International Monetary Fund warns Kenya on devolution overkill, calls for fiscal prudence

Henry Rotich, Cabinet Secretary, National Treasury and other delegates at the IMF Conference on exploring opportunities in Kenya [PHOTO: MOSES OMUSULA/STANDARD]

By MACHARIA KAMAU

The International Monetary Fund (IMF) has warned against duplication of roles at the national and county government levels.

The Bretton Woods Institution cautioned that duplication of roles could result in the country wasting resources in the effort to deepen devolution.

Antoinette Sayeh, director of the IMF African department said there is an inherent risk of increased unnecessary spending due to the numerous functions that are repeated at the two levels of government.

She added that county government officials should undergo training in public financial management to avoid overspending and negating progress that the country has made in economic development.

“The on-going fiscal decentralisation provides an opportunity to improve accountability and the quality of service delivery, but will need to be well-managed to guard against the risk of excessive spending because of overlapping functions,” she said.

Sayeh added that this underscores the need for capacity building in public financial management at the county level.

She spoke yesterday in Nairobi at a conference organised by the Government and IMF exploring the policy challenges Kenya faces in building upon its economic successes to achieve emerging market status.

Kenya has been implementing a devolved system of government that started in earnest after the March elections. The system has however been marked by a rocky start with the counties seeming to spend well beyond what is within their means.

Quality of spending

In the past few months that the county governments have been in place, spending has been heavy on salaries and personal emoluments to county staff, and marginal on development projects.

A recent report by the Office of the Controller of Budget showed gross fiscal indiscipline among most of the counties, with recommendations that the books of many should be probed further.

Last month, County governments came under attack for irregularities in their budgets, linked to gross overspending. Controller of Budgets, Agnes Odhiambo said governors submitted budgets that included grants for motor vehicles, loans and mortgages of county officials she advised that the Sh10 billion allocated for devolution will be dispersed once the rules are adhered to.

On her part, Sayeh said for the economy to grow, there is need to cut waste and grow spending on infrastructure through efficient and quality of public spending.

“A key task for public finances is to raise the efficiency and quality of public spending. This will create fiscal space, which is obviously important for infrastructure, where large gaps remain, but also for social spending, where it is particularly important to ensure that scarce public resources are used well,” she said.

She noted that the country is poised for a take-off, given its limited exposure to shocks that have in the recent years hit the global economy.  “Kenya is less vulnerable to the vagaries of the global economy and to domestic generated shocks than it was three-years-ago, when it embarked on its economic reform programme with financial support from the IMF,” said Sayeh.