Is it possible to say which counties have spent more of their budgets on development, as the Controller of Budget did recently, claiming that Kwale led the pack with 57 per cent of its total expenditure for the year going to development?

No. It is impossible to say this. Here’s why. In order for us to compare counties on anything, there must be a common set of standards for that item. For example, all county budgets are due on April 30 by law, so we could compare them in terms of whether they meet that deadline or not.

You might say that there is also a common standard for how to classify recurrent and development expenditure, but alas, there is not. If different counties classify expenditure differently, we are making an apples to oranges comparison when we say that a particular county spent more on development than another.

This is not simply academic: Consider that in the 2016/17 budget from Kwale, there are items like medical drugs, dressings and allowances in the development side of the budget, totalling more than Ksh200 million (and I have just selected a few items). None of these are normally considered development/capital expenditure, and are likely to be inflating the apparent share of the county’s budget that is going to development relative to other counties.

Why don’t we have clear guidance on how to classify recurrent and development expenditure? The first problem is that Kenya continues to insist on a distinction between “development” and “capital” expenditure that is at odds with best practice.

Most countries distinguish between current and capital, or recurrent and capital. When the word capital is used, it is meant to focus our attention almost exclusively on the production of assets. Traditionally, these assets are physical (buildings, roads) or financial (stocks, funds) in nature.

In Kenya, the use of the word development muddies the waters. Roughly two-thirds of the time this word is used, it is meant to signify capital projects. But many people use it (wrongly, in my view) to refer to any “development project” or programme, which then means that donor-financed projects or other items with the word “development” in them are mixed together with capital projects into an indefinable stew.

This leads to numerous irrational decisions, such as reclassifying a clearly recurrent expenditure, like drugs, as development when a donor pays for it, but marking it as recurrent when the government pays for it (a distinction the Controller of Budget actually endorses).

This mess is exacerbated by armchair public finance “specialists” who have come up with even more arcane and bizarre definitions of “development.” For example, it is common to hear people say that any project that brings a direct benefit to citizens should be considered development.

If this logic was followed, the entire wage bill for health workers, which no one (Kenyan or otherwise) has ever considered to be development spending, would suddenly become the largest fraction of development spending in most counties.

This is stuff and nonsense. Rather than come up with ever more fanciful attempts to define a nebulous category that has no actual meaning on the ground, we would do well to return to the first principles of public finance and simple categories like current and capital.

However, even if we were to do this, there are still many issues that are of uncertain classification. This requires policy guidance from the National Treasury. I have moved beyond shock at the inability or unwillingness of the Budget Department of the National Treasury to provide this guidance, in writing (as it must be), now more than three years after the first county budgets.

The issue was raised last year at the first annual convening of county Heads of Budget in Nairobi by more than half of the counties. I personally wrote to the National Treasury to follow up on this matter several times. We again convened the Heads of Budget last month and invited Treasury to address the issue. In spite of several letters and e-mails, we received no feedback from the Budget Department and they refused to send a representative to our meeting to discuss the issue.

Whenever Treasury is confronted about lack of transparency or guidance to counties, they quickly turn defensive, claiming that they have point persons who can address county issues and that they have visited many of the counties to train them. But this is a policy issue that requires a circular or guideline, not trainings or point persons.

It is ultimately Treasury’s role to implement the PFM Act, including the fiscal responsibility principles that set the rules on the share of development spending required by national and county governments. At this point, the failure to sort out this matter is dereliction of duty, plain and simple.

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