Ruto orders two-year business permit waiver for NYOTA beneficiaries

President William Ruto's directive for county governments to waive business permit fees for beneficiaries of the National Youth Opportunities Towards Advancement (NYOTA) Programme for two years aims to reduce the cost of doing business for young entrepreneurs. While laudable in its intent to foster youth empowerment, this directive raises significant legal questions regarding the constitutional autonomy of county governments in Kenya. Under the devolved system, counties possess distinct powers to levy taxes and charges, primarily through their respective County Finance Acts. The implementation of a nationwide waiver, therefore, necessitates a careful navigation of inter-governmental relations and adherence to the principles of public finance management, potentially requiring legislative action by each county assembly to give the directive legal force.

In a move aimed at bolstering youth entrepreneurship and lowering the cost of doing business, President William Ruto recently directed all county governments to waive business permit fees for beneficiaries of the National Youth Opportunities Towards Advancement (NYOTA) Programme for a period of two years. This presidential directive, reported by KBC Kenya, underscores the government's commitment to supporting young entrepreneurs and integrating them into the formal economy. The NYOTA Programme itself is a significant national initiative designed to enhance youth employability, promote entrepreneurship, and encourage financial security among young Kenyans.

While the policy objective of empowering youth is widely supported, the directive immediately brings to the fore critical legal and constitutional considerations within Kenya's devolved governance structure. County governments, as distinct entities, derive their revenue-raising powers from the Constitution and specific Acts of Parliament. The enforceability and implementation of a national executive directive that impacts county-level revenue collection present a complex interplay between national policy objectives and the fiscal autonomy of devolved units. This article will delve into the legal framework governing county revenue, the nature of presidential directives, and the implications for legal practitioners advising on compliance and inter-governmental relations.

Kenya's Constitution of 2010 established a devolved system of government, creating 47 county governments with distinct functions and powers, as outlined in Article 186 and the Fourth Schedule. Central to county autonomy is their power to raise revenue. Article 209(3) and (4) of the Constitution grants counties the authority to impose property rates, entertainment taxes, and any other tax authorised by an Act of Parliament, as well as charges for services. This power is operationalised through the County Governments Act, 2012, and individual County Finance Acts, which specify the types of fees and charges, including the Single Business Permit (SBP). The SBP consolidates various local licenses into one annual permit, simplifying compliance for businesses.

The Public Finance Management Act, 2012 (PFMA), further regulates the financial management of both national and county governments. Section 109 of the PFMA mandates that all monies raised or received by or on behalf of county governments be paid into the County Revenue Fund. County Finance Acts, which are approved by County Assemblies, set the annual fee schedules for various permits and services. The NYOTA Programme, a five-year Government of Kenya initiative supported by the World Bank, targets vulnerable youth aged 18-29 (up to 35 for persons with disabilities) with a Form Four education level or below, who are unemployed, underemployed, or in low-income work. It provides training, entrepreneurship support, including start-up capital of KES 50,000, and promotes a culture of savings.

The President's directive to waive business permit fees for NYOTA beneficiaries presents a fascinating legal challenge to the principles of devolution in Kenya. While the President, as the Head of the National Executive, exercises significant authority under Articles 131 and 132 of the Constitution, the power to impose and waive local taxes and charges primarily vests in county governments. Article 209 of the Constitution explicitly grants county governments the power to impose charges for services, and this power is exercised through county legislation, specifically the County Finance Acts.

A presidential directive, while carrying significant political weight, does not automatically override or amend existing county legislation. For the waiver to be legally effective and binding on county governments, each of the 47 county assemblies would typically need to enact the waiver into their respective County Finance Acts or pass specific resolutions to that effect. The County Governments Act, 2012, establishes county governments as bodies corporate with perpetual succession and powers necessary for the discharge of their functions, including legislative authority through their assemblies.

The Constitution, under Article 189(2), mandates cooperation and consultation between national and county governments, emphasising respect for the functional and institutional integrity of each level. However, a directive on revenue collection, without a clear legislative framework for its implementation at the county level or a compensatory mechanism from the national government, could be perceived as an unfunded mandate or an infringement on county fiscal autonomy. The Public Finance Management Act, 2012, provides a framework for financial management, but it does not grant the national executive the power to unilaterally dictate county revenue policies.

Past judicial pronouncements, such as the High Court's decision in *Republic v. The Cabinet Secretary, Ministry of Health & 3 Others Ex Parte Kenya Medical Practitioners, Pharmacists and Dentists Union* (2015), have highlighted the importance of public participation and adherence to constitutional provisions when national government directives impact devolved functions. While that case concerned health data collection, the underlying principle of respecting constitutional mandates and processes applies. For the waiver to be smoothly implemented, the national government would ideally need to engage in structured consultations with the Council of Governors and individual county governments, potentially leading to a harmonised approach or even national legislation that facilitates such waivers, perhaps with a compensatory funding mechanism to offset lost county revenue. Without such a framework, counties may face budgetary shortfalls or legal challenges if they implement the waiver without proper legislative backing.

President Ruto's directive to waive business permit fees for NYOTA beneficiaries is a significant policy statement aimed at fostering youth entrepreneurship. However, its practical implementation requires careful consideration of Kenya's devolved governance framework. Legal practitioners must advise their clients, both beneficiaries and county governments, on the nuances of this directive.

For NYOTA beneficiaries, while the presidential pronouncement offers hope, the actualisation of the waiver will depend on the legislative actions of individual county governments. Attorneys should monitor the passage of relevant amendments or resolutions in County Finance Acts. For county governments, the directive necessitates a balancing act between supporting national policy and upholding their constitutional mandate for revenue collection and financial management. Legal professionals advising counties will need to assess the fiscal implications and guide them on the appropriate legislative steps to formalise the waiver, ensuring compliance with both national values and devolved powers. The coming months will likely see increased engagement between the two levels of government to harmonise this directive with the existing legal and financial frameworks, setting a precedent for future inter-governmental policy implementation.