A long long time ago when Tigers used to smoke and I used to hunt, I never managed to kill any Leopard but the arrows I shot caught antelopes by surprise. Now, I no longer go to the foothills to hunt but I sure can strangle Cougars-the hunter in me still lives on. Hunting for knowledge was interesting in primary school as we equally enjoyed the new friendships we grew while on the football pitch or during the moments we watched rugby across the fence every evening-Horace “HoracioDelBusto” Otieno and Oscar Osir were a beauty to watch. Horace was the Elephant while Oscar was the hare on the rugby pitch hunting for tries. Away from all these interesting things, I tried out something that I exceedingly did well in-business. Kids loved biscuits and I ventured into the business of selling biscuits-Britannia biscuits. This venture was such a lucrative hunting ground for extra coins as pocket money since a box which contained 320 pieces of biscuits was going for KShs. 150/- and I sold a piece at KShs. 1/- making a revenue of KShs. 300/-(provision for broken pieces was 20). This translated to a profit of KShs. 150/- (300-150). Since then, I have always loved business.
When I joined the corporate world a decade ago, maximisation of shareholders’ wealth is one sweet song we sang in unison-lower the cost, maximise the profits. What if we practise this in the public sector through strategic implementation of the Public Finance Management Act(PFMA) with the aim of maximising shareholders’-public-wealth? The government through the National Treasury offers Stewardship in safeguarding the assets of the nation given the country’s great wealth which if well managed can spur growth in various sectors of the economy. The work of the government should not only be limited to safeguarding these assets in the best interest of the citizens but also strive to integrate strategic finance with public finance to multiply the nation’s assets so as to sustain the growing population and guarantee future generation’s sustainability.
What is Strategic Finance? This is an approach that aligns financial goals with an entity’s strategic plans or structure. It does not stop at the conventional financial planning and analysis but goes an extra mile by focusing on long term growth and value creation-It is a confluence of financial expertise with strategic thinking to inform decision making and guide business towards sustainability and make it a going-concern (planning for future growth, managing risks, and making decisions that drive the entity forward). The ideologies in Strategic Finance which can be employed to realise Strategic Public Finance are:
- Strategic Planning-Attention should be paid to developing short, medium and long-term public finance with the country’s strategic objectives such as adopted manifestos and other frameworks like the Vision 2030 and SDGs. This does not only stop at revenue collection targets by KRA but also developing fiscal policy strategies to achieve sustainable growth and value creation in various sectors over long term periods. Planning ensures that the revenue collected are allocated effectively to departments in both the national and devolved governments to support their vision and mission on a need to need basis.
- Mergers & Amalgamation-Mergers involves dissolving of the original companies or departments to form a new one making the original ones non-existent while in amalgamation, the original entities/departments continue to exist as part of the new outfit. Non-performing departments that have become obsolete can be merged with operational ones to minimise running costs and have lean ministries with affordable wage bills. To implement this or make it a success, there has to be a proper integration planning to ensure both the operational and financial aspects of the combined departments are seamless and well aligned.
- Public-Private-Partnerships: Collaborative arrangements can provide an avenue for better management of resources, application of technologies or an extensive outreach which equally impacts the government’s service delivery agenda positively. State departments can use professionals to conduct R&D and feasibility studies before implementation of such strategic plans and this could mean professionalisation of the public service and state departments to ensure qualified individuals help the government and general public get value for their money and taxes.
- Regional Strategic Positioning & Product Differentiation- What makes us stand out amidst our peers in the EAC and African Continent at large? What unique value propositions do we have in the region to support sectors such as agriculture, trade, communication, infrastructure and quality of our exports? To achieve this, State departments ought to identify our country’s trade competitive advantages and translate them into value creation/addition through effective utilisation of the revenue allocation. This will bolster Kenya’s market position in Africa and beyond hence manageable balance of payment.
- Taking Calculated Risks & Risk Management-Taking proactive approach towards risk management and mitigation helps to navigate uncertainties and protect resources and assets against unforeseen risks. National Treasury through the CBK has drafted monetary policies (Green Taxonomy) to guard against climate change risks which might impact different sectors such banking and insurance as well as quality and value of assets negatively.
- Strategic Budgeting-Strategic Public Finance should go beyond the traditional budgeting process by focusing on long-term revenue requirements and resource allocation. Strategic Public Budgeting considers forecasting future revenue needs, aligning budgets and fiscal policies with long term objectives, and ensuring that national resources are distributed fairly and efficiently to help support and achieve government’s strategic agenda. This approach to budgeting will enable the government have effective and favourable tax policies and control public expenditure hence minimising public wastage and proliferation of government resources.
All these aim to have significant influence on government’s overall service delivery and the transformation agenda which every middle-income economy country is aiming to attain. These are all business growth oriented and if integrated within public finance sphere will tremendously spur economic growth hence positive economic outlook.
