The office of the Controller of Budget has raised concerns over low expenditure on development budget by county governments compared with high spending on personnel emoluments.

Citing the county governments’ budget implementation review report for the first nine months of 2021/22 dated May 2022, Controller of Budget Margaret Nyakang’o said a review of cumulative expenditure by economic classification showed that Sh139.57 billion (54.3 per cent) was spent on personnel emoluments, Sh3.31 billion (28.5 per cent) on operations and maintenance, and Sh44.3 billion (17.2 per cent) on development.

“County governments spent Sh44.3 billion on development, representing an absorption rate of 22.8 per cent of the annual development budget, which is a decrease from 25.1 per cent reported in a similar period in 2020/21 when the expenditure was Sh48.46 billion,” the report states.

“The total expenditure by county governments in the first nine months of financial 2021/22 was Sh257.18 billion, representing an absorption rate of 48.7 per cent of the total annual county governments’ budget. This increased from an absorption rate of 44.2 per cent reported in a similar period in FY 2020/21, when total expenditure was Sh221.39 billion,” it adds.

According to Nyakang’o, Sh44.3 billion was spent on development expenditure, representing an absorption rate of 22.8 per cent of county government’s cumulative annual development expenditure budget of Sh194.01 billion.

High expenditure on personnel emoluments was pegged at Sh139.57 billion, which accounted for 54.3 per cent of the total spending of Sh257.18 billion, or 35.2 per cent of the first nine month’s proportional revenue of Sh 396.41 billion.

“Counties spent an aggregate of Sh212.88 billion, or 82.8 per cent, of the total expenditure on recurrent activities. This represents 63.6 per cent of the annual county government’s budget for recurrent activities and an improvement from 56.2 per cent recorded in the first nine months of 2020/21 when expenditure stood at Sh172.96 billion,” the report reads.

It adds: “Recurrent expenditure comprised Sh139.57 billion (65.6 per cent) on personnel emoluments and Sh73.31 billion (34.4 per cent) on operations and maintenance expenditure”.

Analysis of the percentage of personnel emoluments for the first nine months of the proportional revenue shows that 20 counties were above the allowable limit of 35 per cent. They are Homa Bay, Nyamira, Vihiga, Embu, Garissa, Machakos, Nandi, Nyeri, Kiambu, Kisumu, Taita Taveta, Meru and  Kitui. Others are Kisii, Elgeyo Marakwet, Tharaka Nithi, Nairobi City, Marsabit, West Pokot and Murang’a.

Low absorption rate

A study of development expenditure as a proportion of the approved annual budget shows only three counties attained an absorption rate above 50 per cent; namely, Kitui (53 per cent), Mombasa (51.5 per cent), and Marsabit (50.6 per cent). A total of 19 counties recorded an absorption rate below 20 per cent of development expenditure — Taita Taveta, Machakos, Baringo, Nairobi, Lamu, Narok, Wajir, Nyandarua, Kisumu, Kiambu and Turkana.

Others are West Pokot, Trans Nzoia, Siaya, Garissa Kilifi, Elgeyo Marakwet, Vihiga, and Migori.

For instance, Wajir County spent Sh5.69 billion on development and recurrent programmes during the reporting period, representing 94.9 per cent of the total funds released by CoB and comprising Sh513.67 million and Sh5.17 billion on development and recurrent programmes, respectively.

“Expenditure on development programmes represented an absorption rate of 12.1 per cent of the annual development budget, while recurrent expenditure represented 70.4 per cent of the annual recurrent expenditure budget,” the report reads.

In Vihiga, an analysis of expenditure shows that the department of trade, industry, tourism and entrepreneurship recorded the highest absorption rate of the development budget at 73.8 per cent.

The county’s department of transport, infrastructure and communication had the highest percentage of recurrent expenditure to budget at 136.8 per cent, followed by the department of administration and coordination of county affairs at 111.9 per cent.

“The expenditures are above the approved budget, which should be regularised before the closure of the financial year,” the report states.

Counties that attained the highest expenditure were Nairobi (Sh16.32 billion), Nakuru (Sh8.79bn), and Kiambu (Sh8.38bn). The lowest expenditure was in Tharaka Nithi, Elgeyo Marakwet and Lamu at Sh2.93bn, Sh2.92bn and Sh2.04bn.

The Controller of Budget urges counties prioritize the implementation of development projects to improve the standard of living for their citizens.

“Further, county governments should ensure that expenditure on development activities meets the minimum set ceiling of 30 per cent of their budgets,” the report says.

For instance, Baringo’s analysis of expenditure by the departments shows that the Department of Youth, Gender and Social Security Services recorded the highest absorption rate of development budget at 17.2 per cent, while two departments, namely; Governor/County Executive Services and Lands, Housing & Urban Development, did not report any expenditure on development activities.

The Department of Water & Irrigation had the highest percentage of recurrent expenditure to budget at 76.3 per cent, while the Department of Education, Vocational Training & ICT registered the lowest at 10.5 per cent.