What does Devolution in Kenya look like economically speaking?

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This article first appeared in my weekly column with the Business Daily on May 29, 2016

When the new constitution was promulgated it was heralded as a positive for development for Kenyans as government would be brought closer to the people and local communities. The idea was that county governments domicile in counties would facilitate higher levels of transparency particularly in terms of how money allocated to county governments was spent.  Under the new constitution, there is an allocation for counties by National Government, the equitable share which is a single, unconditional block grant to carry out devolved functions. This amount is meant to increase year on year, and the Budget Policy Statement for 2016/17 proposes increasing the unconditional transfer to counties from KES 259.8 billion to 284.7 billion. Is this enough? The World Bank has stated in the past that county governments have benefitted from an allocation of one-fifth of the total national expenditure, or an equivalent of 4% of the Gross National Product which is more than was negotiated when the August 2010 constitution. However, counties are always fighting for more money for ‘development’ but let’s take a look at county level spending patterns.

The report by the Controller of Budget (COB) states that for the Financial Year (FY) 2015/16 aggregate approved county allocations which of which 55.3 per cent was allocated for recurrent expenditure 44.7 per cent for development expenditure. However, as of the half-year review of expenditure, development expenditure stood at an average 26 percent despite being allocated 44.1 percent.  Kwale had the highest use of development expenditure at 61.5 percent and Taita Taveta lowest at 0.1 percent expenditure on development. In terms of the major cities, Nairobi development expenditure stood at 20 percent, Kisumu at 21.1 percent and Mombasa at 25.6 percent. All the major cities had development expenditure below the national average and well below the allocated 44.7 percent.

https://i0.wp.com/ilakenya.org/wp-content/uploads/2015/07/Kenya-counties-map.jpg

 (source: http://ilakenya.org/wp-content/uploads/2015/07/Kenya-counties-map.jpg)

An additional challenge is that counties seem to be having trouble absorbing funds allocated. As of the half-year review, counties had an absorption rate of 31.3 per cent of the total annual County Governments’ budgets. The absorption of development funds was particularly low at 19.9 percent, a decline from an absorption rate of 21.9 per cent reported in a similar period of FY 2014/15. Thus we see a core spending pattern at county level where development expenditure is lower than was allocated in terms of percentages allocated and a very low absorption rate of development funds in particular. This is a troubling trend as it is the development docket through which new services can be developed to make access to basic services more available to the citizenry as well as stimulate more economic activity at county level.

In my view poor absorption levels are a reflection of a basic lack of capacity in county governments. Even the COB notes that some counties do not have designated administrators for public funds making the operationalization, administration and accounting for the funds difficult. If even managing public funds is challenging, clearly county governments need support in determining what development projects should be funded and the implementation thereof.

(source: https://citizentv.co.ke/wp-content/uploads/2015/07/rsz_kenyan-shillings.jpg)

It would be useful for organisations active at county level to work with county governments to conduct a skills audit at county level to see what talents are domicile at county level. This should be followed by an audit of the skills required for development projects so that the key skills requirements and gaps are clear. What do development projects need? Quantity surveyors, accountants, engineers? The audits are crucial. This can then be followed by a more structured strategy to acquire the skills required to move development projects at county level forward.  It is time for the pattern of a failure to use development funds to stop because this continued failure will translate to a general failure of devolution to generate the development dividends it was designed to create.

Anzetse Were is a development economist; anzetsew@gmail.com

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