Counties need to observe prudence in financial management

By Benson Okundi

Recent media reports that Members of the County Assemblies had spent millions to finance non-essential trips abroad, out of station training and other engagements are disheartening.

According to the County Budget Implementation Review Report for the first quarter of 2013/2014, out of the total expenditure, personnel emoluments accounted for 55 per cent, operations and maintenance accounted for 38 per cent, while development expenditure accounted for only seven per cent. In addition, it also emerged that county governments spent a total of Sh7.11 billion (55 per cent) of total expenditure on staff compensation.

Whilst the report was categorical that most counties spent cash on recurrent expenditure at the expense of county developmental priorities, this was the realistic outcome given that indeed the transfers from the national Government were predominantly for recurrent expenditure. But the county governments must be cognisant of the reality on the ground and exercise caution at all times.

Misallocation of public funds emanates from a budget-making process that is not adequately informed by an identified set of priorities. This yields macro level distortion between capital and recurrent expenditure. It is evident that formulators and originators of some of the line items in some counties’ budget have surrendered the nation’s treasure to the dictates of waste and extravagance.

County budgeting and budget execution must be guided by prudence and no matter the amount of available resources for appropriation, we must entrench the constitutionally identified principles of public financial management in our budgeting and budget execution.

The principle of equity therefore comes to the fore in as far as striking a balance between funding the needs of the current and future generations. In this regard, development expenditure aimed at creating and/or maintaining the nation’s service delivery capacity must underpin any public expenditure.

As we strive to realise the long-term goal of attaining a middle-income economic status by 2030, we must guard against wasteful expenditure and misallocation. The Constitution and the Public Finance Management Act 2012 are clear on the key fiscal responsibility principles that should be adhered to by the two levels of government. Consequently, openness and accountability, public participation and prudence management of public resources must be espoused at all stages of budget making and execution.