County Governments should Embrace Financial Prudence

County Governments should Embrace Financial Prudence

County Governments should Embrace Financial Prudence

By Sitati Wasilwa

The 2017 Kenya Economic Report that was released last week by the Kenya Institute of Public Policy and Research Analysis (KIPPRA) made stunning revelations as far as the absorption and utilization of financial resources by the county governments is concerned.

In the report, it is clearly highlighted that for the 2015/2016 financial year only 65% of the total amount of money set aside for development by the county governments was utilized. On the other hand, the absorption rate for the finances budgeted for recurrent expenditure was 91.9%.

This implies that out of the Kshs.166 billion allocated for development expenditure by county governments in the 2015/16 fiscal year, only Kshs.103.45 billion was absorbed. Simple arithmetic reveals that approximately Kshs.63 billion cannot be accounted for or was returned to The National Treasury.

The 2016 Budget Implementation Report prepared by the Office of the Controller of Budget indicates that the total amount of money that was absorbed as far as recurrent expenditure is concerned was Kshs.191 billion. It should be noted that the budgeted amount for recurrent expenditure by county governments in 2015/16 year was approximately Kshs.208 billion.

From the figures, my concern is on the discrepancy that exists between the absorption rate for the recurrent expenditure and the development expenditure. The differences between the two mean that county governments prioritize the payments to the workers as well as facilitating operations and maintenance at the expense of socio-economic development.

Concerns

The relatively low absorption rate for the development expenditure may be due to various reasons: corruption in the execution of development projects and programmes; the existence of financial bureaucracy which delays disbursement of funds and; implementing projects which are not economically viable and abandoning them on the way.

Looking critically at the afore-mentioned reasons, corruption and the implementation of bogus socio-economic projects are the main causes for the low absorption rate. Financial bureaucracy would also have led to a relatively low rate of absorption for the recurrent expenditure hence not a key factor in this context.

With the devolution of political leadership and economic resources, equally came the effective devolution of corruption and grand theft. County governments are typical representations of graft theatres mimicking the looting of public financial resources that is the norm in the national government.

Furthermore, for the county governments, ensuring that workers are paid is much more important than ensuring the completion of development projects. The proper completion of development projects by having a high absorption rate of funds has a higher positive impact on the county residents than the payments to the workers.

One of the structural weaknesses of the county governments is the high number of employees. It is very common to find several county employees having the same or similar job responsibilities. This is evidently clear through the duplication of roles and positions of responsibility. County governments are conduits for issuing political rewards with the need to accommodate friends and relatives.

Failure of Institutions

As much as Kenyans are not angry enough about the swindling of their taxes, there tends to be a systemic failure in the institutions charged with the constitutional mandate of eradicating corruption. The effectiveness of governance institutions is fundamentally important in socio-economic development.

After the Offices of the Controller of Budget and the Auditor General publish reports on the utilization of funds by the county governments, nothing constructive takes place in terms of accountability by the governors.

We are only treated to sideshows and political drama between the Senate and the Council of Governors where the accused Governors appear before the Senate Public Accounts Committee. Corruption is an economic crime as clearly stated in the Economic Crimes Act yet we have not seen corrupt governors being arrested and jailed. Are governors gods? Are they above the law? Is the justice system selective in Kenya?

The Ethics and Anti-Corruption Commission (EACC) is a spineless and colorless public institution. We should highly consider giving more noticeable powers to this institution which seems to only act as a haven for creating employment for a few people to pocket tax payers’ money.

What is the role of the Members of County Assemblies? Our national constitution highlights three roles for them: representation, legislation and oversight. They have failed fantastically as far as oversight of county financial resources is concerned. Most of them simply lack the intellectual rigor to institute effective oversight frameworks and mechanisms.

Worse enough, their get-rich-quick tendencies at the expense of exercising servant political leadership is also responsible for the ineptness they exhibit with respect to their weak oversight role. These are people whose political leadership lacks values and morals just like the Members of Parliament, Governors and at the Offices of the President and the Deputy President.

The Future

As we remain optimistic about the effectiveness of county governments and other public institutions, we must remember that as citizens we have the constitutional mandate of holding the political leaders accountable.

Elections present an opportunity to increase the level of optimism that we have in view of the effectiveness of the governance system. Electing the ineffective political leaders would in fact be an endorsement that as citizens we cherish political immorality and mediocrity.

The next phase of devolution after the elections should be one characterized by very high absorption rates of the development expenditure and effective governance institutions and systems. It should be an era to witness robust oversight by the Members of County Assemblies (MCAs).

Lastly, development projects and programmes should be thoroughly evaluated to ensure that they are viable and sustainable. High levels of competence as well as adherence to high standards and quality must be fully embraced and emphasized for this to happen.

 

The writer is an economist at Savic Consultants’ Centre for Economic & Public Policy Analysis (CEPPA) in Nairobi, Kenya.

 

 

 

 

 

 

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