting from a complaint, could he tell us through which section of the law that would entitle the Prime Minister or his Office to interfere with taxation matters? Otherwise, is it in order to mislead the House?

Shame!

Mr. Deputy Speaker, Sir, there was no interference if the Prime Minister only ordered that the relevant Ministries should deal with the issue, look at all the issues of law and so on and discuss the matter. That was not interference. If it was interference, he would have ordered that those things be stopped and that those people should not pay tax. However, there was no violation. The Prime Minister is the co- ordinator of Government business and he has a right to deal with any issues which are brought to him as a matter of complaint.

Mr. Deputy Speaker, Sir, indeed, this is a country for the rich. Now that Mastermind Tobacco has access to the Prime Minister, could the Assistant Minister also tell us when the common man who has tax issue can see the Prime Minister to negotiate and facilitate them to delay the payment of tax?

Mr. Deputy Speaker, Sir, they come to us every day. Even me as an Assistant Minister, they come to me, raise complaints and we take the necessary action.

Mr. Deputy Speaker, Sir, is the Assistant Minister in order to continue misleading Kenyans who work hard and pay taxes that except the ones who are friends of the Prime Minister that they should not be paying taxes? I want to table a letter here where the Prime Minister is instructing that this company’s taxes should not be collected. Further, I want to table another document which shows – and this is a big shame to Kenya – that when the Prime Minister went to look for grants abroad in Norway--- Here is a letter which says that Kenya’s Prime Minister was in Norway asking for money while stopping tax revenue from being collected, that is, US$600 from Mastermind Tobacco. The Prime Minister was being accosted by the Government of Norway just because of this interference. Why is the Assistant Minister misleading the House? I would like to table this document.

Mr. Deputy Speaker, Sir, first, what the hon. Member is quoting is a newspaper cutting which is not evidence in Parliament. Secondly, the letter he has tabled does not stop anybody from paying taxes. The letter is only asking that temporarily the urgency notices which were given to some banks be withheld until the disputed issues are amicably agreed upon by the responsible departments of Government which are the Treasury and the KRA. Thank you, Mr. Deputy Speaker, Sir.

On a point of order, Mr. Deputy Speaker, Sir. As you look through the cutting to show us whether it is admissible or not, I would also like to challenge hon. Kiema Kilonzo to declare his interest. Mr. Deputy Speaker, Sir, this House should not be used by people who go out there or send their relatives to go and extort money from the private sector and then come here to raise questions. We are aware that there are some hon. Members who send their brothers to go and extort money from companies. It is a shame. This House is being accused outside there that we are bringing Questions for money. I think hon. Kiema Kilonzo owes it to the people of Kenya to express his interest.

Mr. Deputy Speaker, Sir, I wish to challenge that. I have no interest other than to make sure that everybody pays taxes to the Kenya Government. I want to challenge my friend, hon. Mbadi, to substantiate his claims.

On a point of order, Mr. Deputy Speaker, Sir. It is true that hon. Kiema sent his brother, and also sent somebody else, to demand Kshs6.6 million. They have told me personally that he did this and he was given Kshs300,000 and another Kshs200,000 was given to another friend of his.

Mr. Deputy Speaker, Sir, you will agree with me that, that touches on my person and the dignity---

Order! Order! Hon. Assistant Minister, you cannot discuss the person of a Member of Parliament without a substantive Motion. So, under the circumstances, since you have actually discussed hon. K. Kilonzo without a substantive Motion, can you withdraw that discussion?

Mr. Deputy Speaker, Sir, I did not discuss his person, but---

On a point of order, Mr. Deputy Speaker, Sir.

What is your point of order, Martha?

Mr. Deputy Speaker, Sir, my point of order is that, having already imputed improper motive on a Member, and this House having participated in the Question on the basis of good faith, it is important that, in accordance with the rules of this House, there be substantiation, so that if it is true, the allegation is acted upon and so that Kenyans can know that this House conducts business above board, or we stand condemned as a House. May we plead with you to issue directions for substantiation to rescue us from contempt.

Mr. Speaker, Sir, this is a matter which is true. If you give me up to Tuesday, I will be able to bring an affidavit from the person the hon. Member solicited the money from. Therefore, I am not discussing him.

On a point of order, Mr. Deputy Speaker, Sir. I want to be heard. I brought this Question to the House about a month ago under Questions by Private Notice. The Office of the Clerk of the National Assembly did not put this Question on the Order Paper as required by law. When my Personal Assistant went to the Office of the Clerk of the National Assembly, he was told that I should not ask this Question, and that it was a matter of procedure. I insisted. I called the Speaker of the National Assembly who was in Mombasa and told him what frustration I was going through.

The Speaker had to come to his office and investigate the issue of Mastermind Tobacco (Kenya) Limited. It was the Speaker himself who ordered that the Question be listed on the Order after issuing a warning letter to some people in that office. Mastermind (Kenya) Limited has been untouchable. Now that we are asking that Mastermind (Kenya) Limited pays taxes, those who blocked KRA from collecting the taxes from that company are now imputing improper motive in my person. You have seen a letter from the Prime Minister which tried to block payment of taxes by Mastermind (Kenya) Limited.

Mr. Deputy Speaker, Sir, I want to challenge the Assistant Minister today to substantiate where I received the money, who I sent to solicit for the money and when it was. We cannot allow these big multinational companies not to pay billions of shillings due to the KRA when Kenyans pay taxes. We cannot allow such companies to use an Assistant Minister like this one here and his brother, the Prime Minister, to take money and refuse to say so before Parliament.

On a point of order, Mr. Deputy Speaker, Sir. I think we owe this House some truth. This Question was listed on the Order Paper just before we went on recess. The hon. Member did not appear in this House to ask the Question. Immediately the Question was passed, the hon. Member walked in. At that time, he had agreed with the company that he was going to be given money.

Order! Order! Hon. Mbadi, the rules of the House are very clear. You cannot impute improper motive on a fellow Member of Parliament without a

Mr. Deputy Speaker, Sir, I withdraw to the extent that it is imputing improper motive, but it is a fact that hon. Kiema did not prosecute the Question the last time it was listed on the Order Paper. Therefore, blaming Parliament for the delay in having the Question answered yet the Question was listed on the Order Paper is wrong. It can be confirmed from the HANSARD. He was not here to prosecute it. He came in after the Question had been passed. Why did he not come to prosecute it then? I withdraw if there was any improper motive that I imputed in the person of the hon. Member.

On a point of order, Mr. Deputy Speaker, Sir.

Order! Order, hon. K. Kiema! The Chair will not allow the House to degenerate into something that is not in line with the dignity of the House. However passionate you are about something, be it the conduct of a Member of Parliament or the conduct of the Government, there are manners and procedures in which to prosecute such matters.

Hon. Assistant Minister, to the extent that you have imputed improper motive on the person of hon. Kiema, could you withdraw?

Could he substantiate?

Order! Order, hon. Members! Substantiation or not, we are not living in a jungle law. We have the Standing Orders. You must read your own Standing Orders and understand its provisions. It says categorically that you cannot impute improper motive on a fellow Member of Parliament with a substantive Motion. Any Member of Parliament here who very firmly believes that another Member of Parliament is acting in an undignified manner, both inside and outside the House, is at liberty to bring a Motion to discuss the person of that Member of Parliament. Before you do so, you cannot impute improper motive in the person of that hon. Member. Could you withdraw your remarks, Assistant Minister?

On a point of order, Mr. Deputy Speaker, Sir. I just want to understand your ruling, because you have said that we cannot impute improper motive in the person of another hon. Member, which is correct. Is discussing a matter or stating a fact, like hon. Kiema tabled some letters here and some newspaper cuttings imputing improper motive? Could we then say that hon. Kiema was imputing improper motive on the person he was alleging wrote those letters? Really, if you suggest that a fact took place and you cannot substantiate it, you are, of course, challenged to substantiate it. Hon. Oburu has said that he can do so by Tuesday.

Hon. Minister, indeed, you can prosecute the Office of the Prime Minister, but you cannot prosecute the person of the Prime Minister. You cannot say that the Hon. Prime Minister did this and that, but you can prosecute to the extent that the matter touches on his Office, and not the individual, without a substantive Motion. So, to that extent, if you, indeed, did that, hon---

Mr. Deputy Speaker, Sir, I did not do so.

Fair enough! I am going to refer to the HANSARD to verify if, indeed, you did not do so. Could you withdraw the remarks, if you did it?

Mr. Deputy Speaker, Sir, to hold the dignity of this House, if I mentioned the person of the Prime Minister, I withdraw and apologise.

Fair enough! Now proceed and prosecute the Question. There is a Question before the House.

Proceed, Assistant Minister!

Order! Order! Hon. Members, in line with our own Standing Orders, newspaper cuttings can never be used as evidence on the Floor of the House. So, this newspaper cutting in itself is inadmissible in line with our own rules.

On a point of order, Mr. Deputy Speaker, Sir. I pleaded with you to call for substantiation to rescue the dignity of the House. If you find that is not in order, the Assistant Minister having twice affirmatively said money exchanged hands and we, as Members, having participated in the Question on the basis of good faith, would it be in order for you to refer this matter to the Powers and Privileges Committee? These allegations are before the entire nation and we really must rescue ourselves as a House. How shall we be proceeding on Questions if we are to fear participating because there are allegations of money changing hands? I plead with you, Mr. Deputy Speaker, Sir, to kindly attend to the matter.

Order! Hon. Members, indeed, following the serious accusations and counter-accusations which have transpired on the Floor of the House today, the Chair directs the Powers and Privileges Committee to investigate this matter and report to the House with speed. The Chair is inclined to believe that two weeks is actually the absolute outer limit. If it can be produced even in a week’s time, the Chair would be very glad to deal with this matter and dispose it of because the dignity and the integrity of Members of this House and the House at large is at stake. In the meantime, this Question will be deferred. I defer it for two weeks and assume the Committee would have finished its job by then.

On a point of order, Mr. Deputy Speaker, Sir. I first want to thank the Chair very much because the whole House cannot certainly be held hostage. The dignity of parliamentarians and myself is at stake. As that goes on, I would also like the House to get to the bottom of the issue of Mastermind Tobacco and the letter; how the Question was brought to this House, how it was delayed and how it has gotten to this Floor.

The Question has not been dropped nor has it been disposed of. The Question is deferred and will appear on the Order Paper exactly two week from today.

Let us move on to the next Question.

Mr. Deputy Speaker, Sir, I beg to ask the Minister of State for Provincial Administration and Internal Security the following Question by Private Notice. (a) Is the Minister aware that cattle rustling is rampant in the area bordering Muhoroni, Aldai and Kisumu Town East constituencies? (b) Is the Minister aware that six heads of cattle were stolen from the home of the late Mr. Matengo Ongondo on the night of 27th February, 2012? (c) Could the Minister consider installing an Anti-Stock Theft Unit in Kisumu Town East?

Mr. Deputy Speaker, Sir, I beg to reply. (a)I am not aware that cattle rustling is rampant in the area bordering Muhoroni, Aldai and Kisumu Town East Constituencies. However, I am aware of only eight cases of stock theft recorded at Miwani Police Station in the last three years. Out of the eight cases, two of them were prosecuted but withdrawn under Section 204 of the Criminal Procedure Code by the complainants. Four others are pending before court while the other two are still under investigation. (b) I am not aware that six heads of cattle belonging to Mr. Matengo Ongondo (deceased) were stolen from his home. Records held by the police in the area do not reflect such a report as at 27th February, 2012 or thereabouts. (c) Owing to the low level of stock theft trend in the area, the Ministry does not intend to establish an Anti-Stock Theft Unit in Kisumu Town East Constituency. The few cases reported in the area can be effectively dealt with by the local police and the Administration Police. Establishing such a unit in the area will not be desirable at this particular time.

On a point of order, Mr. Deputy Speaker, Sir. I was listening very carefully to the answer by the hon. Assistant Minister. He started by saying that he is not aware of incidents of cattle rustling, but he has mentioned eight incidents of cattle theft. When does stock theft become cattle rustling? Is he in order to say that?

Mr. Deputy Speaker, Sir, I did mention that I am not aware of the rampant cases of cattle rustling. I want my colleague, Mr. Olago, to understand these things because it looks like he is not reading from the same script and yet he is a lawyer by profession. Hon. Olago, I am saying that I am not aware of rampant cases of stock theft but I am aware of isolated cases. I have also said that I am aware of eight cases, but I am not aware of the rampant cases.

Mr. Deputy Speaker, Sir, I have asked on various occasions Questions in this House about cattle rustling. The Assistant Minister has treated this issue with contempt and ridiculed our attempts. At one time, he even said there was fish rustling and not cattle rustling in Kisumu Town East Constituency. I have expressed to the Assistant Minister that Kisumu Town East is a rural constituency.

Mr. Deputy Speaker, Sir, hon. Members are consulting in loud tones.

Order, hon. Members! Can you consult in low tones? Proceed, Mr. Shakeel!

Thank you, Mr. Deputy Speaker, Sir. Kisumu Town East is not a town constituency. The name is a misnomer. In fact, we border Muhoroni and Aldai. The recent problems that occurred when the Minister sent police officers and went there personally to Muhoroni and Aldai are the same problems that we are experiencing in Kisumu Town East Constituency. The Assistant Minister has taken this in total disregard and contempt and is handling this issue as if it is a joke. He says that he is aware of only eight cases. We have mentioned to them by name and we have found that that cattle was “rustled” from Kamorongo Village---

Can you ask your question? Do not give us statements.

Mr. Deputy Speaker, Sir, could the Assistant Minister visit my constituency and hear for himself before he makes claims that there is no cattle rustling? When can he come to my constituency?

Mr. Deputy Speaker, Sir, visiting a constituency is a different thing all together. If I am invited to visit the constituency, I will go. But I want to assure the hon. Member that, yes, indeed, we have been having petty theft cases of livestock here and there but that does not necessarily mean that I have to set up the Anti-Stock Theft Unit in that constituency because I need the RDU and the Anti-Stock Theft Unit where we have rampant theft of livestock. But in his case, if he invites hon. Ojode to visit his constituency to do surveillance, I will go.

Final question on the same, Mr. Shakeel.

Mr. Deputy Speaker, Sir, the Assistant Minister has said that he will come to survey. I want to ask the Assistant Minister today to openly apologise to the people of Kisumu Town East that he has ridiculed them and called us fish rustlers. Can he please apologise today so that when he visits Kisumu Town East Constituency he is welcomed by the people whose cattle has been “rustled”? Will he be able to apologise now please?

Mr. Deputy Speaker, Sir, I thought we were dealing with a matter where---

Order, Mr. Shakeel! You are out of order!

Completely!

We are dealing with a matter that is on the Order Paper.

Do not bring politics here!

We are dealing with a matter that concerns cattle rustling. The Assistant Minister has given you his undertaking after you invited him yourself. What are these other conditions you are setting here? Those conditions are not part of the business of the House today.

Order, hon. Members!

Hon. Members, Ordinary Question No.1004 by Mr. C. Kilonzo, Question No.1079 by Mr. Kabogo and Question No.1204 by Ms. Karua are all deferred to Tuesday next week.

