How bad politics derailed Kenya's Sh2.6 trillion budget spending

Briefcase for the government budget in parliament (PHOTO: Moses Omusula)
NAIROBI, KENYA; On Thursday, Kenya is set to break the record again with a Sh3.07 trillion budget to fund its activities for the 2018/2019 financial year that gets underway on July 1.

But even as the National Treasury and Planning Cabinet Secretary Henry Rotich prepares for his big day, questions abound on whether taxpayers have benefited from the Sh2.6 trillion budget he presented in March last year.

From the start, it was going to be a unique financial year. The budget estimates were read to Parliament in March, out of tune with the rest of East African Community economies that traditionally present their estimates simultaneously in the month of June.

Even as the National Treasury justified the move as one meant to accommodate the General Election calendar, the March date meant that Government ministries, departments and agencies did not fully make use of updated data from Kenya National Bureau of Statistics (KNBS) in formulating policies.

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“We gave them what was available at that time so we want to believe they found it useful,” said KNBS Director-General Zachary Mwangi when asked how the date mismatch panned out.

From this unfamiliar start, the implementation of the 2017/2018 budget proved problematic for both the national and county governments.

Strategy meetings

The 2017 General Election needed Sh64.9 billion. While Sh25.9 billion came from the 2016/2017 financial year, the current financial year contributed Sh39 billion. This expenditure put pressure on the budget, but not more than the indirect cost that came with the extended electioneering period.

From political duels in and out of courts to street protests and graft cases, the current financial year has proved tricky, with little trickling down to the taxpayers.

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President Uhuru Kenyatta and his deputy William Ruto spent more than double of their travelling expenditure as they traversed the country between July and December last year in search of votes.

Their expenditure on domestic travel increased by a staggering 138 per cent in the first half of the financial year to Sh432.5 million compared to Sh181.6 million in 2016. At the same time, the two spent Sh667 million on hospitality as they held strategy meetings in their offices and State House.

And with political exchanges culminating in street protests, deaths and injuries, spending on development took the back burner at both levels of government.

According to Turkana Governor Josphat Nanok, who also chairs the Council of Governors, election disputes slowed down the implementation of the budget.

“We admit that inception of the second cycle of devolution has not been without impediments, including those arising from a prolonged election process and also the ongoing protracted court cases stemming from election petitions,” he said.

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For instance, last Friday, the Alfred Mutua-Wavinya Ndeti duel was decided at the Court of Appeal, nullifying the former’s election as Machakos governor. He has been in charge of a Sh9.99 billion budget.

As at the close of December, Mutua had only put Sh55.52 million into development, being a mere 1.9 per cent of the total development budget of Sh2.99 billion. This was a decrease from the 33 per cent attained in the first half of the previous financial year.

This even as the county spent Sh2.75 billion on recurrent expenditure, which chiefly goes to salaries. During this period, the county did not have an internal audit committee as required by the Public Finance Management Act.

Following the court’s decision, Machakos could be staring at another election or protracted legal battle even as Treasury is set to give it Sh10.5 billion in the upcoming 2018/2019 financial year.

Away from Machakos, a record 14 counties spent nothing on development in the first six months of this financial year, according to a report by Controller of Budget Agnes Odhiambo.

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These are Embu, Garissa, Kirinyaga, Kisumu, Meru, Nakuru, Nandi, and West Pokot. Others are Nyandarua, Nyeri, Siaya, Taita-Taveta, Tharaka-Nithi and Vihiga. The dismal run came as a majority of the county chiefs concentrated on thwarting election petitions contesting their wins at the expense of taxpayers.

By January, the seventh month of the 2017/2018 budget, more than 24 governors were still staring at an uncertain future as petitions filed to challenge their wins were pending in various courts.

A poll by the Independent Electorala and Boundaries Commission on January 12 showed that 268 poll cases were still pending in court after the 2017 General Election. About 114 cases had been withdrawn or dismissed by that date.

The MP seat attracted 98 cases while 139 cases were filed for that of Members of the County Assembly. These cases stood in the way of many politicians, slowing their ability to plan and implement the budget.

According to Nanok, the rampant cases of corruption have also posed a challenge to the devolved units.

“The increasing public concern over corruption poses a critical challenge to implementing devotion,” he said.

In the end, Sh93 billion or 89.2 per cent of the total funds released for county budget operations between July and December went to recurrent activities such as paying salaries, leaving only Sh11.36 billion or 10.8 per cent for development activities.

Gloomy picture

It was also tough going following a prolonged dry spell that later paved way for devastating floods that have swept away crops and animals as well as claimed dozens of human lives.

In response to the drought and spiralling food prices, the Government ordered maize from Mexico, which has now turned into the subject of a Parliamentary probe as it emerged that a few individuals used it as a window to profiteer.  

It has not been any better at the National Government. Most of the money has gone to paying salaries and repaying debt at the expense of development projects.

Out of the Sh735.7 billion allocation to the Consolidated Fund Services (CFS), Sh658.2 billion or 89.5 per cent of the budget went to debt repayment. At the same time, Sh1.2 billion was used to repay guaranteed loans to State corporations, most of which are loss-making. An additional Sh71.9 billion was incurred on pensions and gratuities.

By the first six months of the year, gross expenditure on recurrent activities by the ministries, departments and agencies amounted to Sh485.2 billion, representing 46.1 per cent of the recurrent expenditure budget. Personnel emoluments, on the other hand, cost taxpayers Sh181.4 billion.

As the country awaits the report of the Controller of Budget for the six months to June, previous spending patterns paint a gloomy picture on the ability of counties to utilise about 89 per cent of the idle development budget as at end of December.

BudgetHenry Rotich