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Relax rules for NGOs to unleash their full potential

By William Maema

As Kenyans troop back to urban centres from their annual migration to rural areas where they religiously celebrate the festive season, it is fair and just to pay tribute to the great work of non-governmental organizations which literally sustain life and provide livelihoods to thousands of indigent Kenyans especially in the marginalized regions of our country.

Kenyans living in arid and semi-arid areas readily affirm that international NGOs and faith-based charity organizations constitute the only government they know except, of course, during the electioneering period when they are made to feel that they also count as Kenyans.

NGOs, both local and international, contribute immensely to the socio-economic development of Kenya not only through the inflow of much-needed foreign currency but also in the provision of direct and indirect employment opportunities to thousands of Kenyans, training and employment opportunities as well as international exposure to our well educated young population. Their personnel also purchase local goods and services and pay substantial rental income to owners of residential and commercial properties in addition to contributing to the national tax kitty through payment of employment taxes.

NGOs, if well engaged, can be effective brand ambassadors for the country. Owing to their direct engagement with the local population, NGO staff know an awful lot about the social mood of the country on real time basis. What they say or not say about the country to their colleagues, families and friends back home can potentially impact the country’s brand for good or for worse. NGOs can, therefore, be effective instruments for attracting direct foreign investment and promoting tourism in the country.

There is therefore a solid business case for the Government of President Ruto to deliberately tap into the huge resource that is the NGO sector by creating a more conducive legal and regulatory environment for the smooth operation of NGOs and maintain Kenya’s lead as the region’s most preferred base for international NGOs. Sadly, rightly or wrongly, Kenya is viewed as a country that tolerates the NGO sector as a necessary evil rather than the essential development partner that it is.

Fortunately, what needs to be fixed does not require much effort or financial resources. Most of the bottlenecks stifling the sector are of an administrative nature which can be addressed through a change of mindset and minor policy adjustments.

The first step is to bring into force, with or without amendments, the Public Benefits Act which was assented to by President Kibaki in 2013 but is still gathering dust on some shelf pending the gazettement of the commencement date. The PBO Act was intended to repeal and replace the archaic and oppressive Non-Governmental Organizations Coordination Act which was passed in 1990 at the height of the clamour for multi-party democracy. Its principal objective was to reign in foreign organizations which the government of the day alleged were being used by “their foreign masters” to fund pro-democracy initiatives during the one party era. By all accounts, this law is no longer fit for purpose in a democratic and progressive State 33 years later.

The registration period of NGOs should be substantially reduced from the current 6 months to a few days through the introduction of online filing and processing of applications as well as doing away with the archaic but mandatory vetting of applications by the National Intelligence Service. Such vetting, if necessary, can be conducted after registration and the appropriate action taken depending on the outcome.

The law should be amended to recognise the unique distinction between local and foreign NGOs the same way that the Companies Act recognizes the difference between a local (subsidiary) company and its parent (holding) company. The regulator treats every NGO registered in Kenya as a stand-alone body corporate and frowns upon any reference to affiliation with the parent foreign organization in the constitution.

It is untenable for the regulator to disregard the parental oversight role of the foreign NGO by treating its local chapter as an autonomous body corporate over which the parent NGO has no mandate. This position has created significant challenges for foreign NGOs seeking to extend their programmes into Kenya since their intention is never to cede control of the locally established entity but simply create a vehicle for undertaking programmes in Kenya in much the same way as multinationals do. Most foreign NGOs find the requirement to have a separate Board in Kenya as an administrative nightmare which is inimical to their global structure.

The decision of whether the NGO to be established in Kenya is to be purely foreign (akin to a branch of a foreign company), local (akin to a subsidiary) or a hybrid of the two should be left to the international Board of the parent NGO.

While the requirement for one third local Board component is understandable and sound, it should not be a pre-condition for registration as is currently the case. Foreign NGOs should be given a grace period of at least three years to identify and recruit suitable local Board members rather than being required to do so at inception. This is the practice in other regulated sectors such as telecommunications.

The requirement that employees of parent organizations may not be Board members of the Kenyan NGO makes no logical or practical sense since it is they who give the funds, direct policy and oversee the operations of the Kenyan entity and report to the global board.

 While the rotation of Board members is a well-founded best practice, in appropriate circumstances NGOs should be allowed to re-appoint Board members who have exhausted their constitutional term limits subject to obtaining the approval of the NGO Board which should not be unreasonably denied. The absolute maximum of two 3 year terms does not work for the vision bearers of local NGOs and key personnel of international organizations who are forced to exit prematurely while their skills are still required by the NGO.

Too many unnecessary approvals are required from the NGO Board in order for an NGO to operate compliantly. For instance, the requirement for approval of the NGO Board before opening bank accounts and for the signatories even for an additional account in the same bank and branch is unnecessary and adds to the workload of the already over-stretched staff of the regulator and needlessly stalls the operations of NGOs. It should suffice for the NGO Board to have the right to receive such information from the NGO upon request.

While every NGO is required to file annual returns, a fine of Ksh.25,000/- for late filing is rather punitive considering that in most cases the delay is inadvertent. 

Further, the new requirement that an NGO may not file nil returns during dormancy is inconsistent with the reality that most NGOs rely exclusively on donor funding and are sometimes forced to go into dormancy for several years pending receipt of further funding. Such NGOs should be allowed to file nil returns to maintain their registration and avoid the fines for late filing or deregistration.

At the application stage, an NGO is required to indicate a maximum of 5 counties in which it proposes to undertake operations, if registered. If it wishes to operate in other counties, it must obtain prior approval from the NGO Board upon demonstrating success in the initial counties of operation and availability of funds to venture into other counties. NGOs should be allowed to operate in any part of the country where their programmes are required considering that the nature of operations of some NGOs does not lend itself to the strictures of physical boundaries. Also, emergency humanitarian response may be needed in counties that were never initially envisaged during registration.

Strangely, the only sanction provided for in the existing law for any violation of the Act is deregistration. To the credit of the NGO Board, however, it has not misused this power to deregister non-compliant NGOs. It normally issues compliance notices as a prelude to deregistration while wielding the draconian sanction as a weapon of last resort.

Finally, the process of obtaining work permits for expatriate staff should be streamlined and made more predictable, easier and shorter. Currently, the application first goes to the NGO Board which takes approximately 3 months to be approved after which it is forwarded to the Department of Immigration Services where it takes a similar period. In contrast, applications which do not require NGO Board approval and are filed directly with the DIS take half the time to be processed. So much for what was intended to be a fast-track process for NGOs.

The NGO sector, if well tapped, nurtured and supported, can be a portent catalyst for socio-economic change in Kenya.

The article was published in the Business Daily and can be accessed here.