By Joshua Nyamori
As a keen observer in the politics
and socio-economic issues affecting Kisumu, I have taken time to read news
reports and commentaries on the mainstream and social media, peruse through
relevant reports and talk to relevant officers on the alleged 1% budget
expenditure on development.
My problem with the media and
bloggers who have taken to discuss this issue in the last few
weeks is that, despite knowing the problem with that particular statistic, they have decided not to present the entire issue, but rather to focus only on part of the story that appears juicy. When you present what you claim to be facts, it is also importantly honest to analyze these facts within the prevailing context, interpret them objectively and give proper conclusions and recommendations.
weeks is that, despite knowing the problem with that particular statistic, they have decided not to present the entire issue, but rather to focus only on part of the story that appears juicy. When you present what you claim to be facts, it is also importantly honest to analyze these facts within the prevailing context, interpret them objectively and give proper conclusions and recommendations.
On the alleged 1%, my investigation
reveal that the World Bank surveyors simply picked what had been expended from
the budget account at a specific date in March 2014. This report gives an
account of the status of budget implementation through review of fiscal
activities of the County during the period July 2013 to March 2014.
It is important to note that this is
an erroneous indicator of the financial commitment of a county government on
development within the specific financial year. As we all know, Government pays
for work done. The rate and amounts of payment from the budget account are
therefore functions of the speed of procurement processes and the completion of
contractual milestones by the contractors. For proper and effective development,
the two factors cannot be tied on the rate of payments alone, as they are
influenced by many factors, including: date of receipt of disbursement from
Treasury, capacity within the procurement department; availability of capital
amongst contractors to undertake the assignments expeditiously; efficiency and
effectiveness in delivery of construction milestones; efficiency of issuance of
certificate of completions; and the efficiency in invoicing and payment
processes.
A proper indicator of the financial
commitment by the County Government should therefore be the contractual value
of all development projects at a given time, rather than what is expended at
that particular date. In fact, it must be appreciated that most development
projects are rarely completed in the year of commitment. Once funds are
committed and the projects are rolling out as designed, the entire contractual
sum should be considered as expenditure accruing out of the budget account.
Accountants would always advice that the best way to determine the financial
position of an institution is to determine, not the actual, but rather accrued
income and expenditure situation as at a particular date.
It is also wrong to compare oranges
and apples. Kisumu, Nakuru and Mombasa have been compared to much smaller
counties like Bungoma and Turkana. Its important to note that these three
counties are struggling under the yoke of mistakes made in the past, especially
on heavy wage bills. It is said that Kisumu has a staff base of almost 4000
against the CRA recommendation of 1600. This staffing level gobbles up about
85% of the budget, leaving only 15% for repairs, maintenance, operations and
development.
What am I talking about?
The world bank report is based on a
report by the Controller Of Budget as at March 2014.
Part of the report reads thus, “The
County has recurrent budget allocation of Kshs 5,752,358,314 (69 per cent),
development budget allocation of Kshs 2,476,672,486 (30 per cent) and budget
allocation for pending bills of Kshs 115,969,200 (1 per cent), summing up to
budget allocation of Kshs 8,345,000,000. In the nine months period to March
2014, funds amounting to Kshs 2,363,414,207 were released to the County of
which Kshs 388,260,660 was for the County Assembly while Kshs 1,975,153,547 was
to finance the County executive budget. During the period under review, the
County total expenditure stood at Kshs 1,992,213,742, which represents an
overall absorption rate of 23.9 per cent. Recurrent expenditure amounted to
Kshs 1,970,509,720, thus an absorption rate of 33.3 per cent while expenditure
on development activities totaled Kshs 21,704,022, which is an absorption rate
of 1.0 per cent. However, substantial amounts had also been committed to
projects by end of March 2014. County Assembly total spending stood at Kshs
247,655,994 while County executive’s spending amounted to Kshs 1, 744,557,749
during the period under review. Analysis of the executive’s expenditure reveals
that Public health, medical and veterinary department was the highest”
A few issues arise out of this
paragraph:
(1.) The budget of Ksh.
8,345,000,000, based on limited resources from the national exchequer and
expectIons of revolutionary enhancement of local revenue, was unrealistic under
the prevailing circumstances, especially in a County like Kisumu where
population growth rates are high by any standards; where there is dearth of
formal sector industrial activities; where labour-absorptive capacity of modern
industrial, commercial and traditional agricultural sectors falls short of the
growth of labour force; where poverty relegates many people to anti- social behaviors; and where high dependency levels stifle savings and investment –
the vicious circle that condemns majority of the population to perpetual
poverty. Revenue increase is a factor of economic performance. Kisumu County’s economy is a pathetic situation that has been dipping since the 1970s. Its
recovery, which I believe is on course, and eventual growth will take a little
while.
(2.) The so called 1% ( Ksh.
21,704,022) expenditure on development expenditure above is in reference to
percentage of development expenditure on the actual total (recurrent +
development) budget ( Ksh. 8,345,000,000), not on the amount available for
expenditure as at the reporting date, which is the amount released from the
Exchequer as at that date (Ksh. 2,363,414,207).
(3.) Out of the amount released by
National Exchequer as at the reporting date, Ksh. 388,260,660 was ring fenced
for County Assembly expenditure, leaving the Executive with only
Ksh.1,975,153,547. Out of this, the mandatory recurrent expenditure on staff
emoluments, plus obligatory operations, repairs and maintenance expenses
gobbled up Kshs. 1,970,509,720, of which “Public health, medical and veterinary
department was the highest”. Surely, which other money was the County
Government expected to spend to pay for development programs?
(4) It is important to note that
expenditure levels as at the reporting date does not necessarily define the
performance rates of the County on development. This can only be determined by
analysis of the actual contractual commitments on development, and performance
on implementation milestones.
In conclusion, my view is that
Kisumu’s annual budget estimates should be more realistic and the estimated
local revenue, as a part of the income side of the budget, should be based on
credible surveys of the economic situation and potential revenue base. This
will avail more money for development.
Secondly, the National Government
needs to urgently support Kisumu County to undertake the painful but necessary
step of staff rationalization and downsizing through availing resources to pay
golden handshakes for redundant staff who should be urgently retrenched. This
could release almost half of the total revenue towards financing of development
and other critical operational expenditure.
Thirdly, Kisumu was identified by the
Grand Coalition Government to be one of the Special Economic Zones. The
necessary policy, institutional and financial framework should be put in place
to realize the objectives of this zone, as a way to reducing poverty through
increasing investments and employment creation. It us only through this that
local revenue would be enhanced. There is just an extent to which the current
driver economy can generate revenue to the County Government. This should be combined with enhancing the credibility, reliability, efficiency and
effectiveness of the local revenue collection and management system.
Adopted from Amazing Kisumu