Research on the implications of public debt and the wage bill on the realization of social-economic rights in Kenya

  • Contract
  • Consultancy
  • Nairobi
  • 1 year ago

TERMS OF REFERENCE FOR A CONSULTANT TO UNDERTAKE RESEARCH ON THE IMPLICATIONS OF PUBLIC DEBT AND THE WAGE BILL ON THE REALIZATION OF SOCIAL-ECONOMIC RIGHTS IN KENYA

1.0 ABOUT THE KENYA HUMAN RIGHTS COMMISSION

The Kenya Human Rights Commission (KHRC) is a premier non-governmental organisation (NGO) in Africa, dedicated to advancing human rights-centred governance at all levels. Guided by its vision of a society of free people and its mission to promote human dignity, freedoms, and social justice in Kenya and beyond, KHRC works through a broad network of partners. These include over 30 Human Rights Networks (HURINETs) and grassroots organisations across more than 30 counties, over 30 national-level state and non-state actors and coalitions, and more than 50 sub-regional, regional, and international human rights organisations and networks. As a domestic transnational organisation, KHRC continues to drive impactful interventions at the county and national levels—efforts that form the core of our legitimacy and extend its influence to regional and international platforms.

2.0 BACKGROUND AND RATIONALE

According to a report issued by the World Bank[1], key development challenges such as poverty, inequality, youth unemployment, transparency and accountability, continued weak private sector investment, and the vulnerability of the economy to internal and external shocks persist, despite Kenya having made significant political and economic reforms that have contributed to sustained economic growth and political stability. Service delivery remains a significant challenge due to the increasing burden of public debt, which takes up a considerable slice of government revenue and potentially diverts resources from essential services. Total debt service as a percentage of revenue was 58.8% in 2023 and 69.6% as of June 2024, meaning a large portion of the government’s revenue is used to service the debt. 

As per the latest data from the Central Bank of Kenya (CBK), Kenya’s public debt reached Ksh10.6 trillion, (equivalent to 70.0% of Gross Domestic Product (GDP)) as June 2024, marking a 2.9% increase from Kshs 10.3 trillion (70.8% of GDP) recorded in June 2023[2], making 39.6% points higher than the International Monetary Fund (IMF) threshold of 30.0% for developing countries.

The now high public debt raises concerns about its sustainability and implications for fiscal and macroeconomic stability, as a significant allocation of resources is set aside to repay debt, impacting on the ability to invest in public services such as education, social welfare, healthcare, and infrastructure, hence depriving the taxpayer a chance to enjoy social-economic rights through provision of services by government. Kenya’s tax system predominantly covers the value-added tax, income tax, customs duty, and excise duty, providing a strong nexus for solidifying a public contract, where citizens pay taxes expecting the government to deliver effective and quality services.

In Kenya, public debt has continued to reduce the fiscal space, leaving limited room for government spending on essential public services and crowding out private investment, which results in higher interest rates. For instance, interest payments made up the bulk of Kenya's debt servicing costs at Kshs 689.0 billion, equivalent to 57.4% of the total debt service in FY 2022/2023, more than the Ksh578.0 billion worth of interest payments in FY 2021/2022 and equivalent to 63.0% of the total debt service costs as of June 2022. Countries like Kenya are currently perceived as riskier, resulting in lenders demanding higher interest rates on new loans, further increasing the cost of debt servicing and straining public finances. The combination of increased debt servicing costs and reduced fiscal space has pushed the governments to enormously cut spending on critical public services like infrastructure, education, and healthcare, an injustice to their citizenry. 

Further, the wage bill crisis is one that Kenyans cannot turn a blind eye to, especially because the current public service productivity is far from driving, among others, high and sustained revenue growth, and improved service delivery. The wage bill grew steadily from Ksh464.90 billion in FY 2012/13 to Ksh733 billion in FY 2017/18 and increased to Ksh795.2 billion in FY 2018/19 due to, among others, uncurbed employment in the counties since devolution. Despite evident efforts by the Salaries and Remuneration Commission (SRC) to reduce the wage bill, the same continues to crowd out spending on development and negatively impacts the government’s ability to render public services. Notably, the politicisation of the wage bill remains a key concern. For instance, the recent increase of state departments from 50 to 57 negatively impacts the already bloated wage bill, as taxpayers are set to pay an additional Ksh66.6[3] million a year in salaries for the seven newly appointed principal secretaries.

