The Controller of Budget has disclosed to the National Assembly the tilted allocation of development funds to ministries and state departments.
While some are swimming in development funds, others have not received a single coin in the first six months of the 2023-24 financial year, leaving their proposed projects in limbo.
Ten state agencies did not receive a single coin for development in the first six months of the year to December 2023, while six others used more than 50 per cent in the review period.
Margaret Nyakang’o told MPs that despite having submitted their development plans for the year, some departments did not receive any money from the National Treasury during the period under review.
Those affected include Shipping and Maritime Affairs, Culture and Heritage, Mining, Petroleum, State Law Office, Judiciary, Office of the Director of Public Prosecutions, National Land Commission, National Gender and Equality Commission and the Auditor General.
The period also marked the lowest development expenditure by the government in the last five years.
The government only used Sh70.41 billion for development in the first six months of this financial year out of the budgeted Sh783.22 billion.
This is a meagre nine per cent of the total in contrast to the 50 per cent that should have been utilised over this period.
It is against the Public Finance Management Act that states that development spending should cover at least 35 per cent of total spending.
“So, for the six months the departments had a development budget but did not receive any from the exchequer towards development, they recorded zero. We will have to check what is it that they were supposed to do but they did not,” Nyakang’o said.
Essentially, the total government spend in the six months is still low compared to the cost of constructing the Nairobi Expressway (Sh88 billion).
But even as some entities stared at empty development accounts, others had received up to 80 per cent disbursement by December.
The State Department for Internal Security had received 51.4 per cent, Office of the Registrar of Political Parties 75.4 per cent, Witness Protection Agency 51.9 per cent, State Department for Performance and Delivery Management 83.3 per cent and State House 59.6 per cent.
The government's original gross budget for the financial year amounted to Sh4.34 trillion, but was revised to Sh4.54 trillion in the first supplementary budget.
This comprised Sh807.64 billion for ministerial development expenditure, which was also revised to Sh783.22 billion, and Sh1.56 trillion for ministerial recurrent expenditures, which was revised upwards to Sh1.68 trillion.
The national government disbursements for the half-year to all 81 Ministries, Departments and Agencies (MDAs), the 47 counties and three Consolidated Fund services amounted to Sh1.44 trillion, representing 33.7 per cent of the revised annual net estimates, as opposed to the 50 per cent projections for half year.
According to Nyakang’o, the National Treasury disbursed Sh631.41 billion to MDAs, comprising Sh70.41 billion for development and Sh561 billion for recurrent expenditure.
A presentation to the National Assembly Finance committee shows that the recurrent expenditure received the highest proportion of exchequer issues totalling 85.2 per cent compared to 4.9 per cent disbursed for development.
“The total ministerial expenditure on development in the period amounted to Sh197.41 billion, this being both the government and donor funded projects,” the Controller of Budget said.
Expenditure on salaries and allowances for the six months of the 2023-24 financial year was Sh752.92 billion, an increase from Sh671.88 billion in a similar period last year
The MDAs development spending analysis shows that the largest expenditure category was capital transfers, totalling Sh156.87 billion, accounting for 79.5 per cent of the total development expenditure.
These transfers including subsidies, grants or direct payments to Semi-Autonomous Government Agencies (SAGAs) are intended to support activities and mandates carried out by parent ministries.
Nyakang’o added that specialised plant, equipment and machinery amounted to Sh9.02 billion, while construction and civil works totalled Sh7.25 billion.
“State Department for Economic Planning had the highest capital transfers, reaching Sh27.69 billion, constituting 18.2 per cent of the total. Following closely, the State Department for Transport was allocated Sh20.08 billion, representing 13.2 per cent of the total capital transfers,” reads part of the Budget Implementation Review Report.
In the spending directed towards salary and recurrent, many state departments have used almost or above the target required by the CoB.
In the six months to December, State House had spent 60.1 per cent of its recurrent budget, which was away ahead of any other entity.
The Department for Youth Affairs had spent 50.3 per cent, Labour and Skills Development 50.4 per cent, State Department for Culture and Heritage 50.9 per cent, IEBC 51 per cent, Witness Protection 51.5 per cent, Forestry 52.8 per cent, and Internal Security and National Administration 56.5 per cent.
Others are Environment and Climate Change 58.3 per cent, Transport 59.2 per cent, Performance and Delivery Management 83.3 per cent and the Office of the Registrar of Political Parties 75.2 per cent.
Most of the government entities that prioritised recurrent expenditure were in the form of compensation, grants, travel and insurance.
Compensation to employees included basic salaries for permanent staff, wages for temporary employees, and personal allowances paid as part of the salary, among other payments to staff.
The total expenditure under compensation to employees was Sh291.28 billion, representing 38.6 per cent of the ministerial gross recurrent spending.
This does not include expenditure for National Intelligence Services and Kenya Defence Forces, both under the National Security Sector.
“In the first six months of the year, traveling expenditure amounted to Sh11.38 billion, compared to Sh8.11 billion recorded in a similar period in the last financial year. This comprised domestic travel at Sh7.67 billion and Sh3.71 billion on foreign travel,” Nyakan’go said.
Expenditure on insurance was Sh12.48 billion, and rent, and rates on non-residential buildings were Sh4.3 billion, specialised materials and supplies were Sh4.92 billion, while hospitality was Sh2.91 billion.
Grants by the MDAs were in the form of grants and other transfers, current transfers, and emergency relief, which are meant to complement activities and mandates executed on behalf of the parent ministry.
In the first six months of year, the total grants reported by MDAs amounted to Sh346.62 billion, representing 46.1 per cent of the MDAs gross recurrent expenditure. The total expenditure reported by MDAs was Sh173.34 billion, with the Ministry of Defence reporting the highest transfers of Sh68.87 billion, followed by the State Department for Roads at Sh29.08 billion.
President William Ruto’s administration had at the beginning of the financial year announced plans to step up fiscal consolidation, which saw the administration put on hold all projects that were incomplete.
The drastic spending cuts and new tax measures were to mark the beginning of the normalisation of fiscal policies as the government scaled down.
Tax expert Clifford Otieno says with the low spend on development, it is unlikely that President Ruto’s administration will achieve its pledge of constructing 1,000 dams.
The administration is also looking to increase the supply of new housing to 250,000 per annum and the percentage of affordable housing supply from two to 50 per cent.