What does the recently released Controller of Budget report, covering FY 2015/16, tell us about the state of county finances?

Fact #1: Counties received the full allocation for the equitable share of Ksh259.77 billion during the year. However, the COB does not tell us when they received it during the year, information that would help us to assess where to lay some of the blame for failure to fully execute budgets, or the billions in pending bills (Ksh37 billion) piled up at the end of the year. This is a major gap in transparency; it is nearly impossible to find cash flow data that is readily available to the public.

Fact #2: As a whole, counties collected more in local revenue in 2015/16 than they did in 2014/15. Local revenues were up from Ksh33.9 to Ksh35.0 billion. This was also a small increase as a percentage of target, from 67.2 per cent of target in 2014/15 to 69.3 per cent of target in 2015/16. This suggests that counties are slowly moving toward more realistic targets at the same time that they slowly increase collections.

Fact #3: Counties spent about 15 per cent of their operations and maintenance budget on travel (foreign and domestic). That translates into about 3.7 per cent of total spending. While such spending may well be wasteful, it is not as large a share of the budget as it might appear from media reports.

Fact #4: If counties are spending too much on travel, the problem is at the budget formulation stage. Counties budgeted Ksh12.83 billion for travel, but only spent Ksh11.04 billion. Citizens concerned about wasteful travel should make more noise when the budget is formulated and approved if they want to curb this spending. To be sure, some counties have gone over budget: COB finds six counties spent more than they budgeted for travel.

Kwale, for example, spent more than 150 per cent of its travel budget (the assembly underspent its travel budget while the executive spent nearly double what it had budgeted). Murang'a, Trans Nzoia, Makueni, Machakos and Turkana were all guilty of excess expenditure as well.

Fact #5: While most of the focus on county travel has been on MCAs, they account for less than half of the travel expenditure at county level. Assemblies spent roughly 37 per cent of total travel expenditure, while county executives accounted for the rest.

Fact #6: Counties have large cash balances at the end of the year, suggesting that their liquidity problems in the early part of the year relate to their failures to pass budgets on time and requisition those funds, and not to the failure of national government to transfer resources to them. Counties began 2015/16 with a total cash balance of Ksh36.1 billion, roughly 10 per cent of their total budgets. That should be more than enough to cover a month of spending.

Counties also collected roughly Ksh2.3 billion during July 2015/16, meaning they had some cover for August as well.

Fact #7: The Controller’s national and county reports contradict each other on the matter of how much was disbursed for free maternity in 2015/16. The national report claims the amount was Ksh2.4 billion. The county report puts this figure at Ksh3.32 billion. The latter figure matches Treasury’s figure in the Budget Review and Outlook Paper. All of these figures fall short of the approved budget of Ksh4.3 billion and there is no explanation in any of these reports for the variation.

Fact #8: Spending on sitting allowances for MCAs actually declined marginally in 2015/16, from Ksh2.94 billion in 2014/15 to Ksh2.82 billion. This was also below the budget for 2015/16 of Ksh3.45 billion. Although sitting allowances are not entirely discretionary (unlike travel budgets), it is still the case that concern about spending on this item should be dealt with at budget formulation.

Fact #9: COB continues to report on spending on allowances in excess of maximum monthly allowable figures as regulated by the Salaries and Remuneration Commission, but does not clarify whether or not it has taken into account the higher allowances payable to chairs and vice-chairs of committees.

Analysis by my organisation last year suggested most counties had about 20 committees, meaning that a very large number of MCAs were eligible for higher allowances as chairs and vice-chairs. It is not obvious that COB has taken this into account in its assessment, so they may be overestimating the problem.

Fact #10: As I have pointed out previously, we cannot take the recurrent versus development spending comparisons in the COB report seriously. Notice, for example, that Baringo correctly classifies medical drugs as recurrent while Kwale wrongly classifies them as development. This undermines claims that Kwale has spent a larger share of budget than other counties on development.

Jason Lakin is Kenya country director for the International Budget Partnership. Email: [email protected]