Hon. Members, the Chair has a Communication to give. You will recall that on Tuesday, 17th April, 2012, when the Public Financial Management Bill, 2012, came up for Second Reading, Mr. Mbadi, rose on a point of order seeking the direction of the Chair as to whether the debate on the Public Financial Management Bill, 2012 was constitutional. In the debate that ensued, various arguments were advanced by the Deputy Leader of Government Business, Mr. Kimunya, the Minister for Finance, Mr. Githae, Mr. Ethuro and Mr. Ogindo. In a summary, the following issues were raised for determination by the Chair: (a) whether the Second Reading of the Public Financial Management Bill, 2012 was contrary to the Constitution and more specifically whether the debate on Clause 109 of the Public Financial Management Bill, 2012 relating to the establishment of county revenue funds for county governments was unconstitutional in so far as the timeline of 18 months specified in the Fifth Schedule to the Constitution for the enactment of legislation to implement Article 207 of the Constitution had lapsed, (b) whether the County Governments Bill, 2012 as passed by the National Assembly on 23rd February, 2012, contains provisions establishing the county revenue funds for county governments, and whether the passage of County Governments Bill, 2012 satisfied the requirement of the said Article 207 and the Fifth Schedule to the Constitution,

Thank you, Mr. Deputy Speaker, Sir. I rise to seek a Ministerial Statement from the Minister of State for Provincial Administration and Internal Security on the state of insecurity in the Turkana County---

Order, hon. Members! Order, hon. Ethuro! Wait until we get to the order.

Mr. Deputy Speaker, Sir, you can appreciate the anxiety. I rise to seek a Ministerial Statement from the Minister of State for Provincial Administration and Internal Security on the state of insecurity obtaining in the Turkana County. An incident took place at the border point of Lokiriama and Lorengiti where raiders from a neighbouring country attacked in the night of Thursday/Friday last week. Battles continued for the whole of Friday. Again, it is alleged that five people were killed and five sustained serious injuries and were rushed to the Lodwar District Hospital, a distance of over 100 kilometres.

In his Statement, I would like the Minister to provide the following information:- (i) Who are the attackers or the raiders, where were they coming from and how many were they? How many residents were killed, injured and displaced, how many livestock were taken away and/or recovered from the raiders how many security forces were killed or injured in the process? (ii) I would like him to explain the continued failure by the Government and the security forces comprising of the police, Administration Police (AP) and General Service Unit (GSU) to contain these raiders. (iii) I would like him to confirm whether the Chairman of the District Security Committee who is also supposed to be the District Commissioner and the Officer Commanding Police Division (OCPD) were at the time of the attack. What was the response in terms of efficiency and efficacy and why do they continue to leave away from the district headquarters in Lodwar, 50 kilometres away and even then, they are always away from the office? So, the Minister should confirm why the Government has failed to recruit the Kenya Police Reservists. The Government promised to recruit them last year to beef up security.

Mr. Deputy Speaker, related to that one, is also an attack that took place in Todonyang, where the AP’s RDU Camp was actually attacked and the officers of Government were killed and injured. I would like the Minister to respond along the same lines, in terms of the attackers, in terms of the casualties and in terms of why the Government has failed even to protect its own personnel, that are supposed to protect the residents. At that rate, could the Minister assure this country and, in particular, the residents of Turkana County that they are safe given that even a Government camp was attacked by people from outside the country?

Mr. Temporary Deputy Speaker, Sir, you remember that even the Prime Minister has visited Todanyang twice, and it is still vulnerable to those attacks. Thank you.

Mr. Assistant Minister, can you give an undertaking on the same? When will you have the Ministerial Statement available given the sensitivity of the matter?

Mr. Deputy Speaker, Sir, while I want to undertake to issue an elaborate Statement on Wednesday morning, given the very nature of the statement, I want to assure Kenyans that we are safe and we are in control. Listen to my Statement on Wednesday morning.

Fair enough, you have made your undertaking.

Hon. Ababu Namwamba! Just take exactly two minutes because by 3.30 p.m., we have to start another business.

Mr. Deputy Speaker, Sir, I just want to bring to the attention of the House that I had earlier on today given a notice for a Motion of Adjournment to discuss the matter of re-emergence of police brutality against innocent Kenyans and their leaders; incidents of political scenophidia or intolerance that have been witnessed in the recent past. But I have since noted the provisions of Standing Order No.156, which indicate that we cannot interrupt debate on the Supplementary Estimates and, therefore, I wish to request the Chair to guide myself and the House in terms of how we can proceed with this matter.

Mr. Deputy Speaker, Sir, this in light of the fact that, even as we talk today, incidents of police brutality are seen to be gaining momentum. We have been treated to horrifying scenes in the past. We watched in horror clips on national TV of a young Pokot man being brutalized by police officers.

Mr. Deputy Speaker, Sir, yesterday, we witnessed other worrying scenes of police dispersing innocent Kenyans in a manner that is certainly not consistent with the new Constitution. I do seek your guidance on exactly when this House could adjourn to give attention to this matter, which I believe is a grave matter of national importance. Thank you, Mr. Deputy Speaker, Sir.

Hon. Ababu Namwamba, the Chair is, indeed, aware of your concerns but on a Committee of Supply Day, we cannot interrupt the business of the House. In any case, it is supposed to be for three hours. We are right on time now. But clearly, the Chair will definitely do the needful for this matter to come up at the earliest opportunity.

Mr. Deputy Speaker, Sir, most obliged.

Next Order!

(Mr. Musyoka)

I second!

Order, hon. Members! Hon. Members, there is a Statement to be given by the Leader of Government Business, and I think this is the time for him to do so before we go to the next order.

I thank you, Mr. Speaker, Sir. I rise pursuant to the provisions of Standing Order No. 36 (4), this being a Thursday, when the Leader of Government Business makes a Statement with regard to the business for the following week.

Order, hon. Members! I have two communications to make before we go to the next order. Taking up from where the Leader of Government Business has left off, I wish to make the following communication with respect to the Address by His Excellency the President next Tuesday.

Pursuant to sections 3 and 7 of the Sixth Schedule to the Constitution as read with Standing Orders No.16 and 18, the President of the Republic of Kenya, who under the Constitution and the Law is, until the first elections held under the Constitution of Kenya, 2010, a Member of the National Assembly and may attend a sitting of this House and participate in its proceedings, either:-

(a) from the Chair of State; (see Standing Order No.16); or

(b) from the Front Bench; (see Standing Order No. 17); or

(c) from the Speaker’s Chair; (see Standing Order No. 18).

By a letter from the Office of the President dated 17th April, 2012, His Excellency the President has notified the Speaker of the National Assembly of his wish to attend and deliver a Presidential Statement to the House on Tuesday, 24th April, 2012 at 2.30 p.m. I wish to draw the attention of hon. Members to Standing Orders No.16 and 18, which will apply to the President’s attendance in the House on that day. Standing order 16 provides thus:-

“The President, while occupying the Chair of State-

(a) may on any day after disposal of all matters other than business and between or by way of interruption of any orders of the day (but not in relation to any order of the day), make a Presidential Statement, which shall be heard in silence and not followed by any comment or question;” Thereafter, paragraphs (2) and (3) of Standing Order No.18 provide as follows:-

Paragraph (2):-

“Whenever the President delivers a Speech or a Presidential Statement from the Speaker’s Chair, the Leader of Government Business shall lay the Speech or Presidential Statement on the Table of the House after such Speech or Statement is read.”

Paragraph (3):-

On a point of order, Mr. Speaker, Sir.

What is it, hon. Member for Gwassi? Go on as long as it is not revisiting matters on which I have given direction in this Communication.

On a point of order, Mr. Speaker, Sir. I totally agree with your ruling, but there is a part of your ruling on which I want to seek more clarification. You have pointed out that there is no direct connection between the Finance Bill and the Supplementary Budget. That is assuming that the Supplementary Budget is just realigning expenditure within the agreed total Budget allocation, or appropriation for that matter. But what of instances where the Executive is asking Parliament to give, through a

Indeed, hon. Member for Gwassi, you are entitled to that opinion. Mine was to give directions and I believe I have given them as best as I understand the law. Whatever challenges there will be we will meet them as we transact on the Finance Bill, and, subsequently, the Supplementary Appropriations Bill. All these are matters of law and we will all input into them.

Order, hon. Members! I do not wish to have this matter protracted beyond where it has reached; I want to take the next Order.

On a point of order, Mr. Speaker, Sir.

Order, hon. Member for Gwassi! I will take the next Order.

On a point of order, Mr. Speaker, Sir.

Order, hon. Member for Gwassi! Let us conduct this business in a manner that is expeditious.

Hon. Members, you will note that the next Order, Order No.9 is supposed to last a minimum of three hours. So, we should have started at 3.30 p.m. but we are now at 4.00 p.m. So, we will continue with this Order depending on the level of interest up to 7.00 p.m.

On a point of order, Mr. Speaker, Sir. I have no intention of disrupting debate on Order No.9; I also want to appreciate your ruling. There is something of logic and procedure that we have raised before. I do not wish to direct the operations of the House Business Committee; but when you look at the sequencing of Order No.9 and Order No.10, it is only logical that Order No.10 comes before Order No.9. The simple logic is that once there is a Budget it is better to have authority to raise money before you get authority to spend. That is what Order No.9 is seeking. So, I would want to invite your direction at some point at your convenience that as a matter of practice we change the way these issues are normally ordered in this House, so that the Finance Bill comes ahead of the Appropriations Bill.

Very well, hon. Member for Rangwe, I have heard you but maybe I want to hear the Minister even as I will address myself to the practice that we ought to embrace. Before I hear the Minister, I see the hon. Member for Kisumu Town East is so anxious on this matter; so, we will hear him.

Thank you, Mr. Speaker, Sir. Likewise, I do not wish to challenge your ruling, but I would like to point out that further to what my brother, Mr. Ogindo has

Mr. Speaker, Sir, on the same vein, I would like you to give your direction on a matter. If you look at the way this Motion is framed, you will see that it talks about a sum not exceeding--- and all that being granted from the Consolidated Fund. My reading of this is that the Minister is asking this House to appropriate funds through the Supplementary Appropriation Bill. If you look at the Constitution, and I want to particularly go to Article 223(4), you will find that it says:- “(4) When the National Assembly has approved spending under clause (2), an appropriation Bill shall be introduced for the appropriation of the money spent.” So, this envisages that Parliament must, first of all, approve spending before we appropriate the funds. We cannot, as a House, attempt to appropriate funds before the spending is approved by the House. So, the Minister is jumping the gun. He should have given us the Supplementary Estimates and then bring the Appropriations Bill to this House. So, I would ask the Chair’s ruling as to whether this Motion is constitutional in the first place.

Mr. Speaker, Sir, I am aware that hon. Mbadi is asking you to repeat what you have just said in your ruling and what has been said here before. Perhaps, taking into account that he is a first time Member in this House, there is a procedure that is usually used in terms of the Motions and the passage of a Supplementary Bill. It starts with a Motion and when the Motion is passed, the Minister then brings the Supplementary Appropriations Bill which is then passed by the House. That starts with a Motion and that Motion is what is before this House. When this one is passed, the details are then brought in the Supplementary Appropriations Bill. So, it does not go in the reverse. I just want to guide my colleague. Let him be patient and he will learn these procedures as he goes on. There are still a couple of months and, perhaps he will catch up with the rest of us.

On a point of order, Mr. Speaker, Sir.

Order! Hon. Mbadi, I have heard you. I heard you loudly and your reference to constitutional provisions. I respect your arguments on the Constitution but please, have the patience to hear others in the House. It is unhealthy to allow an altercation between the Member for Gwassi and the rest of the Front Bench. We have heard you, I respect what you have said and I will respond to it even as I give directions.

On a point of order, Mr. Speaker, Sir.

Order, the Member for Gwassi! Let us hear the Minister.

Thank you, Mr. Speaker, Sir. You have already ruled that there is really no connection between the Supplementary Budget and the Finance Bill. You have also ruled that the Supplementary Budget is based on the Appropriations Act which has already been passed by this House. Therefore, just to reiterate what Mr. Amos Kimunya has said, after we have passed the Supplementary Budget, we will bring the Supplementary Appropriations Bill. That is the time you will be able to see whether we are in breach of the Constitution or not. In my view, we need to proceed.

On a point of order, Mr. Speaker, Sir. I wish to be heard and for the Minister to understand what I actually said. I am not saying that they have brought the Appropriations Bill. What they have done is seeking the authority of Parliament to grant money from the Consolidated Fund. If you look at the Constitution, and I want to remind the Minister that this Constitution is new--- It was not there in the last Parliament. So, a new Member of Parliament and an old Member of Parliament, we are the same. I would urge for some respect from hon. Amos Kimunya who is my professional colleague but remind him that he left class long before I went to class to do accounting.

Order, Member for Gwassi! Can you address yourself to the core business?

Thank you, Mr. Speaker, Sir. I am just challenging that the wording of this Motion is trying to ask this House to grant the Executive powers to go to the Consolidated Fund and withdraw money, something you cannot do. If the motive of the Executive was to ask Parliament to approve the Supplementary Budget, then it should have been done differently. If this is the way it was being done before--- The way the Constitution is worded today is contrary to what he is telling us to do because he is asking us to give him authority to go and withdraw money from the Consolidated Fund. Even if he does not bring the Appropriations Bill, he will have the authority to do it. This Constitution is saying that he is not supposed to do that. That is what I am saying. I am not asking for traditions. If traditions are repugnant, we should replace them.

Order, Member for Gwassi! Be modest even as you make your submissions.

Mr. Speaker, Sir, it is, indeed, true that there is a relationship between the Supplementary Budget and the Finance Bill. This is not a direct relationship. In other words, the Budget is not only financed by revenue from taxation, the Government has various ways of raising money to finance the Budget. Taxation is only one of them and borrowings, external and local is the other while grants is another way. Therefore, I do not see why, necessarily, the Finance Bill must be debated before this Motion on the Supplementary Budget because it is not necessarily tied to the Finance Bill measures that are contained in the Finance Bill. Therefore, the Supplementary Budget Motion can continue and the Finance Bill can follow. I do not think we lose anything and

Order, hon. Members! Indeed, I have listened and reflected as carefully as I possibly could this time to the issues raised by the hon. Member for Ragwe and supplemented by the Member for Kisumu Town East. We have also heard the Member for Nambale and the Minister for Finance and his colleague in the Ministry of Transport. Hon. Members, I find that the arguments, particularly, those presented by the Member for Nambale absolutely convincing and are in tandem with the ruling which I delivered earlier on. But, hon. Members, because I must respect the submissions made by other Members, I just want to reiterate the findings and the directions which I gave in my ruling earlier on today and to further say this: That, before we get to the Supplementary Appropriations Bill, I will give further direction which will then solidify the ground with regard to the practice that we ought to embrace hereafter. But, at the moment, I am persuaded that there is no harm which will be done if we do the Supplementary Estimates Motion first on Order No.9 and then the Motion on Order No.10. As I see it, it does not affect the authority of the House one way or the other. The “authority of the House,” mark those words. I think we can transact business in that manner. Significantly, I do not see any inconvenience given that those two Orders are being transacted in the same sitting. I am most obligated. Thank you. Proceed, Mr. Minister!

