President Uhuru Kenyatta’s effort to streamline the procurement process might be taking a toll on the disbursement of development cash to counties.
In what is likely to increase friction between the national and county governments, Treasury is said to have insisted on development funds to be disbursed only to counties that have complied with an order to upload their tenders to the public information procurement portal.
According to a Treasury source, county governments have, however, not taken this kindly, with some of them terming the latest directive “patronising.”
“The President directed that only funds for projects uploaded on the Public Information Portal would be released to the counties,” said the source, adding that some of the county chiefs were afraid of revealing details about the tenders as they were bidders.
“If they don’t put their procurement plans on the portal, we will stop disbursing the cash altogether,” said the source.
On Friday, Council of Governors chairman Wycliffe Oparanya blamed Treasury for making it hard for counties to spend on development.
Mr Oparanya explained that in the first months of a financial year, the budget line on development spending in the Integrated Financial Management Information System (Ifmis) is normally closed.
“At this time, Treasury is only releasing money for wages. You can’t divert money to anything else because you have to pay salaries,” the Kakamega Governor told The Standard on phone.
He said this was Treasury’s ways of containing spending.
“It’s like we are being micro-managed from Nairobi,” said Oparanya.
He said when development lines are closed, counties can only pay pending bills from previous financial years which is done through “auto-creation.”
All the 47 counties have broken the law, spending an average of 70 per cent of their revenue on salaries and allowances between July and September last year. Analysis of new data provided by Controller of Budget Agnes Odhiambo showed that in counties such as Baringo, Garissa and Nakuru, for every Sh100 of their revenue, Sh90 went to paying wages.
This was far above the 35 per cent limit placed on both national and county governments’ spending by the Public Finance Management Act, 2013.
According to the report, only Kakamega spent less than 50 per cent of its revenue on wages in the first three months of the current financial year.
Development expenditure took a back seat as 20 counties poured 80 per cent of their revenue into salaries.
More shocking is the revelation that over half of the counties did not put a single cent into development, with the little that was left after expenditure on wages going to operations.
In the 2019 Budget Policy Statement, Treasury Cabinet Secretary Henry Rotich flagged inability of many counties to attain at least one third of development spending despite having budgeted to do so, posing a fiscal risk.