Kirinyaga and Busia counties have emerged as the top performers in absorbing their allocated development budgets during the first quarter of the 2024-25 financial year. According to the latest report released by the Controller of Budget, Margaret Nyakang’o, both counties achieved an impressive 12% absorption rate for their development budgets from July to September 2024.
In Kirinyaga, the county allocated Sh378 million to development projects out of its total expenditure of Sh965 million, while Busia spent Sh328 million from an expenditure of Sh1.5 billion. These counties’ ability to efficiently channel funds into development initiatives stands out, considering the overall performance across the counties was much less favorable.
Despite the achievements of Kirinyaga and Busia, the larger picture reveals significant concerns regarding budget absorption. The combined development expenditure of all counties during this period amounted to Sh6.71 billion, which represents just 3% of the annual development budget of Sh205.33 billion. This marks a decline from the 4% absorption rate recorded in the same period last year, when Sh6.92 billion was spent on development projects. The low absorption rate highlights a persistent challenge in ensuring that counties effectively allocate and utilize funds for development, which is essential for the growth and improvement of local communities.
The Budget Implementation Review Report (CGBIRR) also indicates that several counties are struggling to prioritize development activities. Notably, 10 counties did not report any expenditure on development activities during the review period, raising concerns about the management of public funds. These counties Baringo, Elgeyo Marakwet, Kajiado, Kisii, Lamu, Nairobi, Nyandarua, Tana River, Uasin Gishu, and West Pokot allocated their entire budgets to recurrent expenditure, bypassing critical development projects that are essential for improving infrastructure, education, health, and other services that directly benefit citizens.
For example, Baringo allocated its entire approved expenditure of Sh599 million to recurrent costs, rather than investing in long-term development initiatives. This approach is concerning, especially as counties are required by the Public Finance Management (PFM) Act, 2012 to allocate at least 30% of their budgets to development activities. The inability of these counties to meet this requirement suggests a misalignment with the priorities set out by the national government and the PFM Act, which was designed to ensure a balanced approach to both recurrent and development spending.
The performance across counties also reveals a decline in overall recurrent expenditure. For the review period, recurrent expenditure totaled Sh48.96 billion, representing 13% of the annual recurrent budget, which is a decrease from the 18% reported in the first quarter of the previous financial year. This decline suggests that some counties may be taking a more conservative approach to recurrent spending, perhaps due to fiscal constraints or the need to prioritize saving for future expenditures.
The report, which covers the period from July to September 2024, is prepared in compliance with Article 228(6) of the Constitution of Kenya, 2010, and Section 9 of the Controller of Budget Act, 2016. It evaluates the performance of counties in terms of revenue and expenditure, highlighting challenges that hinder the successful implementation of budgetary allocations. The overall budget for counties in the 2024-25 financial year, approved by the County Assemblies, amounts to Sh576.73 billion, with 36% (Sh205.33 billion) allocated to development expenditure and 64% (Sh371.40 billion) earmarked for recurrent costs.
While Kirinyaga and Busia counties have demonstrated commendable performance in development expenditure, the broader trend across the country indicates the need for more efficient budget management. Counties must strive to meet their development expenditure targets, ensuring that allocated funds are directed towards projects that foster long-term growth and directly benefit the people they serve. To this end, a more focused effort is required from all county governments to improve budget absorption, particularly for development activities, as this will be critical in achieving the goals outlined in the PFM Act and supporting the sustainable development of Kenya’s regions.