Research by Twaweza Institute and the National Taxpayer Association revealed that 66% of people pay taxes to enable the government to deliver services. Therefore, citizens should hold governments accountable for failing to deliver services. Notably, human rights only become more than declarations of belief when they are clearly defined, have political[4] backing and are legally enforced. Legal rights exist as a fiscal reality only when they have budgeted costs, and they cannot be protected or enforced without public funding and support from citizens. This right alone explicitly links the right and the resources required to fund it.

3.0 PROBLEM STATEMENT

The realisation and enjoyment of socio-economic rights by citizens remain significantly hindered, despite the country's commitment to ensuring these rights as enshrined in Article 43 of the constitution and various international human rights frameworks. A key contributing factor to this challenge is the mismanagement of public resources, which exacerbates the inefficiency of social service delivery and undermines economic development. Specifically, the growing public debt burden, persistent corruption, and an inflated wage bill have diverted essential resources away from vital public sectors such as healthcare, education, and infrastructure development. Misallocation of resources has left a substantial portion of the population without access to basic socio-economic rights. As a result, Kenya faces a paradox where, despite an increase in economic growth, many of its citizens are not reaping the benefits of this growth, and the realization of their socio-economic rights remains a distant aspiration.

2.0 PURPOSE AND OBJECTIVE OF THE RESEARCH

2.1 Overall objective

This research seeks to explore the extent to which financial mismanagement issues, particularly public debt repayment and the ballooned wage bill, contribute to the lack of enjoyment of socio-economic rights in Kenya. The findings of this study will fill a gap in the existing body of knowledge and provide actionable recommendations to tackle the systemic challenges inhibiting equitable distribution of resources to ensure that all citizens can fully realise their socio-economic rights.

2.2 Specific Objectives

  1. To assess the status of implementation of social economic rights in Kenya.
  2. To investigate the impact of public debt servicing and the wage bill on the realisation of socio-economic rights. Specifically, provide the linkage between increased public debt repayment and inflated wage bill on the enjoyment of specific Article 43 rights, building on the existing report developed by The Institute for Social Accountability[5].
  3. To evaluate the implications of public debt repayment and inflated wage bill on marginalised groups, including youth, women, and indigenous groups.

3.0: SCOPE OF THE STUDY

The focus of the study will be limited to Nairobi City County, with a particular focus on residents in both informal (characterized by lower socio-economic status) and affluent estates (wealthier, higher socio-economic status). The geographical focus will allow the research to examine the inequality dynamics between different socio-economic classes, highlighting the disparities in realising socio-economic rights. The study will explore how public debt servicing, the inflated wage bill, and mismanagement of public resources affect the fulfilment of socio-economic rights, especially for marginalised groups, including women and youth.

4.0 DELIVERABLES

The consultants will be expected to produce the following deliverables:

  1. An inception report detailing the survey methodology, work plan, and tools for data collection.
  2. A draft report summarizing preliminary findings of the survey.
  3. A validation workshop to present and discuss findings with stakeholders.
  4. A final report incorporating feedback from stakeholders, complete with recommendations and policy briefs for each of the target objectives.

5.0 TIMELINES

The consultancy time will be 20 days (excluding KHRC review time), effective from the date of signing this contract.

6.0 PROFESSIONAL EXPERIENCE AND SKILLS REQUIRED

  1. Proven experience in Public Finance Management, budget analysis and research.
  2. Strong analytical skills and the ability to interpret complex data.
  3. Familiarity with the Human Rights-Based Approach, public debt, and wage bill frameworks, practices, and conversations in Kenya.
  4. Knowledge and application of the legal and policy frameworks related to Public Finance Management.
  5. Proven experience in undertaking national and county evaluations or assessments with outstanding skills in qualitative and quantitative research and data analysis, specifically around budget research/analysis/tracking.
  6. Demonstrated professionalism, integrity, ability to work independently with minimum supervision, adherence to set timelines, and availability during the research peri

7.0 HOW TO APPLY

Bids should include the consultant’s up-to-date CV (including at least three recent professional organisations that have contracted the individual/company), a sample report of previous work related to this assignment, a cover letter explaining interest and suitability for this assignment, a proposal outlining methodology and work plan, and a financial proposal (maximum six pages). The interested candidates are required to submit their bid documents by Thursday, May 1, 2025, to consultancy@khrc.or.ke quoting the title of the assignment.

REFERENCES

[1] https://www.worldbank.org/en/country/kenya/overview

[2] Reports from the National Treasury

[3] https://nation.africa/kenya/news/how-the-new-seven-pss-will-impact-the-bloated-wage-bill-4976336

[4] Holmes and Sunstein 1999

[5] https://drive.google.com/drive/folders/17Nj7oHbBhN561kga3ejbTU4RTzE_goq-

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