Mr. Speaker, Sir, I beg to move the following Motion:- (i) THAT, a sum not exceeding Kshs32,229,309,230 be granted from the Consolidated Fund to meet expenditure during the year ending 30th June, 2012, in respect of Supplementary Estimates of 2011/12 Financial Year (Recurrent) having regard to the proposed reduction of Kshs10,477,941,240 therein appearing. (ii) THAT, a sum not exceeding Kshs7,841,257,830 be granted from the Consolidated Fund to meet expenditure during the year ending 30th June, 2012, in respect of Supplementary Estimates of 2011/12 Financial Year (Development) having regard to the proposed reduction of Kshs25,091,468,240 therein appearing.

Mr. Speaker, Sir, when I presented the Budget for the year 2012, it assumed a strong economic growth and stable micro-economic environment. Our financial

Mr. Speaker, Sir, I rise to second the Motion, which will unlock the door for us to receive and debate the Supplementary Appropriations Bill, which will lead to the ratification of the realignment of expenditure in line with the current realities.

Mr. Speaker, Sir, this is a very straightforward matter. When the Government came to this House and asked for authority to spend monies within specific budget lines and received that authority from the House, some issues shifted. Some expenditure could not be committed because of projects not beginning. Other projects became more expensive. New realities came into being. An example is our military intervention in Somalia, which has helped to stabilize maritime operations within the region and bring down the cost of doing business for everyone.

There are, indeed, other issues that the Minister for Finance has enumerated, including the adjustment of salaries and other benefits that have come into being between the last approval and now. It, therefore, becomes necessary for this House to give that extra authority for the realignment of the monies within the bigger envelope that was done.

Mr. Speaker, Sir, I just want to highlight the fact that even as we go for extra monies in some of the accounts, it is not just a matter of asking for more. There have been major sacrifices in some of the Ministries with people saying, yes, we are cutting down our expenditure on foreign travel, furniture and other expenditures to give room for what is now viewed as key expenditure constraints. Specifically, I want to highlight the issue that is very current, of the acquisition of extra shares in Kenya Airways. As part of its fundraising strategy, the Kenya Airways has

Hon. Members, the Member for Nambale happens to be a bit closely involved with me in parliamentary business that we are pursuing together. So, he engaged me and I did not follow what was happening.

Thank you, Mr. Speaker, Sir, for giving me this chance to make my comments on the Supplementary Estimates this afternoon. From the outset I would like to state that, as Members of Parliament with the mandate of ensuring that the Executive is kept on its toes in so far as disbursement, appropriations and allocations of public resources are concerned, I wish to note that we do not make our comments and counter arguments only because we have to make those comments but we do so because we have a duty to Kenyans. I believe when that duty is expedited even the Executive, which for the time being also represents constituencies is assisted. Mr. Speaker, Sir, it is now without doubt that the economy of this country has not grown to the level that it was anticipated when the last financial year’s Budget was tabled. This indicates that in spite of numerous warnings by this House through the Budget Committee of the level of growth of the economy, the Government still continues to over-estimate the growth which results in an ambitious and, therefore, unfounded basis for budgeting of this economy. Time and again this House has expressed concern that these over ambitious forecasts for economic growth translate to missed revenue targets which are now clearly manifest and consequently gives a Budget that is not fully financed. This means that we, as a country, have constantly have had to reorganize our finances and re-prioritize expenditures all because undue short-sighted measures and decisions have been made on the part of the other arm of the Government. It is important to note that the constant shifting of the Budget items, as is now apparent in the supplementary budget, provides opportunities for lethargy and abuse of the Budget as well as resulting in donor fatigue due to shifting of priorities. This makes policies and targets unpredictable as well as undermining the confidence of investors, both local and external. Mr. Speaker, Sir, in the current financial Supplementary Estimates, if you cast your eyes on the measures that we had spelled regarding adherence to austerity measures, you will note that a few Ministries have adhered to what Parliament expressed. Directives were given regarding the curtailing of allocations to non-priority items such as communication, domestic and foreign travel, printing, hospitality, office and general supplies, furniture as well as purchase of vehicles. There are instances where spending agencies are still seeking additional funding for these items, and this is a year when we need to curtail our spending especially in areas which are exerting pressure on the economy leading to unnecessary inflationary pressure. Mr. Speaker, Sir, there have also been major important allocations proposed in the supplementary budget hereby presented including Kshs6.1 billion to cater for the teachers’ salaries and allowances, Kshs1.9 billion for the purchase of fertilizer as well as Kshs1.723 billion for purchase of fertilizer subsidy. It is, however, of concern that these supplementary budget proposals significantly reduce expenditure on voter education, irrigation, provision of water as well as livestock development. This is like robbing Peter to pay Paul, and we have often pointed out that this ought to stop. Hon. Members may recall that we collectively last year fought a good fight together during the review of the 2011 Budget Policy Statement through the allocations that the Committee of Supply made to Livestock Development. Let me inform the House

Mr. Speaker, Sir, I rise in support of the Motion but with some reservations. I have seen an allocation of over Kshs1 billion to the Lamu Port project. One will be forgiven for getting suspicious of mega projects that seem to come always during the elections year.

Although they are necessary, governance in the implementation of such projects is suspect. We do not know for whose good it is being hurried up, and whether the Government is hiring experts who are saying that it may be better for it to be inland rather than on the coastline, with the knowledge that the coastline rises by a certain number of centimeters or meters every year. This is an area of concern, especially when we are short of money; I do not know whether this is the priority area.

I support the increase to the health sector in order to meet the salaries and remuneration of nurses and other medical personnel. I think this is an area that we need to check. They may even deserve more than allocated in the sense of also providing the necessary facilities for them to carry out their duties.

Once again, I am in support of the allocation to our security forces who are out there in Somalia, but then I am reminded that recently our forces became part of the African Union Mission in Somalia (AMISOM). I know that the international partners are contributing to this. Are there possibilities that this Kshs12 billion is going to be reimbursed? If it will be reimbursed, we need to see it flowing to other much needed areas, otherwise at least, personally I am satisfied with the work that our defence forces have carried out. One wishes that the police force would get equally serious and handle internal security in the same manner.

Thank you, Mr. Temporary Deputy Speaker, Sir, for the opportunity to contribute on this very important Motion. Let me start by thanking the Minister for reassuring the country that the CDF funds will not be withdrawn. These funds have already transformed the lives of Kenyans and we as Members of Parliament have started viable and critical projects in our constituencies. We have started primary and secondary schools, water projects and health centres. Some of these projects are not

On a point of order, Mr. Temporary Deputy Speaker, Sir. Some very important points are being made by hon. Njuguna and some Ministers are engaging the Minister for Finance, who is not listening at all to what is being said.

Order, Mungatana!

No, Mr. Temporary Deputy Speaker, Sir. The time that is being utilized by the Member should be utilized properly.

Hon. Mungatana, the Minister is listening and he is also consulting other colleagues.

On a point of order, Mr. Temporary Deputy Speaker, Sir. It is wrong for my learned friend to create that impression. If you look at the paper he is carrying, the Minister’s notes are more current on what hon. Njuguna was saying. We can lay what he has on the Table and what the Minister has on the Table and you can see that all the points which hon. Njuguna has raised, he has noted them down. I can tell you that. I am an hon. Member and you should trust what I am telling you.

Very well! Indeed, the Chair has already ruled that the Minister is listening and consulting. Hon. Njuguna, you can now proceed!

Mr. Temporary Deputy Speaker, Sir, I was on the point of fertilizer. This is the planting season and the same fertilizer that is supposed to be released to the market at Kshs2,300 is selling at Kshs3,500. The poor Kenyan farmer cannot afford to buy this fertilizer. Therefore, the farming community will continue to be

Thank you, Mr. Temporary Deputy Speaker, Sir, for giving me this opportunity to also make a small contribution to this debate on the Supplementary Estimates.

Mr. Temporary Deputy Speaker, Sir, at the outset, I want to state that we are not happy with the way the Government has handled itself, as far as the preparation of these Estimates are concerned. What we say now - I hope the next Members of Parliament who shall be here will really put the Cabinet Secretary, President and his budget officers on the spot. That is because we expect them to follow the law and the spirit of the law, which is that we, as Parliament, really control the purse strings of this country and not the other way round.

Mr. Temporary Deputy Speaker, Sir, first of all, we passed a Budget here. That Budget was based on the Budget Policy Statement that was agreed between Parliament and the Minister. When the Budget came, we expected that, that Budget would be followed. We were not wasting time. We were not engaged in discussions in the market. That Budget was meant to be followed.

Mr. Temporary Deputy Speaker, Sir, I want to remind the House and the Minister - who was then not the Minister - that before the Budget was put before this House, the departments of Government made proposals and this House, through its departmental Committees, sat down, looked at those proposals and agreed. That is how we ended up with a Budget. So, when you have a Supplementary Estimate that takes more than 100

Proceed!

At some point, they bring the same Supplementary Estimates which actually changes the Budget by more than 100 per cent in a certain department.

Mr. Temporary Deputy Speaker, Sir, the accepted international best practice is that, if there are any changes at all within the Supplementary Estimates, it should not go beyond 10 per cent. By and large the Minister, in some of those departments, there was an attempt at adherence of that policy. Questions then have to be raised and the Minister has to explain what is happening.

Mr. Temporary Deputy Speaker, Sir, for example, if you look at the Development estimates that have been presented, you would find that the Ministry of Lands under Development Vote No.36 has had a percentage increment of 225.76 per cent up from the Budget that was presented before this House. That is making a joke of the process of budget making. Vote D23, the Cabinet Office has had an increment of equivalent of Kshs125 million, which is 67.57 per cent. Again, this is an office that brought its budget. We debated those things. We looked at them. How can it be that a few months down the road, the Cabinet Office has an increment of 67 per cent in the budget? How does the Minister explain that? What is the emergency? What is it that has happened in the Cabinet Office to require such a large increment; almost 70 per cent?

Mr. Temporary Deputy Speaker, Sir, then you have other important bodies such as the Kenya Anti-Corruption Commission. If you look at the Development Vote No.34, KACC has had a reduction of a total of 94 per cent, which translates to a Kshs188 million cut away from this year’s Budget. This is the same Government that talks about zero tolerance to corruption, talks about fighting corruption tooth and nail and then, in Budget, they cut 94 per cent of the funds that are supposed to go towards implementing the programmes.

Mr. Temporary Deputy Speaker, Sir, I am focusing on the Development vote. It is not fair for a Ministry such as the Ministry of Fisheries Development, which to a large extent affects two regions, the region in the Coast and the region in the Lake area, to lose a total of 26.28 per cent in its budgetary allocation.

Mr. Temporary Deputy Speaker, Sir, the point I am trying to make to the Minister is very simple; we must have fiscal discipline. You cannot bring a Budget a few months ago and three months down the road, you are asking for this ridiculous increment to the Ministry of Lands of 225.76 per cent in the Development Vote.

Mr. Temporary Deputy Speaker, Sir, this country needs to be taken more seriously in as far as planning of its finances is concerned. Proper explanations need to be given for us to accept to move in the manner in which the Minister proposes we do. We expect proper planning. If a Ministry can come and tell us something and then, a few

Mr. Temporary Deputy Speaker, Sir, I also rise in support of this Motion. Mr. Temporary Deputy Speaker, Sir, we know the challenges that the economy has faced in the last nine months, including the issue of drought mitigation. Although I am supporting this Motion, I would also like the Minister to note that when he talked about the issue of drought mitigation, we are not hearing it for the first time. For the last so many years, even when I was in school, there were still those issues of drought mitigation. Is the Government not in a position to come up with proper measures on how to reduce issues of drought, so that, year in, year out, we do not have figures in the Supplementary Budget to finance those efforts? So, it is an issue of planning for the country. Somebody somewhere in the planning area is failing. Also, the provisions of the Budget process should include issues of drought mitigation and even other issues of risk reduction management. Mr. Temporary Deputy Speaker, Sir, when the Minister was moving the Motion, he said that part of this Budget is a result of the financing of the external loans that became too expensive because of the weakening of the shilling. The weakening of the shilling was also one of the issues that were not properly arrested by the Government. So, it shows that although the Supplementary Budget is here, there were also actions by the Government that actually did not take place at the right time and, hence, now the unnecessary expenditure that we are incurring. Mr. Temporary Deputy Speaker, Sir, I also know, from the Supplementary Budget moved by the Minister, that the Ministry of Water and Irrigation is not being funded. If we are to have a healthy nation, water is very important, indeed. Where I come from, for example, our biggest problem is water. When we see that, that Ministry is not being funded, then something somewhere is really not right. Mr. Temporary Deputy Speaker, Sir, I note from the Supplementary Budget that the figure of Kshs40 billion as a per cent of the trillion Budget, is actually reasonable.

Bw. Naibu Spika wa Muda, naomba nitoe mchango wangu kulingana na makadirio ya ziada ambayo yamewasilishwa na Waziri wa Fedha. Bw. Naibu Spika wa Muda, nikiunga mkono Hoja hii, namuomba Waziri wa Fedha kusikiliza ushauri wetu kwa makini. Hii ni kwa sababu ana masikio lakini hataki kusikiliza ushauri wetu. Shida yao kubwa ni kuwa hawazingatii ushauri wowote. Tafadhali Bw. Waziri, fungua masikio yako leo. Bw. Naibu Spika wa Muda, Kamati ya Bunge ambayo inahusika na makadirio ilimshauri Waziri na kumuelekeza vile ambavyo ilionelea makadirio hayo ya fedha

Mr. Temporary Deputy Speaker, Sir, first of all I want to remind this House that we are not under any obligation at all to approve and pass this Supplementary

On a point of order, Mr. Temporary Deputy Speaker, Sir. Is Mr. Mbadi in order to mislead this House that the amount of money that has been allocated to defence forces is being paid elsewhere, yet we have not yet received a single cent from Amison or the United Nations. They are saying that it is going to take at least six months. In the meantime we have to shoulder the burden.

I think he has just confirmed my fears that this money will be paid after all. So, why are we giving you the money? Why do you not wait and pay them from the amount that will be given? This will be a double allocation. This Kshs12.5 billion will not be given to our forces. You are just misusing the names of these poor Kenyans for nothing. They are fighting out there in the cold and they are suffering. I am sure if you bring them back here, many of them will be crying that they never even got a coin yet the management of Kenya Defence Forces will be increasing their wealth. They are laughing here in Nairobi. They are never in the field but we are appropriating more funds to make them fat

Mr. Temporary Deputy Speaker, Sir, is the hon. Member in order to impute improper motive on Members of this House and those who are outside and cannot defend themselves, that they will be making billions of money out of the allocation that is being made?

Mr. Deputy Speaker, Sir, I think the Minister has not read the Standing Orders properly. He should have asked whom I am imputing improper motive against, because I cannot impute improper motive on a ghost.

Hon. Mbadi, stick to your contribution and not the sideshows such as some millionaires will be created after the budget is passed and issues like those. Just stick to your contribution.

Mr. Speaker, Sir, exactly. How do you expect me to sit in this House and approve a Supplementary Budget that is taking away money from the Ministry of Fisheries Development and yet I represent fishermen? That is impossible. I have to oppose this Motion and say that we are creating billionaires out of this expenditure. If we were not creating billionaires---

On a point of order, Mr. Temporary Deputy Speaker, Sir. I just want to enquire from my good neighbour why he is so worried about creating many billionaires. That is what we want to target in Vision 2030. We want very many billionaires including him. Why is he so shy?

