EXECUTIVE SUMMARY 

Objective and Purpose 

The purpose of the PEFA climate assessment is to provide a baseline for monitoring and evaluating the extent to which climate change is mainstreamed into government PFM systems, going forward. The PEFA climate questionnaire was completed by the Ministry of Environment with input from the National Environmental Management Authority (NEMA). 

The fiscal years for this assessment are FYs 2018/2019, 2019/2020, and 2020/2021, same as the standard PEFA. The scope of the climate responsive PFM assessment is the same as that of the standard PEFA. The last budget submitted to Parliament for purposes of this assessment was FY2021/2022 budget submitted in FY2020/2021. The cut-off date was 30th June 2021. The field work began with a virtual kick-off meeting on 18th July 2022, with all members of the oversight team being present. A three-day training workshop was organised in Naivasha – Kenya, from 20th to 22nd July 2022 for key government officials and development partners. The field mission ended on 26th August 2022 with a debriefing meeting. The assessment was jointly conducted by international and local PEFA experts. There are 14 PEFA climate indicators. All were assessed and applicable. 

Implementation

In terms of implementing climate change policies the following are the most important measures currently being implemented by the Government to reduce the country’s generation of GHG emissions. 

• Increasing of renewables in the electricity generation mix of the national grid. Enhancement of energy and resource efficiency across the different sectors. 
• Making progress towards achieving a tree cover of at least 10%of the land area of Kenya. 
• Make efforts towards achieving land degradation neutrality. 
• Scaling up Nature Based Solutions (NBS) for mitigation 
• Enhancement of reduced emissions from deforestation and forest degradation plus (REDD+) activities 
• Clean, efficient, and sustainable energy technologies to reduce over-reliance on fossil and non-sustainable biomass fuels. 
• Low carbon and efficient transportation systems. 
• Climate smart agriculture (CSA) in line with the Kenya CSA Strategy with emphasis on efficient livestock management systems. 
• Sustainable waste management systems. 
• Harnessing the mitigation benefits of the sustainable blue economy, including coastal carbon Payment for Ecosystem Services (PES). 

The following are the most important measures currently being implemented by the government to adapt to climate change impacts 

• Index based weather insurance 
• Climate proofing of infrastructure 
• Climate smart agriculture 
• Building of dams for provision of water in arid areas 
• Development of geothermal sources of energy as non-weather dependent sources 

ASSESSMENT FINDINGS AND WAY FORWARD

Main findings

This section provides an overview of findings of the assessment of existing practices compared with the PEFA Climate framework. It focuses on key PFM tools and processes in place to support the implementation of climate change policies, and how they contribute to the achievement of the three budgetary outcomes – aggregate fiscal discipline, strategic allocation of resources and efficient service delivery- while implementing these policies. This section will also highlight possible areas of improvements on the basis of the inputs from the inception questionnaire. The detailed analysis of findings and evidence to score the indicators is presented in section 6.3 of the report.

The overall performance on the 14 indicators under PEFA climate framework present a mixed bag of results with some PFM processes scoring high in terms of integrating and mainstreaming climate change issues while other areas have lagged (see figure 1 below) either due to rigidity in existing laws, lack of capacity and technical knowhow on climate change matters within some government entities and mere teething problems not just on climate change responsive PFM but the entire PFM processes especially among county governments. Overall, the government has put in place vibrant climate change laws, regulatory framework, policies, and plans geared towards addressing climate change challenges that the country is facing. However, there are weaknesses in implementing the climate change strategies as discussed in section 6.3 of this report and which will require collaborative effort within all levels of government to alleviate.

Strengths and areas of improvement

The government has performed well on climate responsive fiscal decentralization framework (see figure below) especially in supporting county governments to put in place systems PFM arrangements that are similar to national government, building their capacities and guiding them on climate proofing their processes. This accompanied by consistent allocation of resources. More effort is required on tracking climate related expenditure and reporting as well as on how to factor climate change mitigation and adaptation planned expenditure into budget proposals to support implementation of climate change strategies. This will enable the government to better achieve strategic allocation of resources. Strategic allocation of resources involves planning and executing the budget in line with government priorities aimed at achieving policy objectives.

Efficient service delivery as a budgetary outcome requires using budgeted revenues to achieve the best levels of public services within available resources. The government has accomplished moderately in the provision of climate related performance information which is critical for planning as indicated by CRPFM 12 in the figure below.

Publishing information on climate related objectives, key performance indicators, outputs and outcomes is critical for measuring performance and for ease of oversight by legislature. Tax policies aimed at reducing GHG emissions and increase resiliency and their implementation thereof should be addressed. The finance Act 2022 introducing a tax incentive that encourages the use of market approaches for low carbon development is a good starting point. It is equally important that the government enforces incorporation of specific climate objectives, targets, and indicators in the performance contracts of extra budgetary units and public corporations in charge of implementing climate related programmes for better service delivery to communities faced with immense climate change challenges.

*Kindly note that in the text of this assessment report document the descriptive dimensions 5.2 and 5.3 will appear swapped, as this assessment was prepared before the final version of the PEFA Climate Supplementary Framework.