Audit reveals zero expenditure on development by some 20 counties

A section of Nairobi's Eastleigh residents during a clean up exercise on December 17,2022. [Collins Kweyu,Standard]

At least 20 counties did not report any expenditure on development activities, an audit by the Controller of Budget has revealed.

The County Government's Budget Implementation Review Report for the First Quarter of the Financial Year 2022/2023 revealed the counties did not report any expenditure on development activities, possibly due to the challenges in setting up new county administration after the August elections.

Dr Margaret Nyakang'o, however, noted Narok, Vihiga and Nyamira counties recorded the highest proportion of development expenditure to their approved annual development budgets.

"County governments reported expenditures of Sh2.22 billion towards development activities, representing an absorption rate of 1.4 per cent of the cumulative annual development expenditure budget of Sh160.58 billion. Twenty-three counties did not report any expenditure on development activities during the period under review," read the audit in part.

Baringo County had a development budget of Sh4.49 billion. However, In the First Quarter of FY 2022/23, it did not incur any expenditure on the development programmes.

The county reported pending bills of Sh349.38 million, which comprised Sh199.93 million for recurrent expenditure and Sh149.44 million for development activities. It, however, did not settle the pending bills during the period under review despite the availability of Sh1.17 billion in the County Revenue Funds.

Bomet County did not report any expenditure on development programmes compared to a similar period in FY 2021/22 when the county spent Sh154.24 million.

Bungoma County did not report any expenditure on development programmes despite having a development budget of Sh3.84 billion in the reporting period.

Busia County also did not report any expenditure on development programmes.

Other counties that reported zero expenditure on development projects include Elgeyo Marakwet, Embu, Garissa, Isiolo, Kakamega, Kilifi, Kisumu, Makueni, Mandera, Marsabit, Migori, Nairobi, Nandi, Siaya, Tharaka Nithi, Trans Nzoia, Uasin Gishu,

The Controller of Budget recommended that county governments should develop and implement strategies to enhance the utilisation of funds allocated for development activities in the remaining financial year period.

Further, county governments she said should ensure that expenditure on development activities meets the minimum set ceiling of 30 per cent of their budgets.

The audit revealed county governments generated a total of Sh6.17 billion, in own-source revenue which was 10.8 per cent of the annual target of Sh57.01 billion, against an expected performance of 25 per cent of the annual target in the First Quarter of FY 2022/23.

Counties as of September 30, 2022, reported pending bills amounting to Sh161.36 billion. These comprised Sh127.38 billion for recurrent expenditure and Sh33.98 billion for development expenditure.

Analysis of the pending bills shows that Nairobi City County accounted for 62.2 per cent of the pending bills at Sh100.36 billion.

Other counties with high pending bills are Wajir at Sh5.50 billion, Mombasa at Sh4.51 billion and Kiambu at Sh4.81 billion. Mandera County Executive did not report any pending bills according to the report.

County governments were advised to settle the eligible pending bills as a first charge on the budget in line with Regulation 41 (2) of the Public Finance Management (County Governments) 2015, which states that "debt service payments shall be a first charge on the County Revenue Fund and the Accounting Officer shall ensure this is done to the extent possible so that the county government does not default on debt obligations".

The Controller of Budget noted that the National Treasury delayed in disbursing the equitable share of revenue to counties.

County governments as per the audit were allocated Sh370 billion as the equitable share of revenue raised nationally to finance their budgets in the FY 2022/23.

"As of September 30 2022, the National Treasury had disbursed a total of Sh40.74 billion as equitable share for the FY 2022/23 and Sh29.6 billion, which was arrears of equitable share from the previous financial year," read the report.

The Sh40.74 billion disbursed by the National Treasury audit revealed represented 11 per cent of the allocation for the FY 2022/23 of the Sh370 billion.

At the end of the First Quarter, counties had not received Sh20.31 billion, which was the allocation for August 2022. Failure by the National Treasury to release funds to County Governments the Controller of Budget affected budget implementation.

The Controller of Budget advised County governments to prioritise the implementation of development projects in FY 2022/23 to improve their citizens' living standards, ensuring that spending on development activities meets the minimum set threshold of 30 per cent of annual budgets.

On underperformance of their own-source revenues, counties were advised to review their FY 2022/23 revenue targets to confirm that they are realistic and implement strategies to mobilise their revenue collection, including building staff capacity in revenue administration.

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