Mr. Temporary Deputy Speaker, Sir, I would not like to be a billionaire but I would like to be relatively comfortable. Probably, I would not like to be a billionaire. However, if we create them through proper channels, that is fine. However, I am afraid that we do not want to create billionaires through corruption. I want to conclude.

On a point of order, Mr. Temporary Deputy Speaker, Sir.

I really want hon. Mbadi to conclude.

Maybe he has a burning point of order, Mr. Temporary Deputy Speaker, Sir.

Proceed, Mr. Mbadi!

Mr. Temporary Deputy Speaker, Sir, I would like to finish my contribution. The other final reason why I am opposed to this Motion is; how can the Government come and ask us for more money and yet this country does not even know how much we collect in terms of revenue? I have brought a statement to this House. I have also requested for a statement from the Minister. This statement was supposed to be delivered last Tuesday but, I was requested to give him more time. Up to today, it has not been given. Do you know and does this House know that we were misled into approving Budget Estimates of 2009/2010? We were misled by over Kshs489 billion in the actual revenue for 2007/2008. This House was given figures which were not correct and have since been contested by the Controller and Auditor-General. The then Controller and Auditor-General has, clearly, stated that of all the 14 revenue accounts of Government, he could only certify two and those were very small ones. With regard to the rest, he does not know whether the amount collected is the same one which was banked in the Exchequer Account and the same one that was reported.

Mr. Temporary Deputy Speaker, Sir, all the queries which were raised by Controller and Auditor-General for 2007/2008 - that is what he has asked for - and 2008/2009 were raised before the Public Accounts Committee of this Parliament. Our officers explained this in detail. The Reports of the Public Accounts Committee were tabled in this House, they were debated and passed and the Ministries have been asked to implement them and a memorandum showing the process of implementing the recommendations of Parliament on every issue has been given and tabled also in this Parliament. So, I do not know what the hon. Member is talking about. Everything has been tabled in this Parliament, discussed, reconciled, recommendations made and appropriate actions taken.

Mr. Temporary Deputy Speaker, Sir---

Hon. Mbadi, hear me out. Which specific reports are you referring to?

Mr. Temporary Deputy Speaker, Sir, it is the hon. Minister who is misleading this House. The Speaker has already ruled that the Minister must bring that

On a point of order, Mr. Temporary Deputy Speaker, Sir. The hon. Member who is my friend has just made a very serious statement that money was stolen. We are in a country with law and order. What this House cannot be silent about is when we are told that public funds were stolen for purposes of an election. Unless the Member can substantiate it and say that tomorrow he will report the culprits to the police, then he should withdraw that statement.

Mr. Temporary Deputy Speaker, Sir, I cannot withdraw that because it is obvious that the Government has been unable to present my statement. I have already asked why the revenue cannot be explained. If the Kenya Revenue Authority (KRA) says that they have collected this, the Exchequer Account where the money is supposed to be banked is reading a different figure and the Controller, Auditor-General told Parliament that he does not know how much is being collected in this country, this Government cannot explain that and there are differences, that is theft.

On a point of order, Mr. Temporary Deputy Speaker, Sir. I think the matter must be cleared. The hon. Member is saying that the Controller and Auditor- General said that the money cannot be explained. That does not amount to stealing. He has used the word “stealing” which is clearly illegal and a crime in this country.

Mr. Temporary Deputy Speaker, Sir, Eng. Maina should concentrate on engineering. When an auditor expresses an opinion, he cannot say that it is stolen. He tells you that he cannot express an opinion. That means it is theft. I wish the hon. Member can come to me for advice.

Hon. Mbadi, let me get one more point of order from hon. Shebesh and then you will proceed and make your conclusion.

Thank you, Mr. Temporary Deputy Speaker, Sir. I really want to take what hon. Mbadi is saying seriously and beg my colleague, the MP for Mathira, soon to be a Governor or Senator, to allow the Government that is being paid money to respond to what hon. Mbadi is asking. They are seated here. Could they respond? Do not work for them because they do not work for the people of Mathira but they work for Kenyans.

On a point of order, Mr. Temporary Deputy Speaker, Sir. But I work for Kenyans.

Order Eng. Maina! You are out of order. Yes, hon. Mbadi!

Mr. Temporary Deputy Speaker, Sir, I can even indicate where money has been stolen because I have the figures, the data and information.

I think it is important that this country takes these matters very seriously. If you take, for example, the issue of income taxes on profits and capital gains, you will see that there is a difference of Kshs11 billion. The Auditor-General is saying that we have told him that we have collected this money but he has not found it in the bank. He is telling Parliament, please, ask the Executive to explain. Parliament is sitting here and when I bring a statement for the Government to respond, nobody takes it seriously. If you have the answers, why can you not give them to me?

Mr. Temporary Deputy Speaker, Sir, all those issues were discrepancies which were in the form of audit queries which are normal. These audit queries are answered in the Reports which were tabled in Parliament on revenues and expenditures. All those issues were explained and hon. Mbadi had ample opportunity to discuss them and bring them out. The reason why he wants them again tabled while he was here is because he is using the Mars Report which was a production of the queries by the Controller and Auditor-General. Those were just queries. How can we be dealing with queries in Parliament? We should deal with actual answers because discrepancies arise as a result of time differences when revenue is collected.

Mr. Temporary Deputy Speaker, Sir, the hon. Minister should bring the statement. The hon. Minister should confirm this.

Hon. Mbadi, is that report from the Committee or it is just a collection of views from the Committee? Is that a report that has already been presented in this House?

Mr. Tempraory Deputy Speaker, Sir, I am not bringing any report. I am telling you to go to the Report of the Controller and Auditor-General. It is very clear. It tells you this--- And, please, Mr. Temporary Deputy Speaker, Sir, I would want this House to listen to me. What the Controller and Auditor-Auditor General is saying with regard to those taxes on Income Tax on income, profits and capital gains--- I will give you one example. He says: The Kenya Revenue Authority (KRA) collected Kshs166 billion. That is in the records of Kenya Revenue Authority. He says: “When I go to the Exchequer account, I find Kshs172 billion. I have been given from the Ministry Kshs177 billion.” So, he is asking us: Where is the difference of this Kshs11 billion? That is not something that will force me to go to the books. You just add.

Alright. Hon. Mbadi, do you have anything else to add? You have the Floor. Order, hon. Minister!

Mr. Temporary Deputy Speaker, Sir, I am saying: Could this Minister bring the answer to my statement and I will engage him appropriately. I have gone through those accounts. If you look at what they are talking about - the Public Accounts Committee (PAC) Report - it is one small paragraph on revenue. They have only talked about expenditure. We are talking about the following financial year. The financial year in question is the time he is in. In fact, I was even wondering how PAC could do such a thing – just a small paragraph. So, how did you expect me to know? I had to go and look at the books themselves.

Hon. Mbadi, do you have anything else to contribute? Are you done? Very well. Of course, let us have Eng. Maina and then we will come to you, hon. Shakeel.

Thank you, Mr. Tempraory Deputy Speaker, Sir. I rise to support this Motion because as a House, I feel that the Motion in front of us is important. This House has to deal with the business that we were brought here to deal with.

Mr. Tempraory Deputy Speaker, Sir, having said that, I wish to say that when we are looking at the Budget and the planning in this country, we need to pay attention to what we want Kenya to be. I want to say that from the very beginning, there was a Sessional Paper which I think this Ministry and Government should acquaint itself with – that is Sessional Paper No.10 of 1965 which was authored by the late Tom Mboya and our present President. One of the issues in this country is that in the Budget, we should see more financing and spending on our agricultural sector. I want to say that Kenya is turning into an import country. In future, I would like the Budget to look at Kenya as an export oriented country. That has to start with simple things that Kenyans understand - like the growing of food crops. I think we spend colossal sums of money on that item and that should not be the case.

Mr. Tempraory Deputy Speaker, Sir, I support the allocation of money for the war that we are fighting in Somalia; the reason being that, as a country, we cannot continue living in fear. We need that money. If we have any question against this allocation, I would seek the House that we defer that, but allocate that money because we need it for our security.

Mr. Temporary Deputy Speaker, Sir, we have had strikes in this country. There is money that was voted for teachers and nurses. Teachers and nurses were asking for money. I think this country has gone into a spiral where we are starting to be chasing expenditure because we are unable to control the cost of living. We need to look at that, including banks. We have left our markets at will to people whose agenda is purely profiteering. I would wish the Government to look into this matter and ensure that the cost of living in this country is looked into. The way to do it, from my point of view, is to ensure that, one, Kenya is an export-oriented country. Two; ensure that we have put in place various mechanisms to control profiteering.

Mr. Tempraory Deputy Speaker, Sir, regarding the Constituencies Development Fund (CDF), I want to say that it will be sad if anybody would imagine that CDF should be removed from the respective Members of Parliament. CDF should remain! I want an undertaking from the Ministry that CDF should remain actually with Members of Parliament. CDF should not be left to the so-called Governors at ll. As of now, we do not know who are going to be Governors, but we know who Members of Parliament are. Therefore, I want to say that CDF has done a lot for this country and if there is an issue

I will have hon. Shakeel and then go to hon. Sambu.

Thank you, Mr. Temporary Deputy Speaker, Sir. I stand to oppose the Supplementary Estimates as they have been proposed.

Hon. Shakeel, continue, the hon. Members are listening.

On a point of order, Mr. Temporary Deputy Speaker, Sir.

Sophie, what is your point of order?

Mr. Temporary Deputy Speaker, Sir, did you hear the hon. Member refer to the “Luhya nation”? Is he in order to call people the “Luhya nation”? Could he clarify who the “Luhya nation” is?

Yes, hon. Shakeel!

Mr. Temporary Deputy Speaker, Sir, I did not intend any malice. We should be proud. If I have offended anybody by that, I withdraw.

Proceed.

Mr. Temporary Deputy Speaker, Sir, I will, however, still ask them to, kindly, consult in low tones.

Mr. Temporary Deputy Speaker, Sir, I was relating the issue of percentages to the provisions of Article 223(5), which is very clear that the amount appropriated cannot be exceeded by more than 10 per cent. Let me clarify to my colleagues that the 10 per cent is of the appropriated amount. Even hon. Kimunya will want to confirm that the appropriated amount is that amount appropriated to a Ministry.

The Supplementary Estimates are making a mockery of the budget process. A budget process is exactly what it says. You sit down and budget. I cannot see here anything that could be unforeseen that could not have been covered earlier. Mr. Temporary Deputy Speaker, Sir, Mr. Mbadi has talked to you about the Ministry of Education where the Budget Committee had already put aside some money and it was turned down. But now we are bringing it back. So, that was foreseen. There are also other issues that were foreseen like the Kenya Airways Rights issue. The issue of Budget and realignment must take place in the budgetary process. I want to even take on from what Eng. Maina said that he is very much concerned about road infrastructure. The Minister in his presentation earlier on said that some of the reasons why they want more money are because of the Thika project and yet the Minister is reducing the amount allocated to the Ministry of Roads by over 20.5 per cent. So, it is actually tantamount to shooting yourself in the foot. There is one vote where we have increased by 225 per cent; and that is the Ministry of Lands. This was where the Budget Committee had said put some money aside.

What is it, Mr. Kimunya?

Mr. Temporary Deputy Speaker, Sir, I do not want to interrupt Mr. Shakeel, but in his contribution I did hear him say that he was told that a certain company called “Mastermind Tobacco” has not paid taxes of either Kshs12 billion or Kshs6 billion. The company he is talking about is not present in this House. This is a company registered under the laws of Kenya that enjoys as much protection as any other person who cannot be mentioned in this House without substantiation. I am not sure who told Mr. Shakeel about the company. Unless it is an authoritative source that can be tabled on the Floor of this House, I would like to ask that he withdraws that remark and the issue be expunged from the records because I am also aware that there is a Question pending before this House which will shed more light on that matter but it cannot be used as part of the contribution by Mr. Shakeel. So, I would like to urge that the hon. Member either substantiates in terms of the authority of his source or withdraws the mention of a company that cannot defend itself on the Floor of this House until the matter comes substantively through the Question that has been put on the Floor of the House.

Mr. Shakeel, indeed, that is true because that is supposed to be an allegation. You are even talking about Kshs12 billion or Kshs6 billion. On that matter, I think the honorable thing is just to withdraw the statement, not unless you have a document there which--- You have already said that it is either Kshs12 billion or Kshs6 billion. Either you are tabling two documents and if you cannot do that just go ahead, withdraw that remark and move on.

Mr. Temporary Deputy Speaker, Sir, I stand guided by Mr. Kimunya. I was actually referring to the question but Mr. Kimunya has guided me correctly. I shall withdraw that and wait for that discussion to take place when the question is raised.

Order, Mr. Shakeel; you have withdrawn.

I have withdrawn, Mr. Temporary Deputy Speaker, Sir.

Very well.

Mr. Temporary Deputy Speaker, Sir, however, the gist of my argument was that there are a lot of taxes still outstanding and the further argument that I was proposing was that our Budget is a medium and short term step towards Vision 2030. What we are finding is that by reducing certain expenditures, especially on health or adding the expenditure on agriculture we are jeopardizing the achievement of our vision. This country must be food sufficient and we are not yet food sufficient. So, I urge the Minister to kindly look at some of these Supplementary Estimates that they have done and arrange them in such a way that there is not more than 10 per cent variation in each Ministry. If he does, I will gladly support him, but at this moment I cannot support the Motion. With those few remarks, I beg to oppose.

All right. We had agreed that we would have Mr. Sambu and then Mr. Onyancha, in that order.

Mr. Temporary Deputy Speaker, Sir, thank you for giving me this chance to give my views on this Motion. Basically, I support the Motion. In the last Budget Policy Statement and subsequently in the last Budget it was clear that this country was going through a very difficult time; as a result we recommended that we also take austerity measures. The Budget Committee went through the Budget Policy Statement of the time and the Budget, and we also came up with recommendation that; since the country was going through a very difficult time, we also needed to take some austerity measures. This House gave directives to various Ministries to curtail allocations to non- priority areas such as communications, domestic and foreign travel, printing, hospitality, general supplies, furniture and vehicles. I am glad that some Ministries have complied with this directive, but most of the Ministries have not. In fact, they have come to ask for more; it is only those areas where we felt were not priority areas that needed curtailment in terms of allocation. When you look at, for instance the Judiciary, it was very clear that we wanted curtailment in vehicles but the Judiciary has introduced a new item for the purchase of motor vehicles for Kshs500 million. But when you look at major increments one will appreciate that most of them are necessary; as far as I am concerned, I will support the Motion. Regarding the increment particularly for our defence forces, we appreciate that our sons and daughters are doing a good job and we need to support them and to that extent, I will support the idea of increment to the defence forces.

On the issue of the TSC, that is where the Budget Committee wanted some more money. Now they have come to realize that, indeed, we needed more money. I still feel that the teachers deserve the money and I will certainly support the idea. On the Ministry of Gender, Children and Social Development, one never knows when he will be an orphan. You never know when you will be vulnerable and to that extent too, I will support an additional Kshs400 million that they have asked. I am not quite happy with the introduction of a new item in the Judiciary for the vehicles that we felt should not have been a priority at the time we were making the Budget last year.

