County cash crunch

Lately, some county governments have been facing cash crises. Some have not paid workers' salaries for months, and all this is attributed to the fact that county governments are entirely dependent on funding from the national government, which is sometimes hit by delays.

Indeed, a 2014 survey by the Institute of Certified Public Accountants of Kenya (Icpak) indicated that 15 out of the 47 counties rely on single-business permits as their core source of revenue. Fourteen rely on user fees while the rest depend on property rates.

And just this week, Senate Speaker Kenneth Lusaka asked county governments to widen their revenue generation bases by increasing wealth creation.

But the devolved units have many challenges, all of which contribute to the cash crunch they face. First, counties need to be competitive and results oriented, and must promote closer supervision, accountability and participation. Social audits would demand accountability from county government officers through performance management and oversight.

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Details of public projects should be open for scrutiny to determine value for money and to evaluate how well public resources are used to meet the real needs of targeted beneficiaries.

This also means the devolved units need to have laws that attract investors to their counties instead of chasing them away. If county governments take the trouble to make a connection between what taxpayers owe to Government and services offered (and publicise that connection well), they will be able to build tax revenues and thereby create a basis for sustained development.

If this does not happen (which is always the case), the result is the opposite.

Ghost workers

Second, counties must eliminate the phenomenon of ghost workers and other concerns that have remained unaddressed. The challenge of bloated work forces in most counties has occasioned less expenditure on development and more money on salaries and wages.

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A report by the Controller of Budget indicates that for every Sh100 spent by county governments last year, at least Sh40 was used to pay staff salaries.

An in-depth data analysis of the county spending data paints a picture of an impending wage bill crisis that has seen 34 counties shoot through the salaries spending ceiling in the last financial year. This unfortunate situation has seen development projects dropped and contractors going without pay.

Third, there is need to do more on enhancement of business activities, investment, revenue collection and generation, and then focus more on development and low-cost energy. Counties often complain that the public does not appreciate how many services they are responsible for providing, implying that if there was higher awareness, people would be more willing to pay taxes.

This requires public participation, policy debate, resource mobilisation, investment and citizen support in the whole process of resources devolution.

There is a problem with accountability and corruption across counties. One would be excused for thinking that with devolution, accountability is high and resources are utilised well. The practice of service delivery agents being responsible for their actions is totally lacking.

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Looting spree

Instead, counties have become new dens of corruption where senior officials are on a looting spree. This is because of the absence of governance instruments and corruption prevention frameworks.

This perhaps explains why the Auditor General’s report indicts almost all county governments for misuse of public funds. The Ethics and Anti-Corruption Commission survey - National Ethics and Corruption Survey 2016 - conducted before last year's General Election, shows that delays in service delivery, bribery, conflict of interest, discrimination and criminal activities such as fraud, theft and embezzlement were rated as the most common forms of unethical conduct across the counties.

County governments are thought to be closer for service delivery. However, limited information that would help locals play a key role in demanding accountability and controlling corruption is a big challenge.

At the same time, the secrecy in county operations, and especially in the use of resources, can be interpreted as an intention to mismanage public resources. This blocks and negates the very essence of revenue growth.

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This therefore means that for counties to prosper, there is need for communities to come together to identify local priorities and work together to decide how they should be financed. Doing this will require counties to engage in more public participation and communication.

All in all, the decision space in the counties has been limited to a few resources hence the overall influence, even where fully exerted, can make only a small difference in revenue generation and prioritisation.

Prof Mogambi, a development communication and social change expert, teaches at the University of Nairobi; [email protected]

Institute of Certified Public Accountants of KenyaSenate Speaker Kenneth LusakaGovernmentController of BudgetEthics and Anti-Corruption Commission surveyNational Ethics and Corruption Survey 2016