Statistics from the Controller of Budget report for the financial year 2019/2020 shows that the 10
counties forming the Central Region Economic Bloc (CEREB) – a REC bringing together
counties from the central Kenya region: Kiambu, Kirinyaga, Laikipia, Nyeri, Embu, Nyandarua,
Meru, Murang’a, Tharaka Nithi and Nakuru – received a total of Ksh.71.719 billion as equitable
share of revenue raised nationally. Additionally, the counties managed to collect Ksh. 7.711
billion as own source revenue.
The function of government is to provide public goods that enable development, and it is from
such successful delivery of public goods that governments draw their legitimacy. Hence, in order
for them to provide goods and services to their citizens, governments have to first collect revenue
and resources to fully function. In service-oriented societies, it would be required that more
resources are allocated to attainment of public goods – the core function of statecraft and
governance – than to recurrent non-development expenditure. However, far from this ideal
scenario, the CEREB counties’ allocation for services provision is far outweighed by allocation
towards payment of salaries and allowances for civil servants; more money goes into individual
pockets as compared to provision of public goods.
According to the Public Finance Management Act 2015, the threshold for development spending
should be a minimum of 30 percent of total expenditure. This minimum threshold should be
enforced to avoid spending all revenue and debt on recurrent expenditure which does not yield
significant economic returns, besides creating jobs for a few with little public benefit.
Government expenditure is categorized as either recurrent or development. The former includes
salaries and wages, pensions, interest payments as well as expenses for general maintenance and
operations, while the latter includes spending on infrastructure projects – what is called public
goods and services.
In these 10 central Kenya counties, the budgetary allocation for development expenditure has
been much lower as compared to their recurrent expenditure. And much of this goes towards
payment of salaries and allowances for government officials. Alarmingly, the public sector wage
bill in the CEREB counties has skyrocketed in the last few budgets, to the extent that it is
hemorrhaging development and economic growth in the region.
Top on the list of Mt. Kenya counties spending the most share of their resources on salaries is
Embu, under current Council of Governor’s chair Martin Wambora – which pumped 59 per cent
of all its revenue to its employees’ bank accounts as salaries and allowances; followed by Meru,
under the bloc’s vice-chair Kiraitu Murungi, spending 53 per cent of its funds on personal
emoluments. It was closely followed by Nyeri County under Mutahi Kahiga, whose share of
salary expenditure stood at 51 per cent. All these counties, even before any other expenditure,
over half of the available resources had already been eaten-up by the employees.
In the financial year 2019/20, only Murang’a county under Mwangi Wa Iria that met the PFM
Act threshold by spending 37 percent of its budget on development. Laikipia County, on the
other hand, had the lowest percentage of its budget going into development – at 19 percent. None
of the other eight counties met the legal threshold either – Kiambu – 29, Nakuru – 29.2,
Nyandarua – 28.8, Tharaka Nithi – 26.5, Kirinyaga – 24.9, Meru – 22.9, and Nyeri – 22.3.
Therefore, while the ten CEREB counties had a resource basket of Ksh. 79.4 billion, only a
paltry Ksh. 21.4billion (average 27 percent) went into development; a whooping Ksh. 58 billion
went into salaries, operations and maintenance. Simply, for every Ksh. 100 that left the accounts
of the counties, Ksh.73 went to paying salaries and fund operations, and only Ksh.27 went into
development – the core reason why governments are founded. Nyandarua county had the highest
percentage (39) of its budget going into operations, while Murang’a county had the lowest (14)
budget on the same.
Further examination of counties’ expenditure and priorities showed that the governor’s offices in
Nyandarua, Kiambu and Meru counties were the most expensive to run last year. These counties
spent a significant proportion of their total expenditure on the offices of their county heads which
had zero development expenditure. Therefore, in Nyandarua, Ksh.126 million of taxpayers’
money was used to buy tea, entertain guests and pay for allowances and emoluments – this
represents 33 percent of the total county’s own source revenue for the year under review.
Accordingly, for every Ksh. 100 collected from mama mboga, bodabodas and the local
businesses, Ksh. 35 went into funding the governor’s recurrent expenditure.
Own Source Revenue
The situation is made worse in the face of the CEREB counties’ failure to meet own source
revenue targets to supplement disbursement from the national treasury. The under-performance
of OSR collection implies that some planned activities may not be implemented in the financial
year as budgets will not be fully financed.
For example, in the bloc, Laikipia county appears to have had the best resource mobilization
strategy which enabled it collect Ksh. 800 million in the 2019/20 financial year. Curiously,
Laikipia county collected double the amount realized in Meru which comparatively is endowed
with higher agricultural production, higher population and major towns; Kiraitu Murungi’s
county only managed to collect Ksh. 383 million.
Further, despite only allocating less than a third of their resources to development expenditure,
these counties were never able to fully absorb these little resources either (allocated to
development), but curiously achieved 100 percent absorption in their recurrent budgets –
principally meant to foresee these unmet development projects – a contradiction. CEREB
counties attracted condemnation from the Controller of Budget for this poor absorption of
development funds. Muranga county absorbed 86 percent of its annual development budget of
Ksh.3.27 billion while the average from other counties was 67 percent. Development spending is
critical to building infrastructure such as roads, hospitals, provision of water and sewerage
facilities which are critical economic enablers. Provision of such public goods, by governments,
leads to legally putting money into private pockets through creation of employment
opportunities, demand for raw materials and enhancement of value chains which ultimately
dovetail into the national development fabric. Where such resources, then, are spent on non-core
functions of government, then the whole purpose of devolution and spread of wealth is defeated.
The writer is an economist and public policy analyst. She is a holder of a Bsc in Economics,
and Msc in Economics from Makerere University