The Ministry of Agriculture has asked for additional funds for the purchase of fertilizer and subsidy to the fertilizer. This is quite a good idea because we really want to

Thank you, Mr. Temporary Deputy Speaker, Sir. I want, at the outset, to say that I support this Motion, but I have reservations. But before I go into them, I want to address the issue of the Constitution.

Mr. Temporary Deputy Speaker, Sir, it may look irrelevant at the start, but the constitutionality of some of the actions that we are taking is hampered by the fact that the Constitution is new and is experimental for the time being. In my constituency, we have a problem generally about allotment of wards. In my County, we have got two constituencies, which are illegal under the Constitution because they exceed the maximum population allowed by the Constitution. That is just one example of where it does not “fit the foot”. Likewise, when it comes to budgeting, this Constitution is right now being tried for the first time. I would, therefore, not entirely blame the Minister for Finance for not absolutely adhering to the terms of the Constitution as laid out. Indeed, it may come to a point where it may be necessary for it to be amended because it is not possible to fulfil its terms. I have a case in mind, for example, with respect to

Thank you, Mr. Temporary Deputy Speaker, Sir, for giving me this chance to support this Motion.

Mr. Temporary Deputy Speaker, Sir, I stand here to support this Motion because it is a very important one; we need to pass this Supplementary Budget because we know we have our soldiers fighting in Somalia. That is number one; we know that war, anywhere in the world, is very expensive. This is the first time, I think, the country is fighting a full scale war in another country; our soldiers need support, so that they get motivated and continue to fight. They are fighting and dying for the sake of Kenyans. So, whatever they are doing cannot be taken for granted. In war, we require equipment and this equipment must be bought with money. This equipment is actually very, very expensive. Our soldiers need to be properly dressed when they are in the combat zone and all these cost money. We also need our soldiers to get fed, because if they are not fed they will, definitely, start selling their bullets and guns. As a result, the country will be defenseless. So, for anybody to think that the money will be wasted, I think he is either naïve or something. It is important that we have our security taken care of. The soldiers are doing a very good job in Somalia and need all our support as Kenyans.

Mr. Temporary Deputy Speaker, Sir, I support this Motion, again, because we are going to pay our nurses properly. We know that nurses do a very good job. They are professionals and we spend a lot of money training them. So, if we cannot maintain them, it will be a disgrace. The other day the nurses were on the streets and it is very embarrassing for our country that we cannot pay our nurses properly. We do not need to have such kind of thing happening again in this country. Again, we know that our nurses are running out of this country in very great numbers. They are doing this because we are not able to sustain them and pay them good salaries. They need to be paid at the rates that are competitive internationally, so that we can maintain them here. This is because they do a very good job. I have never seen a hospital without nurses. So, it is important that we make sure that they are taken care of, so that we maintain them in this country. As I said, it is very expensive to train one nurse. So, to have one running out of this country is also not good for us. So, it is important that we support this Motion, so that this money is available to pay these nurses.

Mr. Temporary Deputy Speaker, Sir, the other point that I would like to make that has made me support this Motion is about teachers. We need to have more teachers employed in this country. This is because if you go to any school in the country, including Kandara, you will notice there are no enough teachers. So, it is important that we employ these teachers. After employing them, we need to pay them good money because it is very embarrassing to see a teacher teaching and he cannot support his family, dress properly or live decently. So, it is important that we pass this Motion, so that the teachers in this country can get proper salaries.

Mr. Temporary Deputy Speaker, Sir, we all know that infrastructure in this country is getting into very good shape. If you travel around the country, you will find

Mr. Temporary Deputy Speaker, Sir, I rise to support the Motion. Mr. Temporary Deputy Speaker, Sir, during the Financial Year 2010, the Ministry of Education had promised and agreed that they would take on early childhood development. That is the basis of our education. We discussed this in our Committee and agreed that the Ministry was going to provide funds for early childhood development, but nothing has been done about it.

Mr. Temporary Deputy Speaker, Sir, I hope the Minister for Finance is listening. We have not known of any country that has taken off economically without addressing the early childhood development, yet today the early childhood development sector has been lumped together with other administrative programmes. I am afraid that unless the Minister for Finance and the Minister for Education work together, we may not be able to take off in early childhood development which is a very big shortcoming in our educational development.

The other issue is that we have read that the retired teachers are still waiting to be paid Kshs3 billion. I hope the Minister for Education and the Minister for Finance have considered the matter after the court gave a ruling for the teachers to be paid. Some of them have already died. I hope that the Minister for Education has taken care of that.

Our schools have no adequate teachers. There is no quality education that will be provided in Kenya when teachers are inadequate. We know very well that this country is short of 80,000 teachers, yet we are talking about Vision 2030. How do you arrive at that when you have a mediocre education system, and the Government cannot employ enough teachers, both in primary and secondary schools?

Mr. Temporary Deputy Speaker, Sir agriculture is the backbone of this country. The Ministry of Finance and the Ministry of Agriculture should consider themselves lucky that they are able to feed part of the population, depending on rain. We are not going to be able to feed our country if we do not support projects on irrigation. It is sad. This financial year the Ministry of Agriculture requested District Agricultural Officers to identify areas where water pans could be developed, but the Ministry for Finance has not provided funds. We went out to the constituencies, identifying areas where we could develop water pans but the Minister for Agriculture stopped the programme. I hope the Minister for Finance is listening. Why did the Minister for Agriculture stop the

All right. Mr. Minister you can respond now then we put the Question.

Thank you very much, Mr. Temporary Deputy Speaker, Sir. I thank the Members of this august House for the support they have given to the Supplementary Budget. I will only talk about three issues that have come up. One is on the Lamu Port – South Sudan – Ethiopia Corridor and I would like to assure this House that it is just a coincidence that it is being inaugurated during an election year. This has nothing to do with elections whatsoever. In any case, I would not even have allowed it to be part of electioneering and if I had the slightest suspicion that it was being done for electioneering, I would definitely not support it. However, this is an important project because it will open up that area of eastern Kenya. It is an important project that needs to be supported. Why is there an increase in the allocation to the Ministry of Lands? Basically, this is because of the need to purchase land for the IDPs. That is the reason for the increase. Somebody raised an issue on why we have reduced the budget for the Ethics and Anti-Corruption Commission. It is not that we do not want to fight corruption. The reason why the amount has been reduced is because they had proposed the construction of offices but due to a court case, this did not proceed. Therefore, the amount was surrendered and applied elsewhere. Another Member raised an issue about the increase in the Cabinet Office. This is basically because of the support required by the Government on donor funding. We have got some donor funding for the e-government and we are required to have a counter funding from the Government. That is the reason why it is there. Mr. Temporary Deputy Speaker, Sir, the reason why the Foreign Affairs’ budget has been increased is because we are compensating them for the depreciation of the Kenyan Shilling. They were really affected when our Kenyan Shilling depreciated to Kshs107 against the dollar because they are paid in foreign currency. However, here, it is done in Kenyan shillings and when they did the conversion, they were really affected. Some missions could not even pay for fuel and that was the reason for the increase. I think those are the issues that arose.

Hon. Members, we are now in the Committee of the Whole House and on Order No.10. Let us move to the second part of it, which is the Finance Bill, (Bill No.12 of 2011). So, we will proceed.

Mr. Temporary Deputy Chairman, Sir, I beg to move:-

THAT, the Bill be amended by deleting Clause 5 and substituting therefor the following new Clause-

Mr. Temporary Deputy Chairman, Sir, I think it will be important for the Minister to be taking even one minute to explain to this House why he wants it done? Even the mother Bill is not with us and he needs to tell us. That is the practice.

Mr. Temporary Deputy Chairman, Sir, I thought that it was clear on the Order Paper. Basically, it is just giving a definition of “beneficiaries” to avoid any misinterpretation. So, there is only one interpretation for a beneficiary.

Mr. Temporary Deputy Chairman, Sir, I beg to move:- THAT, the Bill be amended by deleting Clause 8 and substituting therefor the following new Clause–

Section 35 of the Income Tax Act is amended – (a) in subsection (1) – (i) by deleting the words “aircraft or aircraft engines” appearing in paragraph (c) and substituting therefor the words “aircraft, aircraft engines, locomotives or rolling stock”; (ii) by inserting the words “and deemed interest” immediately after the word “interest” wherever it occurs in paragraph (e); (iii) by inserting the following new paragraph immediately after paragraph (i) – (j) winnings from betting and gaming; (b) in subsection (3), by inserting the following new paragraph immediately after paragraph (h) – (i) winnings from betting and gaming.

Mr. Temporary Deputy Chairman, Sir, this is basically imposing taxes on betting and gaming services paid to non-residents. We want non-residents to also pay tax.

Mr. Temporary Deputy Chairman, Sir, I beg to move:- THAT, the Bill be amended by deleting Clause 11 and substituting therefor the following new Clause –

Mr. Temporary Deputy Chairman, Sir, I beg to move:- THAT, the Bill be amended by deleting Clause 14 and substituting therefor the following new Clause:-

Order, Minister! I saw hon. M’Mithiaru behind you, trying to, maybe, stand in for hon. Okemo. Hon. M’Mithiaru, what are you trying to do?

Mr. Temporary Deputy Chairman, Sir, the effect is the same.

Hon. M’Mithiaru, go ahead and put that on record.

Mr. Temporary Deputy Chairman, Sir---

Order! Order, Minister! Proceed, hon. M’Mithiaru!

Mr. Temporary Deputy Chairman, Sir, since my Chairman has already talked with the Minister and they have seen that the effect will be the same, the Minister is to move the amendment.

Very well! Minister, you can now move the amendment.

Mr. Temporary Deputy Chairman, Sir, I am proposing that we amend the proposed amendment to Clause 14. The amendment is basically to correct part (b) of the amendment to paragraph 5, which should now read “by deleting the expression “five percent” – which should be substituted with “ten per cent” – appearing in sub-paragraph (f)(i) and substituting therefor the expression “ten per cent” – which I am now revising to read “five per cent”. The effect of this will be the same. We are basically reducing the Withholding Tax for professionals from 10 per cent to five per cent. We have agreed on this with the Committee.

Very well!

Mr. Temporary Deputy Chairman, Sir, I do not know why the Minister and the Committee took that route but I thought we could just delete the entire Sub-Section d(1) to b(1) because at the moment the withholding tax has always been 5 per cent. So, the Minister was proposing it be moved to 10 per cent. But he is saying he wants it to revert back to 5 per cent. This House had not approved the movement from 5 per cent to 10 per cent.

Mr. Temporary Deputy Chairman Sir, indeed, what Mr. Mbadi is saying is within the Finance Bill. The prevailing rates before the introduction of the Finance Bill was 5 per cent but the Finance Bill attempted to raise it to 10 per cent. So, the figure in the Bill is 10 per cent. The correction is now to reduce the 10 per cent to the 5 per cent so that we get to the status quo. So, the amendment is proper in that respect.

Where is Dr. Kones? He had an amendment to move. Since the hon. Member is not in the House, the Chair will drop his amendment

Dr. Kones, are you now in the Chamber?

Yes, Mr. Temporary Deputy Chairman, Sir. First, I must apologize because I have come late and I had another amendment.

Order, Dr. Kones! We have dropped your amendment to New Clause 1A because you were away. I now want you to go to New Clause 1B. So move with us.

Mr. Temporary Deputy Chairman, Sir, I beg to move:-

Mr. Temporary Deputy Chairman, I beg to move:- THAT, the Bill be amended by inserting the following new Clauses immediately after Clause 2-

Mr. Temporary Deputy Chairman, I beg to move:- THAT, the Bill be amended by inserting the following new Clause immediately after Clause 2-

Mr. Temporary Deputy Chairman, I beg to move:- THAT, the Bill be amended by inserting the following new Clause immediately after Clause 2-

Mr. Temporary Deputy Chairman, Sir, I beg to move:- THAT, the Bill be amended by inserting the following new clause immediately after Clause 5-

5A. Section 10 of the Income Tax Act is amended-

(a) in paragraph (c), by inserting the words “and deemed interest” immediately after the word “interest”; (b) by inserting the following new paragraph immediately after paragraph (f) -

Mr. Temporary Deputy Chairman, Sir, I beg to move:- THAT, the Bill be amended by inserting the following new clause immediately after Clause 7-

Mr. Temporary Deputy Chairman, Sir, I beg to move:- THAT, the Finance Bill be amended by inserting the following new clause after Clause 15-

Mr. Temporary Deputy Chairman, Sir, I beg to move:-

THAT, the Bill be amended by inserting the following new clause immediately after Clause 19-

Mr. Temporary Deputy Chairman, Sir, the import of this amendment is really to improve on the revenue collection because the Kenya Revenue Authority (KRA) will be connected online to this GPRS.

Let us move to the next Clause 28A.

Hon. Members, I will propose that New Clause 28 (a) be read a Second Time. It has been distributed, not unless--- Hon. Mututho will be coming later to move it. We will get to that when we reach there. So, let me do the first section and then we will get to hon. Mututho.

Order! Order! Order!

Mr. Temporary Deputy Chairman, Sir---

Order! Order! Order, Minister! We were coming to that. There will be discussion. I have proposed it. Is there any question or comment?

Mr. Temporary Deputy Chairman, Sir, I am contributing to what I do not have. So, I want to humbly request that, that document be given to us so that we may have the benefit---

That is fair enough!

Order, hon. Kioni! You cannot do that!

Mr. Temporary Deputy Chairman, Sir, he has given me the document in a very unorthodox manner.

No! No! No!

All right. the document is available, so, we can proceed. Is there any other contribution before I put the question?

Yes, Minister?

Mr. Temporary Deputy Chairman, Sir, I believe the normal practice on the introduction of any new clause is that, once you call for the new clause to be read a Second Time, the Mover of the new clause has to move it, then it is debated so that, in effect, it goes through the Second Reading. When you go through the Second Reading, then it becomes a part of the Bill. Unless there is a subsequent amendment in the Committee, it will just be a proposal and putting of the question. So, I believe that all you need to do is for hon. Mututho to move the amendment so that he can convince the House as to the rationale for the amendment and what it means. Once it has gone through the Second Reading---

That is fair enough!

It becomes the property of the Committee.

Fair enough, hon. Kimunya! You have said enough!

Mr. Temporary Deputy Chairman, Sir, I beg to move:- THAT, the Finance Bill be amended by inserting the following clause after Clause 28-

Section 2(1) of the Banking Act is amended in

Mr. Temporary Deputy Chairman, Sir, I think the way this clause is being crafted is like it is redefining the banking business. From the Banking Act, they define that the banking business includes--- Then, now they enumerate what the bank does. So, it does not include that one. The same Banking Act includes what they call prohibited business, that is, what banks cannot do. So, by bringing this one here, it is not adding any value at all in this particular respect. More so, the Mover has talked about M-Pesa service. It is like bringing in that one to be a banking activity and excluding the current providers from that kind of activity. So, I do not think that this clause is adding value to this one.

