Government faces rising legal costs as lawsuits claims against state hit Sh44 billion

The cost of lawsuits awarded against the Kenyan government has surged dramatically, rising 2.4 times to Sh43.8 billion in the Financial Year 2023-2024, according to the latest data from the Public Service Commission (PSC).

This sharp increase from Sh18.47 billion in the previous year highlights the growing burden on taxpayers and signals deeper issues in governance and legal practices within the public sector.

The PSC report reveals that the government lost 559 monetary cases in the past year, with 213 state institutions affected.

The number of civil suits filed against public institutions also saw a significant rise, up by 44.9 per cent from 4,185 cases in the previous year to 6,063.

The PSC notes that this uptick in lawsuits reflects serious governance flaws and a failure to uphold the rule of law in government operations.

Poor governance

"A high number of litigations against an institution is an indicator of poor governance. Where there are proper governance structures and the law and procedures are followed, litigation incidents are minimised," the commission said.

This dramatic rise in awards against the government marks the third consecutive year of increasing financial liability due to lawsuits.

The figure was much lower in FY 2021-2022, at Sh12.61 billion. In the year ending June 2024, state corporations and semi-autonomous agencies accounted for the highest portion, totalling Sh22.38 billion, followed by ministries and state departments (Sh21.31 billion).

Public universities received Sh113 million, while constitutional commissions and independent offices lost Sh1.25 billion.

The increase in the government's legal losses coincides with a 63 per cent drop in the monetary awards in favour of government institutions, which fell from Sh10.26 billion in the previous year to just Sh3.76 billion in FY 2023–2024.

Legal defence weakness

This indicates a serious weakness in the government's legal defence and underscores concerns about the effectiveness of public institutions in upholding the law.

The PSC has called for urgent reforms. Among the recommendations is that the Attorney-General's office compile a comprehensive record of all suits filed against public institutions over the past three years and the reasons for the losses.

Additionally, the PSC is urging the office to develop a risk mitigation plan to safeguard taxpayers from bearing the financial cost of these lawsuits.

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"It is also recommended that public officers who make decisions that lead to civil litigation be held personally liable for any awards that may accrue against the institutions where the decision was made," the commission added.

The PSC's report also sheds light on the government's ongoing failure to fully engage the public in policy formulation, a core requirement under the 2010 Constitution.

Less than one-third (22.8 per cent) of public institutions subjected their policies to public participation, and even fewer provided stakeholders with adequate time to review and comment on drafts.

The lack of public input, coupled with issues like corruption, contributed to a drop in the government's overall compliance index, which fell to 42.7 per cent in the year ended June 2024 from 43.8 per cent in the previous year.

"All 20 parameters evaluated performed poorly and were rated 'low,'" said the PSC.

"This implies that the desired transformation of Kenyan society is yet to be realised, based on the performance ratings against the evaluation indicators," it read further.