Counties overspent on wages and benefits during first half of the year, report

A report by the controller of budget has revealed that counties incurred 98.13 billion shillings in personal emoluments between July and December 2023.

According to the first half county budget implementation review report, the amount constitutes 68.3 percent of the total recurrent expenditure of the period under review with the rest of the 98.13 billion shillings earmarked for the recurrent vote going to operations and maintenance.

“Overall, County Governments spent Kshs.98.13 billion on personnel emoluments, which accounted for 58.2 per cent of the total expenditure of Kshs.168.52 billion and 47.8 per cent of the realised revenue of Kshs.205.32 billion in the first half of FY 2023/24.’ Reads the report from the controller of budget, Dr. Margaret Nyakang’o.

This, the reports says, is in contravention of regulation 25 (1) (b) of the Public Finance Management (County Governments) Regulations, 2015 which sets a limit of the county government’s expenditure on wages and benefits at 35 per cent of the county’s total revenue.

Out of 45.59 billion shillings incurred on operations and maintenance, the County Assemblies cumulatively spent 703.62 million shillings on MCAs’ sitting allowances against an approved annual FY 2023/24 budget allocation of 2 billion translating to an absorption rate of 35.2 per cent and an increase of 62.0 per cent compared to 434.29 million shillings incurred in a similar period of FY 2022/23.

The development expenditure during the period under review amounted to Kshs.24.81 billion translating to an absorption rate of 12.2 per cent of the annual FY 2023/24 development budget of Kshs.203.11 billion, which is an improvement from an absorption rate of 6.9 per cent realized in a similar period of FY 2022/23 when the total development expenditure was Kshs.11.66 billion.

Narok, Bomet, Uasin Gishu, Laikipia and Marsabit Counties had the highest absorption rates of their respective approved development budgets at 52.4 per cent, 27.1 per cent, 27.0 per cent, 22.5 per cent and 21.7 per cent respectively.

Counties that had the lowest absorption rates of their respective development budgets were Elgeyo Marakwet, Mombasa, Machakos, Nairobi City and Kisii at 3.9 per cent, 3.8 per cent, 3.5 per cent, 3.3 per cent and 2.9 per cent respectively.

According to the report, the recurrent expenditure was 143.72 billion shillings while development expenditure was 24.81 billion representing 14.7 per cent of the total expenditure in the period under review meaning that county administrations did not achieve the minimum expenditure of 30 per cent on development programmes.

However, the controller of budget cited some cross-cutting challenges that she says have continued to hamper effective and efficient budget execution by County governments.

They included underperformance in their own source revenue collection at 19.95 billion shillings compared to the annual target of 80.20 billion shillings, a high level of outstanding pending bills of 156.34 billion as of 31st December 2023, delay by the National Treasury to disburse the Equitable Share of revenue raised nationally to the counties and failure by the Parliament to enact the County Governments Additional Allocations Bill, 2023.

To address these challenges, the report is proposing that counties build the capacity of key staff involved in revenue collection and implement revenue enhancement programmes to realise the own source of revenue potential and develop their Regulations to implement the Health Facilities Improvement Financing (FIF) Act 2023.

All County governments, the report proposes should settle eligible pending bills as a first charge on the budget in line with the law, National Treasury should ensure that the disbursement of the equitable share of revenue to county governments is in line with the approved disbursement schedule to ensure effective budget implementation while Parliament should expedite the enactment of the County Governments Additional Allocations Bill, 2023 to enable County governments access conditional grants to implement their budgets.

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