Mr. Temporary Deputy Chairman, Sir, it is not very clear what really is the intention of this proposed amendment. If the intention is to include M-Pesa as banking business, then we must oppose it. If the intention is to include foreign exchange bureaus as banking businesses, then we must oppose it. This is because this is now really expanding the definition of banking business. In any case, the definition of banking is not exclusive, but inclusive. So, really, we do not have an idea what the purpose of this amendment is, unless he tells us.

Mr. Temporary Deputy Chairman, Sir, I oppose.

Mr. Temporary Deputy Chairman, Sir, even more fundamentally, I think we need to oppose this amendment. This is because it says “such other business activity as the Central Bank may prescribe as being part of banking business.” I think that this is giving the Central Bank of Kenya too much power. We do not even know how much and how far the Central Bank could go in prescribing. They may even say that if I transfer money to my wife in the house, it is banking business.

All right, Mr. Mbadi! Since we are in the Committee stage, we have contributed enough. So, I will put the Question.

Hon. Midiwo!

Hon. Mbadi, do you have the mandate to move it on behalf of hon. Midiwo? Yes, he is fully authorized to move that amendment.

Mr. Temporary Deputy Chairman, Sir, on behalf of hon. Midiwo, I beg to move:-

THAT, the following new clause be inserted immediately after Clause 30-

The Banking Act is amended by inserting the following

Mr. Temporary Deputy Chairman, Sir, this is something that has been in the public domain for quite sometime now. We are aware of what banks have been doing in this economy. Hon. Members, this is the right time to be with the people of Kenya; those middle class people who are paying high interest rates. We are not even hurting banks so much. What we are saying is: Yes, once the CBR rate has been set, if it is 20 per cent, we can allow you to go upwards of 24 per cent. I also want to say that this is the only country, probably in the world where the spread is so huge. The banks give us very low interest rates on deposits but charge us very high interest rates on loans. I do not need to belabour this point but just to ask my colleagues to support this amendment.

Propose the Question!

I had already proposed it; so, I need to put the Question now. Is there confusion?

Mr. Mbadi has already explained the rationale for that particular amendment. We can now take a few contributions; we go to Mr. Duale and then we shall pick three other hon. Members.

Mr. Temporary Deputy Chairman, Sir, I stand to oppose this amendment. Capping interest rates might appear feasible and might be very populist but it can only work if Kenya was a communist country. It cannot work in this country. It cannot work in a country where there is a free market. I want to raise fundamental issues on this amendment. We want to control both the cost and the revenue. That is the worst form of price control. Again, this amendment is very simplistic in view of the structural drivers of interest rates in the market where both the private and public sector must play a very crucial role in the regulation of interest rates.

On a point of order, Mr. Temporary Deputy Chairman, Sir.

Finally, this will show the credit lending rate that will affect---

On a point of order, Mr. Temporary Deputy Chairman, Sir.

Mr. Duale, make your contribution!

Mr. Temporary Deputy Chairman, Sir, I want to give figures. Credit in the private sector in this country has grown over the years, and reached Kshs1.16 trillion and Kshs13.4 billion in 2011 alone. If you look at 2010, it was Kshs880 billion.

On a point of order, Mr. Temporary Deputy Chairman, Sir.

Can I finish?

What is not in order?

On a point of order, Mr. Temporary Deputy Chairman, Sir. Would I be in order to ask the hon. Member--- The hon. Member who is contributing knows that this Bill does not affect him because he is an Islamist and he banks in Islamic---

Order! Just ignore that and proceed.

Mr. Temporary Deputy Chairman, Sir, from the outset, I said this can only work in communist countries, and maybe those who are spearheading it should wait for their day when they can turn this country into a communist state.

I want to give my final statement. This House and this country must promote competitiveness. It must enhance consumer protection measures and empower credit bureaus. That will reduce the interest rates. That is the way forward.

Mr. Temporary Deputy Chairman, Sir, I stand to strongly oppose the introduction of this clause. I want to draw hon. Members’ attention to the implications of the introduction of this clause. The introduction of this Clause is purporting to say that the rate set by the Monetary Policy Committee, which is a committee that sets the rate for purposes of signaling whether the banks should lend more or less; it is not the contractual arrangement between a borrower and a bank. Right now, the rate is at 18 per cent. If this was to pass through, automatically, all interest rates on all loans would go, including any that any of us has, to the rate of 22 per cent. We have all borrowed from banks.

On a point of order, Mr. Temporary Deputy Speaker, Sir. I think the Standing Orders clearly stipulate that a Member is entitled to give this House facts. The amendment that is being fronted by hon. Midiwo says; “not more than.” It does not say that a bank has to charge 4 per cent and above. So, when hon. Kimunya misleads this House into believing that the moment we pass this amendment, then all interest rates will go to 22 per cent, that is clearly misleading. Hon. Kimunya, a former Minister for

Order! Dr. Nuh, what is that that the Minister said that is not in order?

Mr. Temporary Deputy Speaker, Sir, the Minister misled the House into believing that the moment we pass this amendment, it means that all banks will charge 22 per centum because the CBK rate is at 18 per cent, which is clearly misleading.

Okay. I have heard you. Yes, Mr. Kimunya!

Mr. Temporary Deputy Speaker, Sir, I believe that is an argument. If the hon. Dr. Nuh, who we respect for his age and enthusiasm was to read this amendment, he would see that it is basically saying that the maximum interest that a bank may charge - it is optional - is 22 per cent based on the CBR rate of 18 per cent today. It also says that the bank must pay deposit rates from tomorrow. I will be happy to get that but for now let me just proceed with my line. It also says that if we pass this amendment, the minimum interest that banks shall pay shall be 12.6 per cent on the deposit. Basically, we are saying that if everyone took advantage of the introduction of this clause, loans would be 22 per cent from tomorrow. This is because we have allowed them a leeway of up to 22 per cent. We are also saying that all deposits must be paid for at 12.6 per cent. We are allowing even a spread of close to up to 10 per cent. Currently, people are enjoying deposits even at 18 per cent. So, anyone who has a deposit at 18 per cent would have it automatically lowered to 12.6 per cent while anyone who has a loan at 20 per cent could have it going up to 22 per cent. This is only one of the implications. But the bigger picture we need to appreciate is that Kenya embraced a liberalized economic regime in 1994. Since 1994, we have been going to the world and telling people to come and invest in Kenya as the biggest economy within East Africa because we are a liberalized economy; other than the communists or centrally-controlled economies. People have come to this country and have invested, based on the confidence that they have been given not just by the Government but by this National Assembly passing laws that say we are a liberalized economy. Immediately you pass this, what signal will you be giving to people who want to come to the country to invest on the understanding that it is a liberalized economy and then tomorrow you tell them that you will control them? You are basically telling them: “Pack up and go to Rwanda and Burundi and leave Kenya because we do not need investors in Kenya.” That is the danger. Much as it may look populist, let me also remind hon. Members that the rate we are talking about here--- We have not even defined what rates we are talking about. We are saying that the rate has to be determined by the Monetary Policy Committee. We are not talking about rates. Is it the interbank rates? Is it the CDR rates? Is it the new rates to be determined for purposes of loans? Suppose the Monetary Policy Committee sat tomorrow and set the rate at 50 per cent? Is that what we want? Let us not do these things from a very emotional perspective. Let us not do it for purposes of settling some political scores or wanting to be populist. We are going to lose out. Mr. Temporary Deputy Chairman, I think it is important. This is a fundamental issue and we should have discussed it at the Second Reading, so that we can have enough

Thank you, Mr. Tempraory Deputy Chairman, Sir. Today I am bit quiet, unfortunately, because I did not go for lunch. So, I am a little tired because I did not go for lunch. Having said that, I want to say that I support this amendment. Mr. Tempraory Deputy Speaker, Sir, I want to say that despite the harassment that I am being given by hon. Isaac Ruto, he knows that I am unbwogable and unmoved and if he continues, I will call hon. Beatrice Kones to deal with him. I know dawa yake.

Mr. Temporary Deputy Chairman, Sir, having said that, I want to say that despite what hon. Mbadi is saying, that this affects the middle class, it is not affecting just the middle class. I get calls every day from rural Kenyans; from people who did not go to school; people who are struggling; fishermen and farmers whose houses are being auctioned. They do not auction houses that they own like us. They are auctioning chairs. Indeed, one person told me that one of the banks went and actually uprooted a simple house, which is even illegal by any law. So, I do not care. Today, I did not eat lunch but I am going back home with a better conscience and I have no apologies. If that makes me a communist, I am a very happy communist today to support this. With that, I support.

Thank you, Mr. Temporary Deputy Chairman, Sir, Quickly, let me start by saying that calling us names will never really scare some of us. You can call us communists, dictators and merchants of impunity. You can even call us Mungiki, but we will always say what we need to say. Mr. Temporary Deputy Chairman, Sir, the day that houses were demolished in Syokimau, we adjourned this House to discuss the demolition. The people who live in Syokimau whose houses were demolished - and today I wish I could see the same passion in some of the hon. Members sitting across the Floor--- Was Syokimau a political issue? That is because today, in the three months which, of course, the Government will not tell Kenyans---

Order, hon. Shebesh! I really want you to stick to the issue at hand!

Mr. Temporary Deputy Chairman, Sir, I am saying three months because when we were sitting as the Select Committee on the Decline of the Shilling, we were saying six months. So, it is now three months. Houses of bankers, civil servants and

On a point of order, Mr. Temporary Deputy Chairman, Sir.

Order, hon. Shabesh! There is a point of order from hon. Duale.

Mr. Temporary Deputy Chairman, Sir, I want you to guide this deliberation. It is an amendment. We want to hear about its merits and demerits. Is the hon. Member in order to go round and round? We want to hear its merits and demerits.

Mr. Temporary Deputy Chairman, Sir, I will finish in two minutes because I have nothing else to say. I have finished what I was saying. I have said that the interest rate capping we are asking for is in Section 4(d) and the reason we are asking for this is not because we do not believe that it is, probably, not the best idea, it is because the Government has refused to act to tame the cartel of bankers, whom we are told own this country and will continue to own it forever. We are saying, if you do not have the courage, we will give you an instrument you can use. If the banks will not listen to you, they will certainly listen to Parliament. Mr. Temporary Deputy Chairman, Sir, we are saying, use the Central Bank of Kenya (CBK) rate to cap the commercial bank interest rate at 4 per cent above the KCB rate. If banks cannot make profit from that, I do not mind because most of them made billions of shillings in profit last year. Thank you.

Let me get hon. Ruto. I will then get Minister Dalmas Otieno and then the Minister for Finance will conclude. Yes, hon. Ruto!

Mr. Temporary Deputy Chairman, Sir, I want to ask my colleagues to look at these issues with a very sober mind because we have a country to manage. Indeed, there have been some unfortunate occurrences in the past six months, which have caused our financial markets to become quite unstable. I believe that the Government has now put its house in order. They have learnt a lesson. We have a country to run. We are in a period in which we are transiting to a new order. We are having elections this year. We are also transiting to county governments. We have huge financial burdens to bear yet we want to play around with matters that can destabilise the donor community. We may lose face before the international community. There are times to play populist. There are times to be communists and there are times to be serious. I want to ask my colleagues - they have insisted that they have not had lunch - I am offering dinner to Millie Odhiambo. I hope somebody else will offer some donor to---

On a point of order, Mr. Temporary Deputy Speaker, Sir.

Hon. Millie Odhiambo, what is your point of order?

Mr. Temporary Deputy Chairman, Sir, she said that she did not go for lunch.

Order, hon. Ruto!

Mr. Temporary Deputy Chairman, Sir, is the hon. Member in order to offer me lunch, which all of us know that it was worth Kshs50,000? I cannot go for lunch worth Kshs50,000.

Hon. Ruto, make your conclusion, please.

Mr. Temporary Deputy Speaker, Sir, I want to conclude by requesting my colleagues to pass the Finance Bill as it is and reject this particular amendment with due respect.

Hon. Dalmas Otieno, I will give you time. I had promised hon. Ogindo time to make some contribution. Hon. Noor, from the Committee, let me have just one of you and then I will go to hon. Dalmas Otieno.

Mr. Temporary Deputy Chairman, Sir, I rise to support this amendment. I just want to persuade this House that this amendment seeks to achieve one simple thing. We are not capping the interest rate. This amendment seeks to regulate the interest rate. When you look at this amendment, you will see that it is floating with the CBR rate. That floatation allows flexibility in the market. What we want to achieve are two important points. Of late, the high interest rates have caused a lot of suffering to individuals in this country. The high interest rates have caused a lot of businesses to be closed. The high interest rates have caused a lot of families to lose their houses. The other thing that the House needs to appreciate is that even at the Government level the high interest rates affect the deficit in this country because the Government pays very high rates on its borrowing. It is important that interest rates are brought under control. Mr. Temporary Deputy Speaker, Sir, the second point I want to raise is that---

Remember we are on the Committee of the Whole House.

Mr. Temporary Deputy Chairman, Sir, allow me to say this. It has been alleged here that this amendment has communist leanings. I want to say that in the United States of America there are State laws that have been legislated to guard against usury which is the excess interest charges. In England or the United Kingdom in 1715, a law was passed called the “Legal Maximum Interest Rate” which regulated interest. The long and short of this is that if we have an affordable interest rate regime we are able to ensure that we have an economy that thrives and grows. What we have now is an interest rate that stifles the economy. I want to persuade this House that we pass this Bill in order to jump start our economy.

Mr. Temporary Deputy Chairman, Sir, I want to persuade my colleagues that if some of us are motivated by any political sin, I am not aware. But first I

On a point of order, Mr. Temporary Deputy Chairman, Sir.

Mr. Duale, is it a valid point of order?

Yes, Mr. Temporary Deputy Chairman, Sir.

What is it?

Mr. Temporary Deputy Chairman, Sir, Dr. Nuh confirmed to be of Islamic religion. The choice is there even for Christians that you can go to an Islamic bank where the interest rate is zero. So, is he in order to mislead the House that he wants to speak for others who can even go for Islamic banking? Islamic banking is for everybody including Christians.

Mr. Temporary Deputy Chairman, Sir, I am glad that Mr. Duale has given more credence to my argument. I want to say that the Finance Bill has been in abeyance majorly because of this pending amendment of Mr. Midiwo that has to do with regulating the interest rates. I want to remind hon. Members that there was a time when this House was called to the Kenyatta International Conference Centre (KICC) by the two Principals. The leader of my party, the hon. Vice-President was there and I do not see any circumstances that have changed since Members of this House unanimously rejected the call to drop this amendment.

On a point of information, Mr. Temporary Deputy Chairman, Sir.

Dr. Nuh, do you want to be informed?

Mr. Temporary Deputy Chairman, Sir, I just want to say, for the record, that when the Finance Bill was in abeyance, some of us tried to see whether it was possible to crack the nuts because we wanted a win-win situation, a situation where the Government which was so much averse to regulation of interest rates because of conditions they are saying have been set by the IMF; maybe there is fear that this will cause disarray in the financial sector. It wants to be pleased on one hand and on the other hand it wants to ensure that Kenyans are suffering under an interest rate regime that is not friendly to the poor families and members of this society.

I want to report progress of those meetings.

I should be protected because there are hon. Members who are consulting loudly.

Proceed, I can hear you.

