Kirinyaga Governor Anne Waiguru (centre) with her colleagues during a past media briefing in Nairobi.
Only nine counties spent at least 30 percent of their total expenditure on development projects in the 2023/24 financial year, with the rest breaching the law on the threshold set for growth spending, Treasury data shows.
Nairobi City County spent a paltry 10.3 percent of their total expenditure on development followed by Kisii (13.7 percent), Mombasa (16.2 percent), Kisumu (17.5 percent), Taita Taveta (18.6 percent) and Kiambu (19.4 percent).
Section 102 (2)(b) of the Public Finance Management Act, 2012 provides that county governments should allocate a minimum of 30 percent of their budget for development expenditure.
“The total actual development expenditure for 2021/22, 2022/23 and 2023/24 accounted for 25 percent, 23 percent and 24 percent of the total actual expenditure for the same period respectively,” the Treasury said in the Budget Policy Statement (BPS) for 2025/26.
“This translates to an average development expenditure of 24 percent of the total actual expenditures.”
The BPS indicates that in the financial year 2023/24, nine counties spent at least 30 percent of their total expenditures on development.
Marsabit topped the list by allocating 38.6 percent of its total expenditures towards development. Narok spent 34 percent, Homa Bay (33.3 percent), Mandera (33.3 percent), Siaya (32.6 percent), Trans Nzoia (31 percent), Kitui (30.8 percent), Kilifi (30.6 percent), and Turkana (30.6 percent).
The Treasury said from the analysis, it is evident that most counties allocate expenditures just for approval by the respective county assemblies in line with the legal requirement.
“However, most counties do not adhere to this provision during budget execution. Over the medium term, there are notable fluctuations in consistently meeting the 30 percent minimum expenditures on development,” the BPS states.
“This therefore implies that county development and service delivery may be negatively hampered as counties spend more on recurrent expenditures as opposed to development expenditures.”
The Treasury wants the relevant institutions, including the Controller of Budget, to enhance compliance to the legal provision on development spending caps.
The Treasury said counties have not reported any borrowing to finance their development expenditure.
The Treasury also flagged counties for failing to comply with the requirement on expenditure on wages and benefits.
Regulation 25(1)(a) and (b) of the Public Finance Management (County Governments) Regulations 2015 provides that county governments’ expenditure on wages and benefits for its public officers shall not exceed 35 percent of the county governments’ total revenue.
“During the financial year 2023/24, the County Government’s expenditure on wages amounted to Sh209.8 billion, accounting for 47.6 percent of the total revenue of Sh440.7 billion,” the Treasury said.
“Most County Governments are spending a larger portion of their revenue on wages than the recommended threshold.”
The Treasury said only three counties, Tana River, Narok and Kilifi were able to maintain their allocation to wages and salaries below the 35 percent threshold.
Tana River spent 34 percent, Narok (32 percent) and Kilifi (30 percent) of their total revenues on wages and salaries.
On the other hand, Machakos County spent the highest at 62.6 percent, Kisii (61.1 percent), Nyamira (58.4 percent), Nairobi (58 percent), Embu (57.1 percent), and Nandi (55.7 percent.
Others that exceeded more that 50 percent of their revenue on salaries and wages include Taita Taveta, Tharaka Nithi, Nyeri, Laikipia, Baringo, Lamu, Elgeyo Marakwet, Muranga, Bomet, Kisumu, Kakamega and Bungoma.
The Treasury said the Public Finance Management Act mandates County Treasuries to prudently manage their fiscal risks.
“During the reporting period, several fiscal risks were identified in revenue and expenditure performance, including high levels of pending bills, which impede efficient delivery of public services and hinder growth of local businesses,” the BPS states.
“Non-remittance of statutory deductions by certain county governments, particularly pension contributions, which jeopardises the social security of retirees.”
The Treasury said accumulated bills totaling Sh181.98 billion as at June 30, 2024. The pending bills was an increase of Sh17.22 billion from Sh164.76 billion reported in the previous
“The increasing stock of pending bills in the County Governments is a threat to fiscal discipline and sustainability,” the report states,
“The National Treasury has initiated a transition from cash to accrual basis of accounting which is expected to gradually reduce the stock of pending bills.”
