Spending ought to bear results to grow economy—experts

By NICHOLAS WAITATHU

Productivity has remained low despite the State channeling billions of shillings year-in-year to fund several projects. The move has led to massive wastage of public funds. Kareithi Murimi, a risk analyst says payments such as salaries, overseas and local travel allowances ought to reflect an increase in production.

Kareithi adds that huge payments and low productivity require sound monitoring and control systems in addition to reconstruction of the civil service. “Government due to lack of sound monitoring systems even pay for services not delivered. Travel allowances paid to State officers is too high compared to the productivity realised,” he said in a telephone interview.

The Public Finance Management Act allows recurrent and development expenditure to take 70 per cent and 30 per cent of the total budget.

Sh1 trillion budget

 In the 2013/14 financial year, Treasury allocated Sh568.3 billion in recurrent expenditure and Sh442.7 billion in development expenditure, bringing the budget size to Sh1.011 trillion.

 Kareithi said low utilisation of the budget has also been compounded by low absorption capacity leading to return of funds to Treasury. “The salaries and travel allowances and mileage claims equals to Kenya Revenue Authority annual revenue collection,” he claimed.  The Institute of Economic Affairs Chief Executive Officer Kwame Owino voiced the same issue, saying low absorption capacity remains a key budgetary challenge.

 “When funds are returned to Treasury, the indication is that some people failed to supervise the implementation of certain projects despite being paid,” he noted.  Owino noted that development expenditure will stimulate sound growth in the economy.

He said it assists in taming woes such as unemployment, insecurity, low productivity, and high cost of doing business.  Over the years, both recurrent and development expenditure have been growing based on growth of needs of the economy.  In 2009/2010 financial year, development expenditure received Sh258.9 billion against a recurrent outlay of Sh606.7 billion.

The State allocated Sh675.6 billion for salaries and travel allowances as well as financing administrative operations, while the development expenditure consumed Sh321.2 billion.

Former Treasury Director of Budget Billy Ngugi says slow utilisation of the development expenditure has denied Kenya the opportunity to achieve competence needed to attract more investments and stimulate productivity.

ICPAK Kenya chairman Benson Okundi said high utilisation of the allocations require a review of the procurement law, which hinder growth.