A significant change with regard to the legal framework for NGOs has come in the form of the Public Benefit Organisations Act 2013 (PBO Act), which has now replaced the Non-Governmental Organisations Coordination Act (NGO Act). NGOs will now have an easier time registering, and enjoy tax exemptions.
President William Ruto has announced the long-awaited operationalization of the Public Benefits Organization (PBO) Act, which has languished in legal limbo for over a decade. The move spells a breath of relief for civil society organisations that have been pushing for the operationalization of the Act since 2012.
Speaking during the closing ceremony of the United Nations Civil Society Conference in Nairobi on Friday, May 10, President Ruto disclosed that he has taken decisive action to breathe life into the dormant legislation.
He revealed that on Thursday, May 9, he executed the necessary legal instruments to give effect to the PBO Act, effectively transforming it into law.
The enactment of the Act heralds a new era for non-profit entities engaging in public benefit activities within Kenya, establishing a robust regulatory framework to govern their operations. Central to this framework is the creation of the Public Benefits Organisation Authority (PBOA), a regulatory body tasked with overseeing the registration, monitoring, and regulation of Public Benefits Organisations (PBOs).
Comprising key stakeholders from government ministries responsible for PBOs, finance, foreign affairs, and civil society representatives, the board of the PBO Authority will assume pivotal roles in guiding the sector's development.
Among its functions are; registering and de-registering PBOs, advising the Government on their activities and role in national development, maintaining the register, and ensuring compliance with statutory obligations.
Crucially, the PBO Act delineates a clear timeline for processing registration applications, mandating the PBO Authority to issue certificates of registration within 60 days of receiving an application. Unlike the NGO Act, the PBO Act minimises administrative discretion in registration decisions, fostering a more transparent and expedited process.
Registered organisations stand to benefit from various incentives, including income tax exemptions, preferential treatment for value-added tax (VAT), and customs duties exemptions on imported goods or services used for public benefit purposes.
Furthermore, the PBO Act introduces provisions for self-regulation within the sector, allowing the formation of independent PBO forums tasked with developing and enforcing standards of conduct.
Collaboration between the PBO Authority and these forums is encouraged to promote effective self-regulation.
Additionally, the Act envisages the establishment of a National Federation of Public Benefits Organisations, serving as an umbrella entity for registered PBOs and recognised self-regulating forums.
To address disputes and grievances, the PBO Act establishes a PBO Disputes Tribunal, offering an alternative mechanism for redress outside the standard judicial process.
History of the Act
The PBO Act, initially passed by Parliament in December 2012 and subsequently approved by former President Mwai Kibaki in January 2013, aims to establish a comprehensive legal, regulatory, and institutional framework for non-profit organisations engaged in public benefit work across Kenya, consolidating various regulations under a single statute.
Despite its legislative approval, the Act had remained inactive. This inactivity prompted civil society to seek recourse through the judiciary, resulting in a landmark judgment on October 31, 2016.
The court ordered the government to gazette the implementation date within fourteen days, a directive that went unheeded.
Subsequently, on May 12, 2017, another court order reiterated the mandate, granting the government a further thirty days to comply. Once again, the government failed to adhere to the judicial directive. The prolonged delay in setting a commencement date for the Act has posed significant challenges in determining its applicability.
Furthermore, the absence of a clear legal framework has complicated matters, particularly in instances where the provisions of the PBO Act have been invoked in judicial decisions. With two reported High Court rulings relying on the Act's provisions, the ambiguity surrounding its enforcement has only intensified.