Mr. Temporary Deputy Chairman, Sir, I want to report progress; I want to say that we sat down with the bankers’ association and all the banks involved for more than three times. We were trying to build consensus. At one time we said that we were willing to even drop the amendment, because--- At the end of the page, I have a similar amendment to that of Mr. Midiwo. We said that we were willing to drop the amendment but they had to tell us how they were going to take care of the interest for the sake of Kenyans whose houses were being sold on a daily basis, because they were unable to meet the interest rates that were skyrocketing. We gave them a very good option. We asked them to give the number of Kenyans that they lent money, whom they thought had interest rates that were to be varied. They said that on the face value, we were making noise for a very small percentage of people they lent money to which was just below 25 per cent.

In fact, that gave us more teeth; we told them if they were talking about 25 per cent of borrowers, that was very small amount of money. We told them to concede to the idea that if there was someone they had lent at the interest rate of 13 or 15 per cent and he was repaying the loan at an interest rate of 28 per cent because of the so-called inflation, to take that interest regime back to the 13 per cent. In the next meeting, they came up and said they had given us the wrong statistics. The number of borrowers they were talking about was 75 per cent. It was shame! They were changing goal posts just because we were giving concessions and we wanted to reach a consensus.

I want to give the reasons as to why we want this amendment. Today, every bank has a specific lending rate that it has set on its own criterion and no one regulates it. M/s Barclays can set at 18 per cent, the Kenya Commercial Bank (KCB) can set at 22 per cent, and any other bank can set at 30 per cent and they are honest. They will tell you: “This is our lending rate; so we are charging you 3 per cent or 4 per cent plus.” When you ask the Central Bank of Kenya (CBK), the regulator as to why interest regimes are not being curtailed, or why interest rates are skyrocketing, they will tell you that they have no control over banks.

So, the Kenyan borrower is left at the mercy of banks which determine which rates they are going to lend at.

All right!

Mr. Temporary Deputy Chairman, Sir, let me just finish.

Take 30 seconds.

No, Mr. Temporary Deputy Chairman, Sir, I want to, at least---

No!

I plead with you, Mr. Temporary Deputy Chairman, Sir. The reason as to why we are setting a reference point that will be determined by the CBK is, at least, for Kenyans to know that they have an office which is responsible, which is going to determine at what cost they are going to borrow at any one given time. For example, if

Thank you.

Mr. Temporary Deputy Chairman, Sir, I am pleading with hon. Members that at this time let us think with the Kenyans who are suffering; let us think with our constituents whose houses and lives have been mortgaged, so that sanity can prevail. We are not going to be at the mercy of bankers who are irrational and irresponsible. Thank you.

Mr. Temporary Deputy Chairman, Sir, I sympathize with the sentiments in the House that banking practice has developed in this country in such a way that our savers are paid peanuts, but banks charge high figures as their lending rates. The Members have to realize that the money market, like all other markets even if it was the property market, is never one market. They are several markets. In this particular amendment, the biggest flaw, particularly in Part “b” that is talking of interest earning accounts, the simple way to dodge it is to say that you have no interest earning account as far as your bank is concerned; all accounts are non- interest bearing. Then what happens thereafter? We have achieved nothing. Secondly, the monetary policy read “the Central Bank rate is the rate set and cost with the specific objective. It operates in the segment of the monetary market between the Central Bank and the banks themselves”. That is a totally different money market. It only controls that segment. You cannot use it to control the other market segments in the economy.

The Members must also realize that Kenya is a very open economy. If you add up the imports and the exports, you are talking of a large percentage of our Gross Domestic Product (GDP). When you look at the global market, if Kenya wanted to borrow, we would give a sovereign risk rate which assesses Kenya as a borrower. A nation in Africa borrowing from the east or the west, the sovereign risk assessment is based on different factors, namely, political, economic and otherwise. You cannot use that one rate to determine the other rates in the economy. If we take the retail rates in our country; if we take the check-off rates where you borrow and the money is taken from your salary to repay your loan, the risk is different from a business person who borrows and has to make sure they have net cash surplus to service the loan. So, we are not talking one market. You cannot use the Central Bank rate to control all the other money market rates in the economy. It is a big blunder. I was in banking and the immediate effect of this amendment is the low risk large banks---

On a point of order, Mr. Temporary Deputy Chairman.

All right. Just make your concluding remarks. You know we are in the Committee of the Whole House. Just make your concluding remark.

Mr. Temporary Deputy Chairman, somebody is interrupting. My concluding remark is that if part “a” passes, the smaller banks who are able to get niches in the money market and use their deposit and lending rates to retain the market that they control to be able to develop, will be the biggest losers and the larger lower risk banks will get more money and they will increase oligopolistic control of our market until they get what they want in it. I oppose and the instrument we are using is faulty.

Mr. Temporary Deputy Chairman, Sir, I would beg that you listen to me because what you are going to do is going to have a very bad effect on this country, and I will give the reasons. One, if you pass this amendment, this is what you are saying. One, what you are going to do is to distort the market. What you are going to have are black markets. You are going to have parallel markets as it happened in 1980s when we tried to control interest rates. You are aware when the CBK controlled the interest rates from the banks. What they did was that they started charging you appraisal fees, application fees, booking fees and all sorts of fees just to evade the 19 per cent. That is exactly what is going to happen. You are aware when the CBK curbed those methods, they now formed finance companies which then were able to charge more than banks. So, dear colleagues, I am telling you that we are engaging in an exercise in futility. That is one.

Secondly, already - and I want to be very sincere and frank - we have got commitments with the World Bank and the International Monetary Fund (IMF) and one of the conditions we had agreed is that we will maintain a liberalized economy as far as the interest rates regime is concerned. If we pass this amendment, dear colleagues, what you are saying--- You are giving those banks the ability to recall our loan, which is more than Kshs400 billion, and which we do not have now. Therefore, we are going to default. Our kitty rating is going to go down.

Secondly, already we have a limit. Already, we have a credit limit of Kshs200 billion. What you are saying is that, that extended new credit limit is going to be terminated. Therefore, if that happens, you can forget what you have passed in the Supplementary Budget today. There will be no roads. There will no dams. There will be no water projects. There will be no hospitals. So, we must know that if we pass this amendment that would be the effect.

Very well. Conclude, Mr. Minister!

Mr. Temporary Deputy Speaker, Sir, I need time.

Just take one minute!

Mr. Temporary Deputy Speaker, Sir, I need time. I plead for more because it is important. What we are going to do is going to make or break this country. We must be very clear in our minds about what we are going to do. I want to say that the Executive does not support this because it knows the consequences. The other consequence would be this: The very people we are trying to protect, the lower income groups, the middle class, I can tell you, if you have ceilings on interest rates, they are going to be eased out of the credit market. The banks will start lending to prime customers like the East African Breweries and those kind of companies. So, the people we are trying to save will actually lose out. Secondly and this is even more serious, take it from me, if you pass this amendment, expect a financial crisis. More than ten to 15 small banks are going to collapse. So, we are actually creating a financial crisis. This is exactly what you are doing. The other reason, the bad loans and non-performing loans are only 3 per cent. So, the issue has been exaggerated. At the moment, the non- performing loans in the entire banking portfolio is 3 per cent.

Mr. Temporary Deputy Chairman, Sir, if the issue is about banks making super profits, the solution is not to cap interest rates. The solution is for me to come up with a law that will tax the super profits. Again, interest rates are on their way down. At the moment, there are three banks which are charging 15 per cent. The majority are at 19 per cent.

Lastly, we have been talking about this matter with a committee that was established. We had actually agreed that we will oppose this amendment. This will give us time between now and June, because we must bring another Finance Bill, to discuss and agree with the banks on this issue.

Mr. Temporary Deputy Chairman, Sir, if the things I have said happen, then we will know who is responsible; it is any hon. Member who supports this amendment. You will be responsible for the financial crisis! You will also be responsible for banks closing- ---

Order, Mr. Minister! You have made your point!

You will be responsible for lack of roads---

All right! Thank you, Minister.

On a point of order, Mr. Temporary, Deputy Chairman, Sir.

Order, hon. Mbadi!

Hon. Members, I will now proceed to put the Question. Let us vote on this, so that we can proceed.

Division! Division!

Hon. Members, for us to have a Division, we must have 20 Hon. Members requesting it.

Clerk-at-the-Table, do we have the numbers?

We have the numbers.

All right. We have the numbers. Ring the Division Bell.

I believe the Tellers are ready and may now proceed with the results.

Mr. Mwadeghu and Mr. James Maina Kamau.

Mrs. Shebesh and Eng. Maina.

On a point of order, Mr. Temporary Deputy Chairman, Sir. I have two points of order. You saw the way the defunct Electoral Commission of Kenya behaved immediately after they presented results. They were quick to rush to the other side to shake hands.

Order, Mr. Ogindo!

Mr. Temporary Deputy Chairman, Sir. The second point of order is this: This is very fundamental. We forced a Division and there was counting. We were 31 and at the voting, we ended up with 17. I want you to find those hon. Members who did not vote grossly out of order. I invite you to find them out of order; can you rule on that?

Order, Mr. Ogindo! Everybody had the freedom to vote one way or the other and we had the results here. So, that is not a point of order and we need to proceed.

Dr. Nuh, the New Clause 30A, since it has lost and you were pegging that on Mr. Midiwo’s amendment, we will not proceed with it. It has been negatived, and now we will proceed to the New Clause 32A.

Mr. Midiwo

I think Mr. Mbadi is standing in for Mr. Midiwo.

I am Midiwo! Mr. Temporary Deputy Chairman, Sir, I beg to move:- THAT, the following new clause be inserted immediately after Clause 32 -

You have made the point. It is very clear to me.

Mr. Temporary Deputy Chairman, just allow me to make my point clear.

Thirty seconds, please.

Mr. Temporary Deputy Chairman, Sir, that is why we had Equity Bank and the Family Bank becoming financial institutions and you can see how they are performing now. I would urge this House to allow other competitors to also enter the banking sector.

Mr. Temporary Deputy Chairman, Sir, I stand to oppose that amendment on the basis that the amendment is trying to dilute the strength of the banking sector. It is basically saying that anyone who has Kshs250 million can open a financial house and call it a bank. We have moved from there as a country. It also means that a bank with Kshs250 million is capped in terms of the amount of money they can lend. The reason we moved and this House approved that we should move progressively to banks increasing their capital to Kshs1 billion was to protect the financial sector, so you only have sound banks operating within the country. All the 45

On a point of order, Mr. Temporary Deputy Chairman.

Mr. Temporary Deputy Chairman, could you, please, protect me?

Proceed!

On a point of order, Mr. Temporary Deputy Chairman.

Order, hon. Mbadi! You had your time, please.

Mr. Temporary Deputy Chairman, this House passed this law. This House passed a schedule; a negotiated schedule that said that the core-capital of the banks will now be increased to Kshs1 billion. If we now reduce that---

Hon. Kimunya, conclude!

Mr. Temporary Deputy Chairman, it is also important to underline that as the House was passing this law, it also passed the Micro-Finance Act that also said that for small banks that do not want to compete with the big banks, they can operate as micro-finance institutions and with a core-capital of Kshs20 million when operating outside town and Kshs50 million when operating within town, so that everyone was taken care of. I beg to oppose.

On a point of order, Mr. Temporary Deputy Chairman, Sir. I think if a Member has a point of order, he should be allowed to raise it.

Order! I am the Chair. The Chair will make the decision on when somebody has to speak.

Mr. Temporary Deputy Chairman, Sir, the hon. Minister talked about changing policy. My proposal is perfectly in line with the policy of Government of promoting competitiveness. If the Minister is honest, the earlier contribution he made was that he wanted the market to be opened for competition. Right now, what he is saying is completely opposite; that he wants to control those who are entering the banking sector. This is a clear indication by the Government to protect the banking cartels.

Mr. Temporary Deputy Chairman, Sir, I rise to support the amendment. I am aware that three years ago, there was an amendment that was brought to this House that increased the core capital of the banks. But this country has since moved. Three years ago, we did not have a new Constitution. Today, we have a new Constitution. The new Constitution today creates counties. The counties have become centres of operation. It is important that we enlarge the banking market to create competition.

Mr. Temporary Deputy Chairman, I stand to oppose.

Mr. Temporary Deputy Chairman, Sir, the Micro-finance Act already provides the mechanism for you to have a bank in a town, for you to have a bank that covers a county or a region, in fact, with far lower amount of capital. So, that proposal is already sorted out.

The competition in terms of banks, in fact, what we need is consolidation of banks so that we stop replicating infrastructure. For example, today, what you see, if you go to a shopping mall, you will find bank “A” has an ATM and another one and another one. These are the additional costs of infrastructure that are brining up the cost within the bank which, in fact, is what in part is driving banks to charge higher interest rates.

So, we have provided the avenue for a regional bank to exist. There is really no need to do it again. Thank you.

Members, let us just take a minute for contributions. We are in the Committee of the whole House. So, this is not open debate.

Hon. Harun Mwau!

Mr. Temporary Deputy Chairman, Sir, I am slightly disappointed because when the hon. Member for Kipiriri was contributing, he was saying that we passed a law that allowed us to increase the share capital to Kshs1 billion, and we cannot go back again. Legislation is that if you make a law that you think is no longer serving, you amend it. So, to try to persuade the House that we should not amend what we think is not right or what we think now does not serve our people, that is not very good. However, I come from Kilome. Kilome is a constituency. It has no bank because we are poor people. Kaiti Constituency, which is served by my neighbour hon. Ndambuki, has no bank. We are poor people. Kibwezi has only a few banks which have gone there because of some few things. In Mbooni, there is no bank. We are poor people.

If you look at the banks that we are saying are the top banks now, most of them only became banks in 2005. They were not banks before. Equity was not a bank in 2005. Family Bank was not. If you read the history of Equity, they started with Kshs5,000. Now they are the top bank. If they were blocked at that time, they would not be what they are today. If you read the history of Family Bank, the owner says he started it with Kshs100,000. So, now you are saying, those people who have Kshs100,000 cannot start a bank. What I do not want us to do, I do not want to condemn our great grand children never to be bankers because I do not know when my great grand children or your great grand children will be able to amass certain amount of money - a billion shilling - to open a bank. You heard the former Minister for Finance saying that there are 45 banks that have complied. Now, we want to block and say that, now that is it.

Very well;

f you look at the banks that we are talking about, you will find that there are some communities which do not own banks. Only some communities---

Very good, hon. Mwau; you have made your point.

Mr. Temporary Deputy Chairman, Sir, let me just finish; I am just finishing.

All right.

You will find that there are some communities which do not own banks; but there are some communities which own banks. What will happen is that ethnicity will start growing because others will feel that they are only supposed to serve other ethnic groups, and that is very bad!

We want to be open so that in Makueni, which is a county, we can open a bank even with 20 bob. Now if we say it is Kshs250 million, we in Makueni County can raise Kshs250 million and start a bank there. People in Siaya can raise Kshs250 million and open a bank. People in Turkana can raise Kshs250 million and open a bank.

Very well!

Thank you, Mr. Temporary Deputy Chairman, Sir.

Thank you, hon. Mwau. I will take hon. Dalmas Otieno, then the Minister will conclude and then we put the Question.

I am here, Mr. Temporary Deputy Chairman, Sir.

