By Macharia Kamau and James Anyanzwa
Kenya: More than half of the 47 counties did not spend any money allocated for development in the first four months of devolution, a report of the Controller of Budget reveals.
The report released yesterday and signed by the Office of Controller of Budget, Agnes Odhiambo, shows that 25 counties did not spend a single cent of the money allocated by the Transition Authority.
In total, counties had Sh23 billion at their disposal to start operating as semi-autonomous units between March and June 2013. The national government allocated Sh9.8 billion as grants while counties jointly collected a total of Sh6.8 billion during the same period.
They also received Sh2.9 billion from the Transition Authority for infrastructure development, which was shared equally among the 47 counties, each receiving Sh61.5 million.
Out of the Sh2.9 billion allocated by the TA to the counties for development, only Sh1.3 billion was spent - representing a 45 per cent absorption rate.
“Most counties were unable to spend the infrastructure grant advanced to them through the Transition Authority (TA),” says the report, attributing it to “lack of capacity and lengthy procurement processes within the limited time in which the counties were expected to use the resources.”
The report noted that the lack of adequate human capacity and appropriate financial systems required to effectively implement prudent financial management, remained a major challenge to the county governments.
Counties named as having spent no money on development are Baringo, Bomet, Garissa, Homabay and Kiambu. Others are Kisii, Kitui, Kwale, Lamu, Makueni, Marsabit, Meru, Mombasa, Nakuru, Nyandarua, Siaya, Taita Taveta, Tana River, Tharaka Nithi, Trans Nzoia, Turkana, Vihiga, Wajir and West Pokot.
Uasin Gishu reallocated all Sh61,592,200 from the Transition Authority meant for development to hiring of offices at Kerio Valley Development Authority (KVDA) to accommodate more staff.
The report says only five counties spent all the money allocated to development. They include Embu, Isiolo, Kakamega, Migori, and Nandi.
The rest spent only a fraction of the money, with Samburu spending a mere Sh215,000 out of the allocated Sh61.6 million. Most counties used manual financial systems that were susceptible to malpractice, to manage their financial transactions.
The report recommends expeditious implementation of IFMIS, capacity building in budgeting, project management, adherence to procurement procedures, and development of the requisite legal framework to support revenue growth.
“Though training on the Integrated Financial Management Information System (IFMIS) and Government Payment (G-PAY) System was conducted by the National Treasury and Central Bank of Kenya in some counties, most of them experienced poor connectivity exacerbated by inadequate computer hardware to support the systems. Indeed, most counties reported high downtime for IFMIS.”
The Controller of Budget reports blatant flouting of financial management principles and procurement procedures across all counties and recommends that the county governments be probed for impropriety.
The report released yesterday shows county governments are unable to contain corruption and have as a result lost revenues. At the same time, counties have showed weak controls in the management of money from the National Government.
The Office of the Controller of Budget also recommends human resource assessment and job evaluation to ascertain labour requirements and align former local authority workers to the County structure.
The report notes that none of the county governments has development top of their agenda, with more than 80 per cent of the budgeted allocation so far been spent on salaries and allowances for the county assembly members and executives.
Development projects
Total expenditure for all the counties amounted to Sh16.2 billion, of which a paltry Sh1.3 billion went to development projects. Some of the counties diverted money meant for infrastructure development advanced by the Transitional Authority to recurrent activity.
“The main spending units were the County Assembly, County Executive and Financial Management Services. The counties spent a total of Sh6.5 billion on personnel emoluments, Sh6.7 billion on operation and maintenance and Sh1.3 billion on development,” said the Controller of the Budget.
As at June 30, most counties had not utilised the infrastructure funds from the Transition Authority while some counties spent funds meant for infrastructure development on recurrent activities.
According to the Controller of Budget, the new county managers are so inept that they are unable to match revenue collections by the defunct local authorities. The report shows a continued decline in revenue collections in the four months to June.
Collected revenues
“We note that the total locally collected revenues consistently declined from a high of Sh2.1 billion in March 2013 to a low of Sh1.5 billion in June 2013,” said the Controller of Budget in the report.
“This decline may be attributed mainly to revenue leakages, general apathy among the County residents and revenue collectors, as a result of transitional uncertainties on the channels and modalities of payment of levies previously charged by defunct Local Authorities.”
“The County Executive Committee (CEC) on finance should interrogate the declining trend in revenue collected at the county level and make necessary and sufficient mechanisms to curb this trend as adequate collection of revenue from local sources is critical for successful budget implementation.”
According to the report, diminished local revenue collections coupled with weak reporting frameworks posed a great challenge to the financial operations in the counties.
Some counties, the report says, spent locally collected revenues without first remitting the same into the County Revenue Fund as required by Article 207(1) of the Constitution of Kenya, 2010.
“Further, we noted that other counties continued to operate the defunct local authority bank accounts despite a directive that all bank accounts be closed or frozen by February 2013,” says report.
The Controller of Budget recommends an audit of former local authority bank accounts, assets and liabilities.
