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Budget Implementation and Oversight in Kenyan Counties

Margaret Nyakang’o, Kenya's Controller of Budget, highlighted the critical role of her office in overseeing budget implementation for national and county governments. She emphasised the importance of collaboration with the Senate for effective oversight. Key issues identified include discrepancies between budgeted and actual expenditures, high personnel costs, and significant pending bills. Nyakang’o recommended adherence to national guidelines, improved payroll management, prioritisation of pending bills, and legislative support to enhance budget implementation. Strengthening these areas will ensure transparency, accountability, and efficient use of public funds, ultimately meeting county development needs effectively.

In a recent presentation, Margaret Nyakang’o, the Controller of Budget (COB) of Kenya, provided an in-depth analysis of budget implementation and oversight in Kenyan counties. This presentation covered the mandates and roles of the COB, the linkages between the Senate and the Office of the Controller of Budget, and a review of the county budget implementation report for the third quarter of the 2023/24 financial year.

Constitutional and Legislative Framework

Nyakang’o began by highlighting the constitutional roles stipulated in Article 96(1) and Article 228 of the Kenyan Constitution. Article 96(1) mandates the Senate to represent and protect the interests of county governments, primarily through oversight. Meanwhile, Article 228 establishes the Office of the Controller of Budget, tasked with overseeing budget implementation and reporting for both national and county governments, as reinforced by the Controller of Budget Act.

Roles and Mandates of the Controller of Budget

The Controller of Budget's office has several critical roles, including:
  1. Oversight of Budget Implementation: Ensuring that the budgets of national and county governments are implemented as planned.
  2. Authorisation of Withdrawals: Approving withdrawals from the Consolidated Fund, Equalisation Fund, and County Revenue Funds, as per legal stipulations.
  3. Reporting: Providing quarterly reports to Parliament on budget implementation and specific issues as requested by the President or as necessary.
  4. Advisory Role: Advising Parliament on decisions regarding the transfer of funds, especially in cases where the Cabinet Secretary for Finance might stop the transfer.
  5. Investigations and Public Information: Conducting investigations and ensuring public access to budget implementation information.

Linkages Between the Senate and the Controller of Budget

Nyakang’o emphasised the importance of strong linkages between the Senate and the Controller of Budget’s office, particularly in areas of reporting, investigations, public information sharing, dispute resolution, and enforcement of parliamentary ceilings on county expenditures.
  1. Reporting: The COB prepares and submits quarterly budget implementation reports to the Senate, which form the basis for oversight.
  2. Investigations: The COB conducts investigations on budget implementation issues and reports to relevant Senate committees.
  3. Public Information Sharing: Ensuring transparency by making budget implementation information accessible to the public.
  4. Dispute Resolution: Collaborating to address conflicts between county executives and assemblies in budgeting processes.
  5. Enforcing Ceilings: Ensuring compliance with legislative ceilings on county expenditures.

County Budget Implementation Report Highlights

Nyakang’o presented highlights from the third quarter county budget implementation report for the 2023/24 financial year:
  1. Development Allocation: While counties budgeted an average of 30% for development, actual expenditure was significantly lower.
  2. Revenue Basket: The revenue comprised equitable shares, own source revenue, and additional allocations, with equitable shares forming the largest portion.
  3. Own Source Revenue: Performance varied significantly among counties, with some achieving over 90% of their targets and others falling below 30%.
  4. Recurrent Expenditure: Personnel emoluments consumed a significant portion of the budget, often exceeding the recommended thresholds.
  5. Development Expenditure: Actual spending on development was below the budgeted amounts, with some counties spending less than 10% of their total budget on development.

Contemporary Issues and Challenges

Nyakang’o identified several challenges in budget implementation:
  1. Weak Alignment: Poor alignment between budgeted programmes and actual implementation.
  2. Omission of Key Information: Budget documents often lack essential programmatic details.
  3. Discrepancies and Forged Documents: Issues such as forged documents and incorrect payments were noted.
  4. High Wage Bill: Expenditure on personnel emoluments often exceeds legal thresholds due to poor payroll management.
  5. Accumulation of Pending Bills: Counties continue to accumulate pending bills, with Nairobi County accounting for a significant portion.

Recommendations for Improvement

To address these challenges, Nyakang’o made several recommendations:
  1. Referencing National Treasury Circulars: County finance departments should adhere to national guidelines on budget preparation.
  2. Sensitisation and Compliance Enforcement: Strengthening adherence to COB circulars on fund withdrawals.
  3. Human Resource Management: Implementing government policies on human resource management to reduce the wage bill.
  4. Settlement of Pending Bills: Prioritising the settlement of pending bills.
  5. Legislative Support: Developing applicable legislation to support counties in own source revenue collection.
  6. Standardised Systems: Finalising standardised revenue collection and management systems.

Conclusion

Nyakang’o concluded by stressing the need for continued collaboration between the Senate and the Office of the Controller of Budget to ensure transparency, accountability, and effective utilisation of public funds. She emphasised that robust legislative and administrative frameworks are essential for enhancing the efficiency of budgetary processes and meeting the developmental needs of counties promptly and effectively.

By addressing these issues and implementing the recommended measures, Kenyan counties can improve their budget implementation processes, thereby fostering better service delivery and development outcomes for their residents.