Mr. Temporary Deputy Chairman, Sir, I will be very brief. Let us understand what the core capital is meant to serve. In banking, you are taking other people’s money which you then lend to other people and make a profit from the margin. The core capital is what is intended to get you your fixed assets; the banking premises, some of your staff, and the computer technology that you will be using. As we are talking now, the banking software alone for you to be in the clearing house will cost a minimum of Kshs200 million. Even if you are a one-branch bank, opening a one-branch bank alone may cost you more than Kshs40 million. So, if establishing a bank is going to cost you Kshs300 million before you hire the higher

Very well.

The second point, Mr. Temporary Deputy Chairman, Sir, which is important to note also is this. The attitude amongst many of us, Africans, why we continue to have our banking sector dominated by foreigners – and I sympathize with the Movers of these – is because of a feeling that a bank can be a one-man business. We should remove that from our mentality and accept that banking must be a large number of investors business; we should be able to raise the necessary capital to bear the risk of the deposits of the people being placed in our hands.

Very well; Minister, just take 30 seconds.

Thank you, Mr. Temporary Deputy Chairman, Sir. I just want to say one thing; the cause of the banking crisis in 1980 was the low capitalization and that is why Central Bank has, over the years, been increasing the capital for banks. We are encouraging mergers, and a few banks have merged. We are encouraging amalgamations. So, if you are a small bank, the way is to merge or to amalgamate with another one, or to be taken over by another bank. Let me come to the argument that we are closing the door on other people; we are not doing that. As of now, you can start a bureau society, SACCO or microfinance company with very low capitalization. So, we are not closing. Once you have grown, like the way you have mentioned Family Bank and Equity Bank, then you can apply to be a bank.

Mr. Temporary Deputy Chairman, Sir, lastly, now with agency banking - forget about having a bank in the headquarters of every county – every shop now is a branch, which has now been adopted by almost all the major banks. So, you can open an agency in your kiosk and it is allowed. So, you are not being prevented from banking sector.

Mr. Temporary Deputy Speaker, Sir, I oppose.

Is hon. Mututho not here?

Mr. Temporary Deputy Chairman, Sir, I withdraw my amendment.

Mr. Temporary Deputy Chairman, Sir, I beg to move:-

That the Finance Bill be amended by inserting the following new clause after 32-

Section 11 of the Central Bank of Kenya Act is amended-

(a) in sub-section (1) by deleting paragraphs (a) and (b) and substituting therefore the following new paragraphs-

I will just give one chance. Mr. Muriithi.

Mr. Temporary Deputy Chairman, Sir, I want to assure Mr. Ogindo that we are not in a foul mood and we support him. This is a good idea.

Mr. Temporary Deputy Chairman, Sir, I will surprise Mr. Ogindo by supporting this amendment. I brought it in 2006; it was

Mr. Temporary Deputy Chairman, Sir, I beg to move:-

THAT, the Finance Bill be amended by inserting the following new Clause after Clause 32A-

That is good enough.

Mr. Temporary Deputy Chairman, Sir, I beg to move:- THAT, the Finance Bill be amended by inserting the following new clause after Clause 32B-

Mr. Temporary Deputy Chairman, I beg to move:- THAT, the Finance Bill be amended by inserting the following new clause after Clause 32C-

Amendment of

Hon. Ogingo, that is good.

Is Dr. Nuh not here? Then that amendment is dropped.

Mr. Temporary Deputy Chairman, Sir, I would like to tidy up this amendment and introduce it in the next Finance Bill. Therefore, I withdraw it.

Very well.

Mr. Temporary Deputy Chairman, Sir, I beg to move:- THAT, the Bill be amended by inserting the following new clause immediately after clause 33-

the weighted average lending and deposit rates for all banks and financial institutions; (b) the interest rate spread and its composition; and (c) a simplified version of the balance sheets and income statements. (2) Notwithstanding the provisions of this section, a bank shall disclose any positive or negative information of its customers to the licensed credit reference bureaus, where such information is reasonably required for the discharge of the functions of the banks and the licensed credit reference bureaus. Mr. Temporary Deputy Chairman, Sir, the reason for this is that this helps introduce efficiency in the banking sector. It allows sharing of information and, in the process, perhaps you will end up with a lower interest rate.

Mr. Temporary Deputy Chairman, Sir, I would like to support this amendment and plead with the House that it helps us with this one. Even if you have taken the others, let us now have this so that, at least, we know why these banks charge the rates that they charge.

Mr. Temporary Deputy Chairman, Sir, I beg to move that:-

THAT, the Bill be amended by inserting the following new clause immediately after Clause 33B-

The Central Bank of Kenya Act is amended by inserting a new section immediately after Section 36A as follows- 36B The Central Bank shall, on a quarterly basis make and present to Parliament a report on the key economic and banking sector aggregate.

Mr. Temporary Deputy Chairman, Sir, we felt that Clause 33C be read a second time and the reason is that this will again ensure that Parliament is able to get information and monitor Central Bank of Kenya (CBK) in terms of non-performing loans, economic growth and such other aggregates.

Mr. Temporary Deputy Chairman, Sir, I beg to move that:-

THAT, the Bill be amended by inserting the following new clause immediately after Clause 33C-

33A. The Stamp Duty Act is amended by inserting the following provision at the end of Section 5-

“Provided that the Government shall not charge stamp duty twice where a person moves a mortgage from one bank to another.”

Mr. Tempraory Deputy Chairman, Sir, I want to propose that Section 33D be read a second time and the reason is that it allows for mobility within the banking sector.

Mr. Tempraory Deputy Chairman, Sir, I beg to move:- THAT, the Finance Bill 2011 be amended by inserting the following new clause immediately after clause 43 –

Hon. Members we will consult a bit and then move on.

It is okay now. The Clerk-at-the-Table, you can now move to New Clause 44A.

Mr. Temporary Deputy Chairman, I beg to move:- THAT, the Finance Bill 2011 be amended by inserting the following new clause immediately after Clause 44-

On a point of order, Mr. Temporary Deputy Chairman, Sir. I am not very clear which New Clause 44 we are dealing with because we have New Clause 44 and New Clause 44A and there is an amendment I wish to oppose. So, I want to be clear. If it is the one being moved by hon. Keynan, I wish to oppose it. So, I would like to know.

No! Actually, these two amendments are by the Minister and there is no amendment by hon. Keynan. So, you are okay.

Mr. Temporary Deputy Chairman, Sir, if the amendment by the Minister is the one that was by Mr. Keynan, which is increasing the emoluments for Members of Parliament, I wish to oppose. This is because whereas I believe Members of Parliament are entitled, I will not be party to unfairness to this country. Members of Parliament have refused to reduce interest rates for members of the public, but when it comes to our own things, we are very quick and sneaky. I oppose the amendment.

Hon. Members, we are consulting on a new clause which is not on the Order Paper, to be moved by hon. Ogindo. We want to make sure that we are reading the right things. That is why we are waiting.

Mr. Temporary Deputy Chairman, Sir, I beg to move:- THAT, Section 102 (w) of the Energy Act 2006 be amended by inserting the following words immediately after the word “products”- “which must not exceed the international purchase price per unit by a factor of 1.75.” Mr. Temporary Deputy Chairman, Sir, in the Energy Act, 2007, there is a provision which gives the Minister a leeway to regulate the prices of fuel from time to time. The import of the addition I want to make is that in making those regulations, the new addition now seeks to guide the Minister, so that prices that come in the regulations do not exceed the crude oil price by more than 75 per cent. The import of that is such that we do not overcharge on petroleum products.

Thank you, Mr. Temporary Deputy Chairman, Sir.

Mr. Temporary Deputy Chairman, Sir, cognizance of the fact that our fuel prices are high, this House passed the Energy Act, 2006 and gave power to the Minister and the Energy Regulation Commission and a very elaborate formulae to work out what should be the price to be paid at the pump.

What hon. Ogindo is attempting to do is to remove that formulae and cap it to the international oil price. In between the price per barrel, there are transportation and distribution costs. There are all those other costs, which have nothing to do with the crude

Mr. Temporary Deputy Chairman, Sir, I beg to move:

THAT, a new schedule be introduced into the Finance Bill after PART III appearing on page 330 to read as follows:

THAT, the Bill be amended by inserting a new clause 29 into Part A of the Eighth Schedule to read as follows

Thank you, Eng. Rege. We have it. Thank you for moving that.

Mr. Temporary Deputy Chairman, Sir, I beg to move:-

THAT, Clause 1 of the Bill be amended- (a) in paragraph (a)- (i) by deleting the expression “8” and substituting therefor the expression “8(a)(i), 8(a)(ii)”; (ii) by deleting the expression “14(a)” and substituting therefor the expression “14(a)(i), 14(b)(i)”; and (iii) by inserting the expression “5A(a)” immediately after the expression “5”; (b) in paragraph (b)- (i) by deleting the expression “14(b)”; and (ii) by inserting the expression “2A, 2B, 2C” immediately before the expression “3”; (c) by inserting the following new paragraph immediately after paragraph (b)- (c) sections 5A(b), 7A, 8(a)(iii), 8(b) 14(a)(ii) and 14(b) (ii), on such date as the Minister may, by notice in the Gazette, appoint

Mr. Temporary Deputy Chairman, Sir, I beg to move that the Committee doth report to the House its consideration of The Finance Bill and its approval thereof with amendments.

Mr. Temporary Deputy Speaker, Sir, I beg to report that a Committee of the whole House has considered The Finance Bill and approved the same with amendments.

Mr. Temporary Deputy Speaker, Sir, I beg to move that the House doth agree with the Committee in the said report.

(Mr. Kimunya) seconded.

Mr. Temporary Deputy Chairman, Sir, I want to thank the Minister for the---

Order, Mr. Ogindo! It is the Speaker!

Mr. Temporary Deputy Speaker, Sir, thank you. We have been with the Chairman for a very long time and I got stuck with it. I want to thank the Minister and everybody else for a job well done despite the vigorous war that we have fought. I think all that began well has ended well.

Order, hon. Members! This is not the Third Reading. You can use the platitudes at the Third Reading.

Mr. Temporary Deputy Speaker, Sir, I beg to move that The Finance Bill be now read the Third Time.

(Mr. Jamleck Irungu Kamau) seconded.

Mr. Temporary Deputy Speaker, Sir, I want to thank you for giving me this opportunity. I thought I must say this, we are glad to have a Minister for Finance who has a good heart.

You were supposed to be on honeymoon, but I do not think you have been on honeymoon. I think you have done a good job in attempting to bring some unity and I am glad that even if you took our Kiambu seat, you are worth it.

Mr. Temporary Deputy Speaker, Sir, I also want to thank the Minister for a job well done, but I am concerned about the plight of Kenyans, particularly the issue of the middle class. There is no economy which will ever grow until we are able to manage and provide for our middle class.

Order, hon. Konchella! This is Third Reading!

Mr. Temporary Deputy Speaker, Sir, I would like the Minister to consider in future to come up with a difference between commercial and social loans, so that any fund which is provided by the public should not earn more than 1 per cent interest in terms of loans to homes. This is an area we need to handle as a nation to increase home ownership by our middle class people.

Thank you very much, Mr. Temporary Deputy Speaker, Sir. This is just to thank and congratulate the Minister for Finance and all those who made this possible that we have moved to this stage. The bipartisan way in which we have done this and moved the country forward is something that this House can be proud of, and I would like to be associated with the success.

Mr. Temporary Deputy Speaker, Sir, let me take this opportunity on behalf of the entire Government to thank this House for finally bringing to a close this issue of the Finance Bill. Despite the push and pull, at least, we made good progress and we achieved what is good for the Kenyan people. I want to just record those thanks for Members not just for passing the Bill, but for having sacrificed their time and staying behind. I am sure we will continue until we finish this business for the other remaining one small matter after the passage of the Finance Bill.

The Chairman of the Committee on Energy, Communication and Information, since they denied you the amendment, you can just say one word.

Thank you, Mr. Temporary Deputy Speaker, Sir. I also want to join my colleagues in congratulating the Minister for a job well done. I was very apprehensive, especially about the infrastructure which had come to a screeching halt just because the Finance Bill was not passed. After today, we are going to have water, roads

Mr. Temporary Deputy Speaker, Sir, I beg to move the following Motion:- THAT, this House adopts The Report of the Departmental Committee on Administration and National Security on the Vetting of Nominees to the Independent Policing Oversight Board laid on the Table of the House on Wednesday 18th April, 2012.

I am aware of the law of diminishing returns. The Members have been here long enough and I will be quick in moving the Motion.

Section 8(1) of the Independent Policing Oversight Authority Act, 2011, provides that the Independent Police Oversight Authority shall be governed by a body to be known as the Independent Policing Oversight Board. The Board shall consist of the Chairperson, seven other persons and the chairperson of the Kenya National Human Rights and Equality Commission who shall be an ex-officio . In accordance to this section, in Section 11(5) of the aforesaid Act, the President shall select the chairperson and members of the Board from the list of qualified persons forwarded to him by the selection panel and subsequently forward the names of the persons so selected as chairperson and members of the Board to the National Assembly for approval.

Mr. Temporary Deputy Speaker, Sir, in a letter from the Permanent Secretary, Secretary to the Cabinet and Acting Head of the Civil Service dated 5th March, 2012, the National Assembly was informed that His Excellency the President, in consultation with the Prime Minister, had nominated the following persons for the position stated hereunder:- 1. Mr. Macharia Njeru for Chairperson. 2. Ms. Fatuma Ali Saman for Member. 3. Mr. Mbuko Thomas Kagwe for Member. 4. Ms. Jedida Filate Ntoyayai for Member. 5. Ms. Jane Njeri Njoki Onyango for Member. 6. Ms. Madoka Grace Mabra for Member. 7. Mr. Vincent Kibet Kiptoo for Member. 8. Ms. Rose Awuor Bala for Member. Mr. Temporary Deputy Speaker, Sir, on 6th March, 2012, in a Communication from the Chair, the Speaker directed that the names of the eight nominees to the Board and their accompanying curriculum vitae be referred to the Departmental Committee on Administration and National Security for consideration prior to the approval by the House---

Order, hon. Outa. You are out of order!

The Committee tabled its recommendations on or before 20th March, 2012.

Order, hon. Kapondi! Hon. Outa, you are completely out of order the way you are dealing with the microphone. You should go out for the remainder of today.

Thank you, Mr. Temporary Deputy Speaker, Sir, for protecting me.

Order, hon. Kapondi, there is a stranger in the House.

Proceed, hon. Kapondi!

Mr. Temporary Deputy Speaker, Sir, after consideration of the nominees, the Committee recommends that Parliament approves the appointment of the eight persons to respective positions to which---

On a point of order, Mr. Temporary Deputy Speaker, Sir. This is an issue that we have really been waiting to have time to debate because of the reforms that we are expecting in the security sector.

Mr. Temporary Deputy Speaker, Sir, I would like to raise the issue of quorum because I do not feel that there is enough debate going to be given to this particular Report of this Committee.

Clerks! Order, Members, we do not have quorum. I order that the Division Bell be rung!

Order, hon. Members! Eight minutes are over now; you can stop the ringing the Bell. Could you count and see if we have a quorum?

Hon. Members, there being no quorum, the House stands adjourned until Tuesday 24th April, 2012, at 2.30 p.m.

The House rose at 10.10 p.m.