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Survey: Over Sh300b for development sits idle in State coffers

BUSINESS
By By James Anyanzwa | May 9th 2014
The level of absorption of funds for development plans has been too low for the country to achieve the envisaged double-digit economic growth.

By James Anyanzwa

An estimated Sh300 billion reserved for the implementation of key development programmes in the country could be lying idle in government coffers.

A civil society organisation (CSO) has forecast that about 68 per cent of the total development budget (Sh447.9 billion) allocated to government ministries, departments and agencies (MDAs) during the current (2013/2014) financial year would remain unutilised.

 According to projections by the International Budget Partnership (IBP) Kenya the MDAs would only absorb 32 per cent of their development funds by June 30 this year in a development that could have serious consequences on the country’s economic prospects.

 “The bigger issue is that people are exaggerating their budgets with intentions of getting money from donors which never comes. It is very important that Parliament scrutinises all development budgets presented before it to determine how realistic they are,” said Jason Lakin, a senior Programme Officer and Research fellow at IBP.

The group uses budget policy analysis and advocacy to improve governance and fight poverty around the world.

 “We are not spending as much as we should on capital investment and this is likely to affect our economic growth. Parliament needs to interrogate the budget and question why development budget is not being utilised,” he added.

 Financial year

 According to IBP, 56 per cent (Sh254b) of the gross development budget (Sh453b) was not spent during the 2012/2013 financial year.

“When allocating funds for 2014/2015 we should look at how much we have absorbed in the last year and in the previous years,” Dr Lakin told a media briefing in Nairobi yesterday. A survey of selected ministries by IBP shows that the Ministry of Transport and Infrastructure and Energy and Petroleum ministry are the biggest offenders in terms of low absorption rate of development funds.

 The ministry of Transport and Infrastructure spent only 17 per cent of its gross development funds during the first six months (July-December) of the current financial year while the ministry of Energy and Petroleum absorbed a paltry six per cent of the development funds in a similar period.

 Ministry of Health, however, absorbed 46 per cent of its development budget. According to the Office of the Controller of Budget, the level of absorption of funds budgeted for development programmes has been quite low for the country to achieve double-digit economic growth envisaged by the medium term plan.

Number of activities

 According to the Budget Implementation review Report for the first six months of the current financial year (2013/2014) by the Office, a considerable number of activities were not implemented during the period.

 The report shows that in the first half of the 2013/2014 financial year the absorption rate of development funds was 15.8 per cent of the annual development budget against a mid year target of 50 per cent.

“This has been largely attributed to among other things the lengthy procurement process, delays in release of funds due to revenue shortfalls, weak reporting mechanisms and weal monitoring and tracking system,” says the report.

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