Shock of Sh106 billion ministries left unspent

By Peter Opiyo and Alex Ndegwa

Various ministries and departments returned money meant for critical projects to Treasury even as teachers and medics battled the Government for better pay and terms of service.

The shame of weak financial controls, poor project planning and delays in procurement due to late release of funds by the Ministry of Finance have been exposed in a report by the Controller of Budget, Agnes Odhiambo.

Releasing the report on Wednesday, Odhiambo revealed that Government ministries and departments failed to spend a total of Sh101.6 billion in the last financial year (2011/12).

A big chunk of the unspent funds were for development expenditure. This means that projects like construction of roads, schools, dams, health facilities and water schemes to ease the suffering of Kenyans were not complete across the country.

The Ethics and Anti Corruption Commission was named the worst performer in spending development budget. It only spent 0.1 per cent of its Sh232 million-development budget.

However, the anti-graft agency has been without top management for a long time after former directors led by PLO Lumumba were sacked by Parliament while the appointment of new officials has also been delayed.

The Cabinet Office was the second worst performer recording 1.5 per cent expenditure of its Sh4 billion allocation.

Other ministries named among the bottom five were the East African Community (Sh1.3 million out of Sh74 million) at 1.7 per cent.

Best and worst

Justice and Constitutional Affairs, then under Mutula Kilonzo, used Sh55 million of its Sh1 billion budget for development (5.3 per cent) while the Labour Ministry of John Munyes was third on the list of poor performers, spending just Sh85 million of its Sh1.1 billion allocation (7.4 per cent).

The failure to use funds meant for development is an indictment because it undermines service delivery by denying the public access to vital facilities. 

The details emerged during a presentation by Odhiambo at a meeting of Permanent Secretaries and Accounting Officers chaired by Prime Minister Raila Odinga whose office is responsible for coordinating various ministry programmes.

Odhiambo identified the best and worst performers in terms of absorption of resources.  Odhiambo blamed the problem on weak governance, which includes lack of sufficient financial controls and graft as well as poor planning of projects and delays in procurement.

Other challenges cited were delays in processing payments to contractors, poor financial management information systems that provide unreliable data leading to delays in release of donor funds and donor conditionalities. Recurrent expenditure records a high absorption rates because it is essentially the wage bill for payment of salaries.

Poor absorption rate

The last financial year recorded the lowest absorption rate in six years of development expenditure by Government at 55.1 per cent.

It was a sharp decline from 71.6 per cent the previous year and is beaten only by the 2007/08 financial year where spending was at 55.9 per cent of available funds.

Head of Public Service Francis Kimemia blamed it on bureaucratic procurement procedures, lack of proper coordination and cancellation of funding by development partners.

Prime Minister Raila Odinga, on the other hand, blamed procurement rules for slow implementation of projects. He said corruption where MPs are lobbied by losing bidders for State contracts to use Parliamentary committees to stop the procurement process even after State agencies have resolved the matter.

Finance Minister Njeru Githae said Kenyans and donors expect service delivery from the allocated funds.

“You (permanent secretaries) are letting us down as Treasury because when you don’t absorb the money you are letting the donors, Treasury and Kenyans down,” said Githae.

Chairman of the Parliamentary Budget Committee Elias Mbau said the low absorption by the Government depicts inefficiencies and weaknesses in the budget process.

“Low absorption in government is an issue of concern, especially for a country that is intent on borrowing funds,” said Mbau, the Maragwa MP.

Kimemia pointed out that low absorption affects Kenyans as it denies them the opportunity to get development projects and challenged the PSs and Accounting Officers not to heap blame on cancelled funding by development partners, but assess why their ministries cannot utilize all the funds allocated to them.

“We don’t need to blame donors, we need to ask ourselves why we can’t spent 100 per cent of government funding,” said added Kimemia.

Need for training

He proposed training of programme managers to ensure funds are used and called for harmonisation of Government procurement systems. Ministries with the worst rate of absorption of recurrent expenditure include the Office of the Deputy Prime Minister and Minister for Local Government, then under Sabatia MP Musalia Mudavadi, which spent a paltry 5.1 per of its allocation.  It was allocated Sh18.3 billion, but only spent Sh930.4 million.

The Ministry of State for Public Service follows with 14.9 per cent of its allocation spent absorbing Sh760 million of its allocated Sh5 billion. The defunct Interim Independent Electoral Commission (IIEC) had Sh1.8 billion of its allocated Sh11.4 billion, representing 16.3 per cent absorption rate.

Ministry of Housing is next with Sh570 million of its Sh1.6 billion spent (33.9 per cent) while Ministry of Water spent Sh2.6 billion of its allocation of Sh5.9 billion (43.4 per cent absorption).

Good spending

The Ministry of Tourism ranked first in the absorption of its development budget at 92.3 per cent followed by the Ministry of National Heritage (87.1 percent), State Law Office (81.5 per cent), Planning (80.7 per cent) and Industrialisation (75.7 per cent).

Tourism, Trade and Industry sectors had the highest rate of absorption of 75.2 per cent.

On the other hand, Ministry of State for Special Programmes topped those praised for high absorption rate of recurrent expenditure. Out of Sh7.3 billion, the ministry spent Sh7.9 billion, representing 93.2 per cent absorption rate.

Ministry Foreign Affairs spent Sh7.4 billion of its allocation of Sh8 billion (92.5 per cent) while the Ministry of State for Defence had Sh43.3 billion of Sh52billion spent (83.4 per cent) while Ministry of East African Community spent Sh847 million of its allocation of Sh1 billion (82.7 per cent).

Teachers Service Commission closes the five best spending 79 per cent of its Sh105 billion allocation with Sh83.6 billion. The total budget for the financial year 2011/2012 was Sh1,158.9 billion, with recurrent budget of Sh552.8 billion and Development budget of Sh396.5 billion.

“Budget cuts by the Treasury should be properly coordinated so as to minimise adverse effects on implementation of programmes and projects,” said Controller of Budget, Agnes Adhiambo.  The shortfall in revenue and appropriation in aid collections should also be addressed to facilitate effective project implementation, she added.  Raila said the technical expertise of Parliament in fiscal matters should be strengthened to boost its role in budget making.

Parliament role

He said while the Judiciary and Executive make their budgets independently and forward them to Parliament for approval, the House makes and approves its own budget.

“Parliament doesn’t have experts. Budget making is scientific...Parliament should look at the budget documents and make its recommendation to the Executive, that is how it is practiced in the US,” the PM noted.

The total budget for the financial year 2011/12 was Sh1.15 trillion. Out of these development expenditure was Sh396.5 billion representing 34.21 per cent of the total budget.