Court of Appeal lifts ban on CDF

The Court of Appeal has overturned a High Court decision that had invalidated the entire National Government Constituencies Development Fund (NGCDF) Act, 2015, finding that the lower court erred in striking down the law in its entirety.

In a detailed ruling, the appellate court set aside the judgment and decree issued on September 20, 2024, holding that subsequent amendments to the Act in 2022 and 2023 did not render the original petition moot.

The judges found that the NGCDF Act does not undermine the constitutional principles and structure of devolution, nor does it offend the division of functions between the national and county governments, as had been held by the High Court.

“Contrary to the finding by the High Court, the NGCDF Act, 2015 does not violate the principles and structure of devolution, or offend the division of functions between the national and county governments,” the judges ruled.

The case started in 2016 when petitioners challenged the NGCDF Act, 2015 at the High Court, claiming it violated devolution and public finance principles.

The High Court declared the law unconstitutional in September 2024.

The National Assembly and the NGCDF Board appealed, seeking to overturn the ruling and uphold the Act.

Parliament had argued that the fund is an instrument of the national government, funded from the national share of revenue and that MPs only exercise oversight, not management.

They maintained that the Act complies with constitutional requirements and the amendments in 2022 and 2023 removed any legislative control over project implementation.

The petitioners, however, contended that the Act bypassed constitutional processes, potentially duplicated county projects, and allowed MPs indirect control over development functions, undermining devolution and prudent financial management.

In its judgement delivered on Friday, the appellate court faulted the invalidation of the Act.

While the High Court had rejected the applicability of the basic structure doctrine in Kenya, it nonetheless proceeded to conclude that using constituencies as service delivery units created an unconstitutional third tier of government.

The appellate court found this approach inconsistent.

“Once the court found that the basic structure doctrine is not applicable in Kenya, the very foundation of that particular challenge collapsed,” the bench stated.

The judges emphasised that the NGCDF is expressly designed as an instrument of the national government.

They pointed to Article 6(3) of the constitution, which requires the national government to ensure reasonable access to its services across the country, noting that this may involve decentralisation of national functions.

Subsidiarity (the principle that a central authority should have a subsidiary function, performing only those tasks which cannot be performed at a more local level), the court noted, does not require the national government to abdicate its functions to county governments.

“The principle contemplates that each level of government discharges its functions at the lowest effective level. It is thus foreseeable and constitutionally sanctioned, that the national government may decentralise its own structures and mechanisms in order to perform the functions assigned to it by the Constitution,” the bench observed.

On claims that the fund leads to duplication of projects and wastage of public resources, the court found no evidence to support such assertions.

It said NGCDF has been operational since 2016 without any demonstrated conflict between the two levels of government.

“We did not find in the record any evidence placed before the High Court to demonstrate that, during the period of its operation, any dispute has arisen between the national government and the county governments on account of duplication of funding, confusion in project implementation, or lack of clarity to which level of government is responsible for particular projects,” the judges said.

The court observed that the Senate and the Council of Governors were parties to the case but did not raise complaints of interference with county functions.

It added that even where disputes arise, existing statutory mechanisms provide for intergovernmental consultation and mediation.

“Courts do not invalidate legislation on the basis of hypothetical or speculative harm,” the bench cautioned.

Addressing the separation of powers, the judges held that the High Court placed undue reliance on the Supreme Court decision that invalidated the 2013 CDF Act, without sufficiently considering the changed governance structure under the 2015 law.

They said MPs no longer manage the fund or sit in constituency committees and that their role is limited to oversight as provided under Article 95 of the constitution.

Finally, the Court of Appeal held that even if a specific provision were found unconstitutional, that alone could not justify striking down the entire statute.

“Under the principle of severability, a court must determine whether the invalid portion can be removed without defeating the purpose or structure of the statute,” the judges said.

The appeal was allowed, and the NGCDF Act, 2015 upheld.