The 47 county governments had an aggregate budget of Ksh. 535 billion out of which Ksh. 193 billion was allocated for development and Ksh. 342 billion was for recurrent expenditure.
The counties expected to receive Ksh. 370 billion from the National government in form of Equitable Share of revenue.
Further, the counties expected to raise Ksh. 60 billion from their own sources of revenues and receive Ksh. 7.5 billion in the form of conditional grants from the national government, Ksh. 32 billion from development partners and have Ksh. 58 billion in form of cash balance brought forward from 2020/21.
A total of Ksh. 436 billion was made available to the 47 counties in Kenya out of which Ksh. 340 billion was equitable share, Ksh. 12 billion in conditional grants, Ksh. 48 billion cash balances brought forward and Ksh. 35 billion raised from Own Sources of Revenue.
Poor performance in Own Source of Revenue Collection
At least 16 counties collected less than 60 percent of their annual revenue targets. – Busia (30 per cent), Murang’a (32.9 per cent), Kajiado (33.1 per cent), Garissa (43.7 per cent), Embu (43.8 per cent), Kitui (45.2 per cent), Nairobi City (47.1 per cent), Nyandarua (47.8 per cent), Bungoma (49.3 per cent), Kisumu (49.5 per cent), Wajir (52.4 per cent), Meru (55.9 per cent), Nyamira (56.4 per cent), Narok (56.7 per cent), Kisii (57.8 per cent), and Marsabit (58.6 per cent).
Actual Expenditures by 47 counties in Kenya
During fiscal year 2021/2022, County Governments spent Kshs.400 billion, representing an absorption rate of 74.8 per cent of the total annual budgets. This represented a decrease from an absorption rate of 79.3 per cent reported in FY 2020/21, where total expenditure was Kshs.398.01 billion. The total expenditure of Kshs. 400.96 billion represented 97.6 per cent of authorised withdrawals of Kshs. 410.86 billion.
Development Expenditure Analysis
Development expenditure amounted to Kshs. 98.47 billion, representing an absorption rate of 50.9 per cent and a decline from 62.1 per cent attained in the FY 2020/21 when total development expenditure was Kshs. 116.07 billion.
A total of 17 counties recorded an absorption rate of less than 50 per cent of development expenditure. These were; – Garissa (29.3 per cent), Nairobi City (29.3 per cent), Kisumu (31.5 per cent), Machakos (32.6 per cent), Taita/Taveta (33 per cent), Narok (33.4 per cent), Vihiga (33.5 per cent), Busia (33.8 per cent), Kilifi (35.4 per cent), Mombasa (37 per cent), Turkana (39.5 per cent), Nyandarua (39.8 per cent), Murang’a (41.7 per cent), Baringo (43.9 per cent), Bungoma (44 per cent), Kisii (46.1 per cent), and Laikipia (47.6 per cent).
As of June 30, 2022, Counties reported accumulated pending bills amounting to Kshs. 153.02 billion, comprised of Kshs. 151.68 billion by the County Executives and Kshs. 1.34 billion by the County Assemblies. Nairobi City County accounted for 69.5 per cent of the stock of the pending bills at Kshs. 99.06 billion.
Other Counties with a high level of pending bills are Mombasa at Kshs. 5.87 billion and Kiambu at Kshs. 5.23 billion. Mandera County Executive did not report any outstanding pending bills.
Challenges that hampered effective budget execution during the reporting period
- A high level of outstanding pending bills as self-reported by the county governments that summed up to Kshs. 153.02 billion as of 30th June 2022,
- Low expenditure on development budget, which was Kshs. 98.47 billion and represented an absorption rate of 50.9 per cent of the County Governments’ cumulative annual development expenditure budget of Kshs. 193.53 billion,
- Under-performance in own-source revenue collection, which was Kshs. 35.91 billion compared with the annual target of Kshs. 60.42 billion,
- High expenditure on personnel emoluments at Kshs. 190.11 billion, which accounted for 47.4 per cent of the total spending of Kshs. 400.96 billion or 43.6 per cent of the FY 2021/22 available revenue of Kshs. 436.46 billion, and
- The use of manual systems to process payroll, which is prone to abuse.
County governments processed Kshs. 15.63 billion for wages through manual systems other than the prescribed Integrated Payroll Personnel Database (IPPD).
Other identified challenges included delay in submission of financial and non-financial reports by county governments to the Controller of Budget and weak budgetary control and use of revenue at source contrary to Article 207 (1) of the Constitution.
county governments should prioritise the implementation of development projects in FY 2022/23 to improve the standard of living for their citizens and ensure that spending on development activities meets the minimum set threshold of 30 per cent of their annual budgets.
Counties are advised to review their FY 2022/23 revenue targets to confirm that they are realistic and implement strategies to mobilise their own source revenue collection.
County Governments should ensure that spending on personnel emoluments is contained at sustainable levels and in compliance with Regulation 25 (1) (b) of the Public Finance Management (County Governments) Regulations, 2015.
In FY 2022/23, all the County Governments, including the County Assemblies, are required to migrate to the Unified Human Resource (HR) Information System for the public service by 1st October 2022, in line with the guidelines by the Head of the Public Service.
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