It’s a new dawn in Kenya’s NGO arena, the stakeholders are excited as the more than a decade’s wait has culminated in the gazettement of 14th May 2024 as the day the Public Benefits Act, 2013 was operationalized repealing the more than three-decade old NGO Co-ordination Act, 1992.

Now that the excitement and the dust has settled it is time we take a look at what this means for the rebranded Public Benefits Organizations (PBOs) as the new Act comes with a raft of changes and a bag of goodies.

As the bearer of good news, let us dive straight into the goodies. Registering as a PBO under the PBO Act unlocks a treasure trove of benefits such as;

  • Tax exemptions
  • Direct government financing
  • Preferential treatment in public procurement and contribution to the policy process.
  • Apt benefits if you consider the vast gains of having PBOs in the areas of legal aid, education, poverty eradication, governance and various other sectors that PBOs play an indelible role in.

Beyond the goods, we must appraise ourselves with what having the new Act means. For starters it means a new name. Out with the old Non-Governmental Organization (NGO) tag and in with the new Public Benefits Organization (PBO) moniker. Beyond the name, it also means a new regulatory authority dubbed the Public Benefits Organization Authority and replacing the NGO Co-ordination Organization Board. With a new regulatory authority comes new registration procedures such as having a one tier application away from the two tier system of applying for name reservation, waiting for approval then commencing the application process. The strict timelines of 60 days is also the icing on the cake as it gives a level of certitude to the application process.

However, with the good comes the interesting. The PBO Act recommends that all registered NGOs will have a grace period of one year before they are required to re-register under the PBO Act. This is where the rubber will meet the road as the registration process will come with its own share of complexities. For instance, the assets under the previous NGOs names will require a transfer to the new PBOs, the liabilities as well. The foreign Employees’ work permits are also non-transferable under the Kenya Citizenship and Immigration Act. A very dicey situation for the PBOs over the next one year. The CS and Parliament need to look at this eleven-year-old provision and ask themselves if the mischief it intended to cure then is still at play now.

Another interesting perspective of this particular registration provision is that it intends to bestow the PBO status on PBOs registered under the PBO Act only. However, it also allows for other entities to have the same status even when where they have been registered under a different legal regime. Bestowing such a status on a differently registered entity would negate the purpose of registering under the PBO Act to get the PBO status and take us back to the era of different legal regimes. Maybe the regulations will provide clarity on this conflict.

International Organizations have not been forgotten in the new dawn as they have new rules to follow. For instance, the Authority may exempt an international Organization from registration and instead grant them a permit to operate in Kenya as long as they do not intend to directly implement any activities or programs in Kenya or operate from Kenya to implement any activities or programs in another country. Very interesting provision. Does it mean the organization can implement their activities indirectly? And if so what is the extent of indirect implementation of activities? Another question to be clarified when the regulations are published.

Of note is the establishment of a dispute resolution mechanism, the PBO Tribunal as opposed to the Cabinet Secretary being the arbiter. The Tribunal that may be a great help especially in administrative matters. It has also been bestowed with a strict timeline of 60 days for dispute resolution. It is our hope that an administrative matter such as a name rejection may be resolved by the Tribunal and not find its way to the Supreme Court.

The Act has also provided for various methods of deregistration such as winding up, voluntary deregistration or dissolution, unlike in the past where the options were limited and unclear. The PBO’s assets are also well protected in the Act as upon voluntary dissolution and subsequent deregistration, the PBOs have a right to determine and distribute their assets to other registered PBOs as long as they are certified to be of good standing by the PBO Authority. Where the Authority has cancelled the certificate of registration of a PBO, it may require any officials or members of the organization to provide the Authority with an inventory of the assets of the organizations.

Lastly, the Act permits PBOs to engage in lawful income generating activities as long as the income is used solely to support the PBO for the purpose for which it was established. These include income generated from lawful activities undertaken by the PBOs with its property and resources, own and manage property and assets for the accomplishment of its not for profit purposes, gifts, grants, securities, in kind donations. A very important regulation as previously it was not clear if NGOs could engage in income generating activities and what could constitute the said activities. A question arises with the government’s appetite for taxes, will the Commissioner automatically grant an exemption to taxes for such an income upon application by the PBOs or will the Commissioner reject the application on the grounds of just cause, and for greater certainty, what qualifies as just cause?

Conclusion

The Public Benefits Organization Act marks a significant step forward for the regulation of non-profit organizations in Kenya. While the legal framework is established, the full picture will come into focus with the release of accompanying regulations. These regulations will provide the essential details for navigating the new system. The PBO Act offers the promise of a more streamlined and transparent process, replacing the previous vagueness and bureaucratic hurdles. With cautious optimism, we anticipate a future where subjective decision-making is replaced by clear guidelines

Nyambura Kigo is a Commercial Lawyer at Mulu & Abuja Advocates