Governors accuse the Treasury of delaying disbursements to counties

Development spending in the first three months of this financial year fell below the stipulated 30 per cent threshold, hurting momentum in economic development as 24 counties did not did not incur any expenditure on projects.

This means the counties' quest to speed up economic growth hit strong headwinds in that period, affecting crucial project plans on roads, water, agriculture and health sectors.

The findings are contained in the latest report by Controller of Budget Agnes Odhiambo covering the period between July to September 2018.

Counties that incurred zero expenditure on development were Baringo, Garissa, Homabay, Isiolo, Kajiado, Kericho, Kisii, Kisumu, Lamu and Machakos.

Others were Makueni, Mandera, Marsabit, Meru, Mombasa, Nyandarua, Samburu, Siaya, Tana-River, Trans-Nzoia, Turkana, Uasin-Gishu, Wajir and West-Pokot.

Economic growth is largely dependent on how much investment is made in key areas such as infrastructure and health.

Less development spending means stifled investment, which denies the economy the impetus it needs to grow. In the report, Mrs Odhiambo said development expenditure amounted to only Sh3.51 billion.

This represented an absorption rate of two per cent which is an increase from 0.9 per cent attained in the first quarter of FY 2017/18 where total development expenditure was Sh1.15 billion.

But the counties are not entirely to blame as an analysis of previous financial years shows a similar trend.

DISPUTES

Delays in disbursement of monies by the National Treasury, which affected the timely implementation of county programmes, has been blamed.

The low absorption of development funds has also been partly attributed to the common disputes between the National Assembly and the Senate over the enactment of the County Allocation of Revenue Act.

Consequently, the funds became available in the last month of the quarter which affects absorption of development funds and effective budget execution.

For instance, in the first quarter of FY 2013/14, 27 counties had no expenditure on development. In FY2014/15, six counties did not report any expenditure on development projects as was in the FY2015/16. And in FY 2016/17, seven counties did not spend a dime on development expenditure.

Governors have decried tranche disbursements. By August 2017, a month after the 2018/19 financial year commenced, none of the 47 counties had received a cent of the Sh314 billion shareable revenue.

This was according to gazette notice no Vol. CXX-No. 99 dated August 17 by Treasury Cabinet Secretary Henry Rotich.

County governments will likely remain holding onto large amounts of money at the end of the financial year in June, pointing to the need to fix the capacity of the devolved units to absorb funds.

The Council of Governors (CoG) has complained that it is unfair that the national government share is not subject to tranche disbursements.

 “This is unfair and should be rectified. The frequent changes in the procedure and requirements for county governments funds approved by the Cob is disrupting delivery of services and this seems to be affecting county governments,” said the former CoG chairperson Josphat Nanok.

UNDERFUNDED

In her report, Mrs Odhiambo said that counties were underfunded in the period between July to September 2018. National Treasury disbursed a total of Sh23.53 billion to the counties as equitable share of revenue, which accounted to 7.5 per cent of the annual equitable share of revenue from the national government of Sh314 billion.

“This low level of disbursement implies that counties were underfunded and therefore, unable to fully implement budgeted activities. It is therefore recommended that, the national shareable revenue be disbursed on a timely basis to ensure budget implementation is not adversely affected,” she recommended.

An analysis of development expenditure as a proportion of approved annual development budget during the reporting period shows Narok, Murang’a, and Kitui attained the highest absorption rate at 25.9 per cent, 14.9 per cent, and 8.4 per cent respectively.

Counties also incurred an aggregate of Sh47.45 billion or 93.1 per cent of the total expenditure on recurrent activities.

This represents 17.4 per cent of the annual county governments’ budget for recurrent activities, and an improvement from 14.3 per cent recorded in a similar period of FY 2017/18 when expenditure stood at Sh34.27 billion.