Counties are going against public policy by spending most of their allocations on salaries and administration costs rather than on projects that directly benefit wananchi.
A new report shows that only 10 counties spent at least 30 per cent of their budgets on development projects last year. That means 37 other counties failed to meet this threshold.
The report by the World Bank indicates that if counties continue to pour money into salaries, fuel and office expenses, then the whole purpose of devolution, which was to offer better services to citizens, will be defeated.
According to the report released on Wednesday, the 10 counties that met the 30 per cent requirement were Wajir, Turkana, Bomet, Machakos, Murang’a, Homa Bay, West Pokot, Trans Nzoia, Kisii and Nyamira in that order.
On average, most of the counties spent 21 per cent on development, 30 per cent on administration and 46 per cent on salaries.
Among the counties who spent at least 20 per cent of their budgets on development are Kwale, Kakamega, Samburu, Mandera, Taita Taveta, Isiolo, Tharaka Nithi, Migori, Marsabit, Elgeyo Marakwet, Kericho, Nandi, Garissa and Nyeri.
Those which performed poorly were Mombasa at number 47, followed by Kisumu, Tana River, Embu, Uasin Gishu, Nakuru, Nairobi, Kilifi, Narok, Laikipia, Busia, Baringo, Bungoma, Kitui Vihiga, Meru, Siaya, Lamu, Kirinyaga, Kiambu, Makueni, Nyandarua and Kajiado.
These counties spent only a small fraction of their allocations on development, with the rest being used on salaries, fuel and other office costs.
“The major under-spending on development is more worrisome. Almost half of the counties are spending less than the average 22 per cent of actual spending on development which implies that the counties delivery of services may be negligible in core service sectors,” says the report.
It warns that high recurrent expenditure is potentially dangerous to the achievement of the objectives of devolved units, which was to offer better services.
“High recurrent administrative expenditure and weak revenue mobilisation could undermine the devolution objective of improving service delivery,” says the report, basing its analysis on data for the 2013/14 financial year.
Majority of the counties fell below the target they had set for revenue collection, which the bank further warned could undermine service delivery.
The report titled Decision Time: Spend more or spend smart? says the trend could “crowd out” growth initiatives. It generally paints a picture of wastage, lethargy in implementing projects, wrong priorities in some sectors and weak revenue mobilisation.
“Counties’ own revenue collection is low, reaching 0.5 per cent of GDP compared to 1.2 per cent of GDP annual target in their initial year of operation. This translates to 43 per cent fiscal effort by counties in revenue collection,” it says.
Some of the counties, however, surpassed their targets for revenue collection. The top collectors with over 43 per cent in revenue collection were West Pokot, Kericho, Marsabit, Tharaka Nithi, Homa Bay, Nyamira, Nyeri, Samburu, Kajiado, Bomet, Elgeyo Marakwet, Nyandarua, Siaya, Nairobi, Laikipia, Vihiga, Nakuru, Baringo Makueni, Turkana, Meru, Busia, Taita Taveta and Wajir.
The poor performers were Bungoma at the bottom, Kakamega, Kisumu Kisii, Garissa, Embu, Uasin Gishu, Migori, Nandi, Murang’a, Kwale, Mombasa, Isiolo, Kitui, Tana River, Narok, Trans Nzoia, Kiambu, Lamu, Kirinyaga and Machakos.
However, the World Bank noted that although revenue collection was below the target, it was an improvement from what the defunct local governments used to collect.
On average, counties spent 46 per cent on wages and salaries, 30 per cent on administrative recurrent expenses and 21 per cent on development projects.
The bank welcomed the national government’s continued investment in infrastructure projects but warned that the gap between recurrent and development spending continues to widen.
“The Public Finance Management Act 2012 provides for development spending at minimum of 30 per cent of total expenditure. The expenditure trends from 2007 to 2012 show rising share of development in total spending. But the rising pressure on recurrent spending is now reversing these gains.”
It says the rising share of spending on energy and roads reflects the commitment to improve Kenya’s competitiveness and provide the much-needed growth stimulus.
“Nevertheless, the recent decline in efficiency of these investments is curtailing their potential dividend,” the report warns. The bank has also questioned the efficiency and equity of allocations to some sectors like health and education.
Out of Sh290.6 billion allocated to education in the 2013/2014 financial year, 60 per cent went to teachers’ salaries. The bank recommended that more focus be put on transition rates to secondary and tertiary institutions and ensuring the skills offered meet the requirements of the labour market.