Counties in hard juggling act funding projects, paying staff

Controller of Budget Margaret Nyakang’o.

Photo credit: Jeff Angote | Nation Media Group

Counties are still struggling to match their spending on development projects to that on recurrent expenses such as salaries and allowances.

According to Controller of Budget Margaret Nyakang’o, most counties are spending way below the constitutionally stipulated 30 per cent on development due to poor fund absorption, soaring debts and low own-source revenue collection.

Section 107(2) (b) of the Public Finance Management (PFM) Act, 2012 demands that at least 30 percent of county government budgets should be spent on development programmes.

In her latest report on county spending for the first nine months of the 2021/22 financial year, Dr Margaret Nyakang’o says counties that spent less than 20 percent of their budgets were Taita Taveta (two per cent), Machakos (5.5), Baringo (8.4), Nairobi City (9.1), Lamu (11.2), Narok (11.8) and Wajir (12.1).

Nyandarua (12.3), Kisumu (12.4), Kiambu (12.6), Turkana (14), West Pokot (14.2), Trans Nzoia (15.9), Siaya (16.4), Garissa (17.1), Kilifi (17.2), Elgeyo Marakwet (17.6), Vihiga (18.9), and Migori (19.1) were also poor spenders of development billions. This means crucial projects on roads, water, agriculture and health were severely affected.

“During the reporting period, counties [spent] a total of Sh44.3 billion representing an absorption rate of 22.8 per cent of their cumulative annual development budget of Sh194.01 billion. This performance decreased from an absorption rate of 25.1 per cent in 2020/21 when development expenditure was Sh48.46 billion.  This indicates that counties did not prioritise the implementation of development projects during the period,” Dr Nyakang’o stated.

Counties that spent development funds above the constitutional threshold are Bomet (33 per cent), Isiolo (36.2), Kakamega (33.2), Kisii (31.9), Kitui (53), Laikipia (30.7), Mandera (37.9), Marsabit (50.6), Mombasa (51.5), Nyamira (34.8) and Tharaka Nithi (31.2).

Total development expenditure was Sh257.18 billion, representing an absorption rate of 48.7 per cent. The report blamed under-performance in own-source revenue collection, which exacerbated pending bills challenges, with 21 counties recorded below 50 per cent performance.

They are Uasin Gishu, Machakos, Kilifi, Kisii, Marsabit, Nyamira, Elgeyo Marakwet, Makueni, Nandi, Wajir, Meru, Kisumu, Nairobi City, Bungoma, Kitui, Embu, Garissa, Kajiado, Murang’a, Trans Nzoia, and Busia.

Counties generated Sh27.09 billion, which was 46.1 per cent of the annual target of Sh58.78 billion, against an expected performance of 75 per cent.

“CoB advises counties to review the revenue targets to realistic amounts during the planning and budgeting process. Further, they should develop and implement strategies to ensure the budget is not committed where there is no corresponding funding source,” the report recommends.

Dr Nyakang’o says the Auditor-General issued special reports for county governments as of June 30, 2020 showing total pending bills were Sh152.55 billion (Sh45.54 billion eligible and Sh107 billion ineligible).

The devolved units are also on the spot for using manual systems to process Sh11.99 billion in wages and emoluments, exposing taxpayers to losses. The law requires the payment be done electronically through the Integrated Payroll Personnel Database (IPPD). Dr Nyakang’o said the manual payroll lack of proper controls and is prone to abuse, which could lead to the loss of public funds.

Counties that relied most on manual payrolls were Bomet (Sh1.06 billion), Kiambu (Sh864.22 million), Garissa (Sh746.10 million), Nakuru (Sh593.48 million), Marsabit (Sh569.40 million) and Homa Bay (Sh495.19 million).

Others were Vihiga (Sh469.81 million), Siaya (Sh449.92 million), Mandera (Sh440 million), Laikipia (Sh419.32 million) and Kisumu (Sh401.27 million).