Exposing lack of fiscal discipline by county governments
Most Kenyans are aware of the perennial issue of county governments not allocating or spending enough money in development projects to boost the economy and to create jobs. County governments also have a dubious reputation of lacking fiscal discipline, the highlight being weak budgetary controls.
In a series of articles in the coming months highlighting the state of county governments, we will focus on exposing bad habits by county governments that are costing Kenyans dearly. The Annual county governments budget implementation review report for the FY 2017/18 by the Controller of Budget (COB) published in September 2018 will form the basis of this critical review.
Weak budgetary control
The report makes for sobering reading, repeatedly flagging unrestrained and poor fiscal discipline by county governments in the form of irresponsible budget controls. In the report, the COB for example identifies cases where “expenditure as a percentage of the funds released indicates that…..counties spent more than the total funds authorized for withdrawal by the COB” with the COB attributing this potentially to county governments “spending of own source revenue at source”.
This is a blatant breach of Public Finance Management Act 2012 and specifically Section 109 (2) which stipulates (and with few exceptions) that “The County Treasury for each county government shall ensure that all money raised or received by or on behalf of the county government is paid into the County Revenue Fund” and further that “(6) The County Treasury shall obtain the written approval of the Controller of Budget before withdrawing money from the County Revenue Fund”.
At least four counties were caught out spending more money than the total funds they were authorised to spend by the COB. The counties are:
- Nairobi City: 116.1%
- Mandera: 102.7%
- Murang’a: 101%
- Laikipia: 100.1%
Part 1: County budget allocation, expenditure and absorption rate for Financial Year (FY) 2017/18
We kick off this series by taking a closer look at county governments’ expenditure. Specifically, we will look at recurrent and development expenditure by counties with a focus on the absorption rate indicator.
In other words, we seek to find out answers to the following questions:
- How much money did county governments budget to spend on recurrent and development expenditure?
- How much money did county governments actually spend on recurrent and development expenditure?
According to the COB, absorption rate is the actual expenditure as a percentage of approved county budget. This is a good indication as it tells us how good county governments are in spending money allocated for development vis-a-vis money allocated for recurrent expenditure.
Data source: Annual county governments budget implementation review report for FY 2017/18
The emerging trend confirms what many Kenyans suspect. That without exception, county governments aren’t spending anywhere near enough of the money budgeted for development. In comparison, county governments are very good at spending money allocated for their recurrent expenses like salaries, allowances, travelling, accommodation, utilities and maintenance costs.
The genuine question Kenyans should be asking their county government is, why the discrepancy?
Top 5 counties with the highest absorption rate of development budget:
Bottom 5 counties with the lowest absorption rate of development budget:
Many Kenyans might not be aware that the constitution accords them the right to track and ensure that the government utilises resources appropriately. According to the Office of the Controller of Budget:
It is your right as a citizen to know how public funds have been utilised. In recognition of this, the Constitution provides for public participation in Budget formulation and implementation. The public should check to ensure that the Government is undertaking the activities outlined in the Budget
Where this does not happen:
the public should inform the relevant authorities, which include Parliament, the Kenya National Audit Office, the Office of the Controller of Budget and the Ethics and Anti-Corruption Commission among other oversight institutions to take appropriate action