Budget: We’re busy focusing on the nail polish on the left foot of an elephant

Saturday March 21 2015

 

By JASON LAKIN

Suppose I were to tell you that Kenya’s parliament was busy slashing money for counties, increasing it for regional hospitals, cutting it for medical leasing, and increasing it for itself. And no one was all that interested. It seems hard to believe, but it is exactly what is happening.

The Kenyan budget process has a few key moments that rise above the rest in terms of the gravity of the decisions taken. And no moment is more important, or should be, than the annual approval, with amendments, of the national Budget Policy Statement (BPS) and the County Fiscal Strategy Papers.

While most of the attention has been fixed on the controversial Ksh3 billion that the Budget Committee allocated for “public participation,” little of substance has been said about the rest of the budget, which is now approaching Ksh2 trillion. This is something like focusing on the nail polish on the left foot of an elephant and ignoring the rest of the animal.

What should we be focusing on now? Let me pick on just a few matters. One, the National Assembly is not happy with the agreement between Treasury, CRA and the governors to give counties Ksh258 billion and wants that reduced to Ksh246 billion.

As I have already shown in this space, the Ksh258 billion is a slight decrease in the county share of current year revenues, and this would be exacerbated by parliament’s proposal.

Given the phenomenal heat that has been generated over the past year or so about the county share and the related referenda, it is nothing short of shocking how little attention these proposals are receiving.

The parliamentary proposal would also reduce the funding for medical leasing by Ksh1.1 billion, which further reduces the conditional grants that Treasury had proposed to counties.

It is all the more interesting to note the destination of some of the funds that would be taken away from the county share: An additional Ksh1.74 billion for regional hospitals, Ksh1 billion for the Auditor to audit counties, and Ksh1 billion for the Ethics and Anti-Corruption Commission to ramp up oversight of counties.

The funding for regional hospitals would restore the size of the conditional grant to what it was in 2013/14, after it was cut in half last year. These three proposals may well be popular, and it is an open question whether they are more important than giving counties a larger share of funding. This is what we should be debating right now, but are not.

A second critical issue for parliament to address is whether it agrees with the sectoral distribution of funding in the BPS. The BPS proposes to reduce the share of national spending on agriculture, health, and education (among other things), in order to increase it on energy/infrastructure and national security. Is that right? We should be debating this now as well.

What does parliament think about this question? From the report on the BPS, it appears that parliament supports the sector allocation for energy/infrastructure, and for national security, though they have added Ksh100 million to the Independent Policy Oversight Authority for more staff, slightly increasing the budget for this sector.

When it comes to agriculture, education and health, the National Assembly proposes to increase the agriculture and rural development sector by roughly Ksh6.3 billion, the education budget by about Ksh7.6 billion, and the health budget by Ksh1.5 billion. It also proposes to reduce the total spending by ministries from Ksh1.395 trillion to Ksh1.345 trillion. 

What effect would this have on the share of the budget going to agriculture, education and health? By my count (no tables are available in the public version of this report), this would increase the share of the budget going to agriculture above last year (rather than decreasing it), and leave both education and health with a smaller share of the budget than in 2014/15.

Of course, there is little reason to think that the budget will actually be reduced by the Ksh50 billion parliament is asking for, because, aside from some fuzzy math, parliament has not bothered to find any savings.

Rather, one basis for at least Ksh40 billion in savings is, according to the report, “enhanced efficiency in utilisation of public resources.”

This is the kind of thing that sounds nice but is totally meaningless. We all know government could be more efficient, but if we cannot say how or where in the budget to cut spending, we are not saying anything at all.

Of course, at least one more debate worth having is why, as it purports to slash executive spending, parliament is increasing its own ceiling from a proposed Ksh23 billion to Ksh28 billion, and holding the judiciary at Treasury’s proposed Ksh18 billion. No explanation is provided for either decision. 

Jason Lakin is Kenya country manager for the International Budget Partnership. E-mail:[email protected]