Why State seems in a rush to blow away billions in costly getaways

Ministries and other taxpayer-funded entities are on a spending spree in an attempt to exhaust the money allocated to them this financial year.

In a bid to beat the June 30 close of the financial year and avoid budgets cuts in subsequent financial years, many of the ministries, departments and agencies (MDAs) have descended on posh hotels in resort towns to gobble away their remnant funds.

Hoteliers in Naivasha and Mombasa are doing booming business as the government entities take semi-permanent residence in their facilities.

This despite the country grappling with scarce resources and ever-expanding needs among the citizens while Kenyans are continually slapped with more taxes to finance the budget, a substantial chunk of which is now being spent to finance luxuries by State officials.

The spending spree also makes mockery of President Uhuru Kenyatta’s austerity measures aimed at cutting unnecessary costs to get money to finance development and reduce reliance on costly loans.

Careless spending

According to the reports on Government spending by the Controller of Budget, spending on areas such as domestic travel and hospitality usually stays down over the first half of year and starts picking up in January, hitting fever pitch in the fourth quarter. In her reports over the years, the Controller of Budget has cited the failure by government agencies to stick to their work plans, which see them spend measly amounts at the start of the financial year. The two most recent reports reveal that recurrent spending over the first two quarters averaged 20 per cent of the annual budget, against the ideal 25 per cent.

“The levels of expenditure for both development and recurrent are therefore below the 25 per cent expected performance by the end of the first quarter. In order to achieve higher rates of development and recurrent expenditure, the Office (of the Controller of Budget) recommends that planned activities should be implemented as outlined in the annual work plans. This will ensure appropriate delivery of services to the public,” said Controller of Budget Agnes Odhiambo, in a report.

The last minute and seemingly careless spending has been criticized by lawmakers. Chair for Parliament’s Departmental Committee on Budget and Appropriations Kimani Ichung’wa noted that government entities that are rushing to procure anything at this time need to be scrutinised and even possibly have their allocations slashed.

“There is no reason for anyone in government not to do procurement immediately after the budget is passed at the start of the financial year. If an item you want to procure during a financial year is in the approved budget, you have no reason not to go ahead and procure because you do not procure and pay cash. The law only requires you to have a budget to procure,” he said in an interview.

“Ministries have no justification to be traveling and holding seminars now. If anything, I would have expected them to be busy between January and March when they were formulating budget lines, that is when they needed to have retreats and seminars to agree on what needs to be done in their areas.”

Some of the taxpayer-funded agencies that have been holed up in the luxurious hotels at the Coast include Parliament. But Ichung’wa defended his colleagues, arguing that departmental committees are working on critical and urgent reports, some of which will inform the finalisation of the budget for the next financial year.

“If you ask me about Parliament, I would tell you that these last two months (of the financial year) are the busiest for us. That is why Parliament goes on recess so that members have time to process budget estimates. So there is a lot domestic travel because if you are doing public participation, for instance for us in the Budget and Appropriations Committee, it will involve traveling around the country,” he said.

He, however, noted that there are legitimate instances where the National Treasury has been slow to release funds to the entities. This is something that his predecessor as chair of Budget and Appropriations Committee Mutava Musyimi also noted is to blame for the last minute spending in government.

He said funds are rarely available at the start of the financial year for agencies, resulting in the rushed spending in the third and fourth quarters.

Sunday Standard did a spot check in some of the popular resort towns. In Naivasha, hoteliers are literally smiling all the way to the bank.

The lakeside town has in the last one month recorded an increase in the number of workshops involving governmental institutions. Workshops by entities ranging from the Judiciary to Parliament have become the norm as officers hop from one hotel to the other. State agencies’ officials we spoke to said the surge in number of workshops was due to a desire by ministries to exhaust their budgetary allocation before the end of the financial year.

Newly opened Lake Naivasha Resort has been the major beneficiary of the conferences in the last two weeks, with more bookings made in the coming weeks. In the period, the hotel -- located on the shores of Lake Naivasha and along Moi South Lake road -- has hosted the Serjeant-at-Arms Second Annual Conference organised by Parliament. In the same period, the Judiciary, and the ministries of Foreign Affairs and Devolution held one-week workshops in the hotel. Other government agencies that have engaged the services of the hotel include Kenya Roads Authority, Kenya Civil Aviation Authority and Department of Filming. Others are Ministry of Transport, Competition Authority, the National Transport and Safety Authority, Kenya Rural Roads Authority and National Irrigation Board.

Currently, the nearby Lake Naivasha Simba Lodge is hosting the Centre for Parliamentary Studies and Training for one week. A few metres away, Sawela Lodge is home to the Salaries and Remuneration Commission while the National Aids Control Council held its two-day workshop there. Other hotels that have benefited from the ongoing government workshops include Heritage Resort along the Nairobi-Nakuru highway, Nest Boutique on South Lake road and Morendat Training Institute along the Moi North Lake road. According to a senior state officer who declined to be named, it was the norm for state agencies to hold such meetings before the financial year comes to an end. He said that the meetings were meant to preview the ending financial year and plan the way forward for the staff. “Some quarters claim that the workshops are meant to exhaust the government allocations to various departments but this depends from one ministry to the other,” he said.

But another junior officer termed the period as the best for them as the ministries made sure that all the funds allocated to them by the Exchequer were fully utilised.

“We are literally moving from one town to the other in the name of workshops because Treasury will reduce budgetary allocation to the departments if they fail to clear their allocations,” he said

Kamau Njuguna, a director with the East Africa Chamber of Commerce and Industry, termed the period as the best for the hoteliers and small-scale traders in Naivasha. He noted that the move to downgrade the status of the hotels had seen the number of government workshops drop due to the lower per diem given to the workers.

Booming business

“The move to downgrade Naivasha saw some hoteliers send home their workers but we are happy that in the last two months the number of government workshops has increased,” he said.

The many conferences in Naivasha are on the back of a downgrade of the town by SRC that has made it cheaper for MDAs holding workshops there. Previously, Naivasha was in the same level with Mombasa and Kisumu where allowances paid to government workers attending conferences was the same before SRC intervened. Hotels at the Kenyan Coast -- particularly those within Mombasa, Kwale and Kilifi counties -- have been reporting increased businesses in conference and day workshops from government line ministries and parastatals. A survey by Sunday Standard showed that some hotels known to have large and modern conference facilities are laughing all the way to bank as MDAs.

[Philip Mwakio, Antony Gitonga and Macharia Kamau]