Drawback as ministries and departments fail to spend Sh340 billion

The Controller of Budget Ms Agnes Odhiambo says ministries failed to use the funds due to conditions and procurement hurdles. [PHOTO: FILE]

By JEVANS NYABIAGE and LUKE ANAMI

Various ministries and departments failed to spend a massive Sh339.6 billion allocated to them in the financial year ended June 30, 2013, a new report shows.

This is Sh75 billion more than was left unspent in the previous financial year. Out of the revised Budget estimates of Sh1.15 trillion for the 2012/13 financial year, only Sh814.7 billion was spent. This is despite the allocation of more development resources to fuel the economy.

The Budget Implementation Review Report Fourth Quarter 2012/13 released yesterday by the Controller of Budget shows a big chunk of the unspent funds were for development expenditure.

This means that projects like construction of roads, schools, dams, health facilities and water schemes to ease the suffering of Kenyans were not completed across the country.

Implementation capacity

A massive Sh243.2 billion for development remained unspent at the end of the financial year. This raises questions on the government’s capacity to implement the ever-growing national Budget. 

According to the report, out of the Sh437.1 billion meant for development, the ministries spent Sh193.9 billion, representing a 44.4 per cent absorption rate. “This performance is quite low if the country is to meet the targeted economic growth rate envisioned in Vision 2030,” the Controller of Budget, Agnes Odhiambo, said.

She attributed the low absorption rate to the lengthy procurement procedures, stringent donor conditionalities and weak reporting.

Other hurdles were weak accountability, poor monitoring and tracking systems, and inadequate project supervision.

“Consequently, funds allocated to development projects were not fully utilised hence affecting budget implementation and delivery of services to the public,” Odhiambo said.

“There is need to ensure proper coordination, efficient monitoring and tracking of projects and timely approval of work plans as well as the corresponding cash flows.”

The expanded ministries of Energy, Infrastructure and Information Communication and Technology were the worst performing. They had a 36.1 per cent absorption rate — spending only Sh95 billion out of the total Sh262.9 billion. 

The sector was supposed to spend Sh200.7 billion for development but only managed to use Sh70.9 billion.

 The Environmental Protection, Water and Housing sector that had been allocated Sh68 billion only utilised Sh34.5 billion.

It failed to spend Sh27.7 billion out of the Sh50.3 billion allocated for development expenditure.

Funds

The Agriculture and Rural Development sector was to spend a total of Sh43.3 billion but only utilised Sh29.1 billion. At the end of the financial year, the sector had not spent Sh11.7 billion meant for development.

The former ministry of State for Public Service failed to spend Sh400 million, Foreign Affairs (Sh300 million) while that Finance only spent Sh9.6 billion of the Sh29.7 billion allocated to it for development expenditure.

The Ministry of Transport spent Sh4.5 billion out of Sh13.7 billion meant for development. Other ministries and departments that failed to spend more than half of their development budgets in the 2012/13 budget were the ministries of Agriculture, Roads, Justice, National Cohesion and Constitutional Affairs and Water and Irrigation.

Others are the Cabinet Office, ministry of Energy, Office of the Prime Minister, ministry of Nairobi Metropolitan Development and the ministry of Development of Northern Kenya and Other Arid Lands.

The low capacity to absorb the Budget, which has now grown to Sh1.6 trillion in the 2013/14 financial year, has been a drag on economic growth. This is because most of the budgeted development projects go unimplemented.

The failure to use funds meant for development is an indictment undermining service delivery. It denies the public access to vital facilities.

The National Security sector had the highest rate of absorption of 100 per cent, while the physical infrastructure sector had the least utilisation rate of 36.1 per cent of the gross revised estimates.

The recurrent budget’s absorption rate was 86.7 per cent and development budget’s absorption rate was 44.4 per cent. Recurrent expenditure records a high absorption rates because it is essentially the wage bill for payment of salaries.

However, some ministries diverted part of the funds meant for development for recurrent to meet short-term salaries and wages obligations.

Overspending

For instance, State House spent Sh1.9 billion on recurrent, which was 10.2 per cent above its estimated recurrent expenditure while the ministry of State for Public Service spent Sh7.5 billion even though it was allocated Sh5.7 billion in the budget.

Other ministries and agencies that shot  through their budgetary ceiling for recurrent expenditure were the ministry of State for Defence, Office of the Prime Minister, Transition Authority, Public Service Commission, and Teachers Service Commission.

The 2012/13 financial year was characterised by widespread demand for reviews in salaries and allowances by public officers and civil servants.

This continues to push up the public wage bill at a time when the country is unable to meet revenue collection targets.

Salary hike

Odhiambo took issue with calls for higher salaries, saying the funds allocated for recurrent expenditure were increased, further burdening the taxpayer. “The office takes cognisance of the recurrent expenditure burden that unless checked, could lead to further economic stagnation. This problem could be compounded by imprudent spending by the counties,” she said.

She said the trend affects equitable allocation of budget as more funds are channelled to personal emolument costs thus leading to decrease in allocation to priority programmes during the financial year.

“It is crucial that harmonisation of salaries is undertaken urgently to reduce labour unrest in the country and contain the ever-rising wage bill.”