Delayed release of funds hits counties’ spending on projects
New report shows 14 counties spend zero on projects in the first half of the financial year, with the situation attributed to delayed funds from Treasury
33 counties incurred only Sh11.36 billion on development activities during the period
Fourteen counties did not incur any expenditure on development in the first half of this financial year. The Controller of Budget, Ms Agnes Odhiambo in the half-year report for the 2017/18 financial year, singled out Embu, Garissa, Kirinyaga, Kisumu, Meru, Nakuru, Nandi, Nyandarua and Nyeri as the affected counties.
Others are Siaya, Taita-taveta, Tharakanithi, Vihiga, and West Pokot.
She attributed this to delays in disbursement of monies by the National Treasury, which affected the timely implementation of county programmes.
“In the reporting period, the National Treasury did not fully adhere to the Disbursement Schedule, which affected execution of budgeted activities,” she said.
Cumulatively, the remaining 33 counties incurred Sh11.36 billion on development activities in the reporting period, representing an absorption rate of 8 per cent of the annual development budget, which is a decrease from 21.5 per cent reported in a similar period of financial year 2016/17 when development expenditure was Sh35.73 billion.
Kilifi recorded the highest expenditure on development activities in absolute terms at Sh1.65 billion, followed by Kiambu and Kakamega at Sh856.28 million and Sh844.69 million respectively.
The outcry from governors over the late disbursements has been recurring since the advent of devolution and Ms Odhiambo has come out to recommend that this be tamed to ensure undisrupted continuity of services.
Last month, Deputy President William Ruto agreed that the ability of counties to plan and execute their budgets effectively depends on Treasury’s timely disbursement of revenues.
“Where delays occur, it is important to explain them in a timely and proper manner to enable counties make appropriate adjustments. I acknowledge that the National Treasury, Controller of Budget, Commission on Revenue Allocation and the Ministry of Devolution can ensure disbursement of funds faster,” he said in his speech delivered at the Devolution Conference in Kakamega.
Other reasons Ms Odhiambo cited were the high wage bill and decline or underperformance in local revenue collections, which consequently make the counties become increasingly reliant on the state for funding, putting a strain on the Treasury to provide top-up funds.
In Nyeri and West-pokot for instance, Ms Odhiambo blamed the counties for failing to establish an Internal Audit Committee to oversee financial operations contrary to Section 155 of the PFM Act, 2012.
According to the law, the audit committee forms a key element in the governance process by providing an independent expert assessment of the activities of top management, the quality of the risk management and financial reporting to the county.
In Vihiga County, operational delays and Integrated Financial Management Information System (Ifmis) connectivity challenges slowed the approval of procurement requests and payment to suppliers.
Apart from delays in disbursements, under-performance in local revenue collection in Embu affected its development spending, having declined by 36.2 per cent from Sh197.01 million in the first half of FY 2016/17 to Sh125.60 million in the first half of FY 2017/18.
Statistics from Council of Governors in March show as of December last year, the counties had only received 28 per cent of what was approved by Parliament, compared to an average of 37 per cent since the onset of devolution.
According to International Budget Partnership-kenya country manager Abraham Rugo, most of the counties were also yet to be fully operational during the period under review.
“Many counties were setting up their administrative units which means some development projects which required the approvals of finance executives were put on hold and, therefore, the reason why some did not report any development,” Mr Rugo said.
And in a first, Mrs Odhiambo gave a rare thumbs-up to use of funds by counties in payment of ward representatives’ allowances and travel expenditure.
Counties’ expenditure on MCAS sitting allowances reduced by a whopping 67 per cent.
The report says Sh422 million was paid in allowances compared to the Sh1.3 billion spent in a similar period of the 2016/17 financial year. Allocation for this period was Sh3 billion, meaning what was spent was 13.9 per cent of the approved budget.
Only Narok did not report any expenditure on the representatives allowances but Kakamega (Sh108,172), Samburu (Sh92,372), Turkana (Sh90,505), Tanariver (Sh150,558) and Taita-taveta (Sh80,969) paid more than Sh80,000 to each of their MCAS which is higher than the Salaries and Remuneration Commission (SRC) monthly maximum ceiling.
Those that paid the least monies were Trans-nzoia (Sh3,997), Vihiga (Sh4,145), Kajiado (Sh4,778), Murang’a (Sh6,968) and Migori (Sh7,807).
The Controller of Budget also raised concern on the high expenditure on such remuneration which cumulatively was Sh66.48 billion representing 71.9 per cent of the total recurrent expenditure.
“The office noted continued increase in wage bill and recommends county governments to ensure that expenditure on personnel emoluments should be contained at sustainable levels and in compliance with Regulation 25 (1) (b) of the Public Finance Management (County Governments) Regulations, 2015,” she said.
Travel expenditure reduced by 28.4 per cent from Sh5.2 billion in the 2016/17FY to Sh3.77 billion in the reporting period. Out of this amount, Sh3.4 billion was spent on domestic travel and Sh370 million on foreign expeditions. Narok County incurred the highest expenditure of domestic and foreign travel at Sh243.75 million, followed by Migori and Taita Taveta at Sh165.41 million and Sh163.61 million respectively.
But Mr Rugo stated last year’s electioneering period could have led to the decline in spending on allowances and travels.
“There was no decline in actual terms but in activities by the counties in the period between July to December 2017 as most counties were still settling down. Also, most they had not received their allocations from the National Treasury,” Mr Rugo said.
Controller of Budget Agnes Odhiambo identifies high wage bill and decline or underperformance in local revenue collections as other reasons affecting counties.