Counties neglect development, prioritise salaries – CoB

Counties have been forced to prioritise salaries over development to cope with the shrinking national revenue, a recent Controller of Budget report indicates.

The third-quarter report released by CoB Margaret Nyakang’o on Wednesday revealed an all time low in terms of development spending in the devolved units.

The report covers the period from July 2022 to March 2023.

Out of the Sh239.67 billion released to counties in the last nine months, only Sh29.73 billion was spent on development translating to a paltry 12.4 per cent.

The biggest chunk of the allocation, Sh135.85 billion (56.7 per cent) has been channeled to pay salaries and Sh74.09 (30.9 per cent) billion was used on operations and maintenance.

According to the report, Lamu (Sh2.15 billion), Tharaka Nithi (Sh2.79 billion) and Embu counties (Sh2.89 billion) spent the lowest in development during the nine-month period.

Nairobi City (Sh17.32 billion), Turkana (Sh10.04 billion), Kiambu (Sh8.83 billion) emerged the biggest spenders according to CoB analysis.

Nyakang’o was however quick to exonerate governors from blame on the low spending on development.

She instead blamed the shrinking national revenue and delayed disbursement for the low development spending.

“We cannot blame anyone for low absorption because we have not given them enough resources,” she added.

Speaking during the launch of the third-quarter report, Nyakang’o blamed the shrinking revenue to the low development spending saying counties are forced to address the most pressing issues.

The budget boss also attributed the slow absorption to the incessant delays in releasing funds to the counties.

As of  April 30, 2022, County governments had not received the March and April 2023 disbursements.

“When revenues are limited, you would rather go for the most urgent and here we are talking about salaries. When cash flows are limited, development suffers,” Nyakang’o said.

“As the year progresses if revenue does not come in, they (counties) prioritise salaries and that is why we end up with low development.”

“Treasury could be willing to give the money but when revenue does not meet the desired levels then they can only release what is available.”

The matter, according to the report, has been worsened by the underperforming own-revenue collection in most of the devolved units.

Nyakang’o said most counties are merely scratching the surface when it comes to generating own-sourced revenues which has been on a decline.

“We have issues with the own-source revenue, they (counties) are barely scratching the surface,” Nyakang’o said.

The report singled out 22 counties for failing to meet half of their own set revenue targets.

They include Kwale, Embu, Kisumu, Kakamega, Taita Taveta, Tharaka Nithi, Busia, Nairobi City, Garissa, Tana River, Nandi and Mandera counties.

Others are Wajir, Makueni, Homa Bay, Kisii, Kajiado, Nakuru, Murang’a, Kericho, Vihiga, and Nyamira counties.

The CoB has recommended that the underperforming counties should develop strategies to ensure they realise their targets to avoid accumulation of pending bills.

This even as it emerged that pending bills in the 47 counties totals to Sh159.73 billion as at  March 31, 2023.

Nairobi County accounts for a record 64.4 per cent (Sh102.81 billion) of the total counties bills.

Other counties with the highest pending bills are Wajir (Sh5.38 billion), Kiambu (Sh5.33 billion) and Mombasa (Sh4.91 billion).

Elgeyo Marakwet county is the only devolved unit to record zero pending bills, according to the report.

The report blamed the accumulation of the bills on delays in disbursements, the transition as a result of last year’s elections where some governors instituted verification of the claims and refusal by the successive governments to honour past obligations.

“The CoB recommends that all pending bills be budgeted as a first charge in the budgets in line with Regulation 55 (2) b of the Public Finance Management (County governments) Regulations, 2015,” the report recommends.