County – First Quarter County Budget Implementation Review

KISUMU COUNTY

Kisumu County Assembly approved a Budget of Kshs. 8.6 billion for the FY2013/2014. The
Budget comprises of Kshs. 5.2 billion (60%) for recurrent expenditure and Kshs.3.4 billion
(40%) for development expenditure. However, the County was advised to revise the Budget
to remove unauthorized allocations such as car grants and other anomalies.
In the first quarter of the FY 2013/2014, Kisumu County raised revenue amounting to
Kshs.108.5 million from local sources. Data from the County Treasury shows that Kshs.
39.5 million was raised in July, Kshs.34.7 million in August and Kshs.34.3 million in
September, 2013. Out of the locally collected revenue, only Kshs.100.16 million was banked
with Kshs.6.35 million being spent at source which is contrary to Section 109(2) of the PFM
Act, 2012. The County received exchequer issues amounting to Kshs.415.2 million during
the period under review.

A total of Kshs.338.4 million was spent in the first quarter, all on recurrent expenditure.
Out of the total expenditure, Kshs. 268.3 million (79%) was spent on personnel emoluments
and the remaining Kshs.70.1 million (21%) on operations and maintenance. It is important
to note that the County owes the National Government Kshs. 416.3 million as salaries paid
to staff seconded to the County under the devolved functions.
A further analysis of the operations and maintenance expenditures indicate that the County
spent Kshs. 14.1 million (20.1%) on travel and subsistence allowances, Kshs. 2.9 million
(4.1%) on conferences, and Kshs. 3.4 million (4.9%) on training. The remaining Kshs. 49.7
million (70.8%) was spent on other categories of operations and maintenance such as fuel
cost, motor vehicle repairs and maintenance, and printing among others.
The County faced some challenges during the period under review. Key among them is the
current huge wage bill which is not sustainable. The wage bill is expected to increase after
additional County staff such as Chief Officers and Sub County Administrators are hired by
the County Public Service Board. The County should carry out skills audit, rationalize staff
and consider appropriate steps to contain the wage bill in order to free up more resources
for development programs.

 

MOMBASA COUNTY

Mombasa County
The County prepared and approved a budget of Kshs. 21.79 billion for FY 2013/2014 within
the stipulated budget timelines. This include Kshs. 11.19 billion (51%) for development
expenditure and Kshs. 10.59 billion (49%) for recurrent expenditure. The estimated revenue
is Kshs. 12.17 billion which comprises of Kshs. 4.83 billion (22%) as national equitable
share and Kshs. 7.35 billion (34%) from local revenue sources.
During the period under review, the total revenue for the County was Kshs. 924 million
consisting of national sharable revenue of Kshs. 716 million and local revenue collections
of Kshs. 207 million. The monthly collection of revenue for the period was Kshs. 69 million
in July; Kshs. 65 million in August and Kshs. 71 million in September, 2013.
The County received Exchequer issues amounting to Kshs. 545 million for recurrent
expenditures in the first quarter of FY 2013/2014. The County spent a total of Kshs. 767.2
million implying that a total of Kshs. 221.6 million was spent at source without approval
from the Controller of Budget. Analysis of expenditure by spending units shows that the
County Executive spent Kshs. 755 million (96%) while the County Assembly spent Kshs. 31
million (4%). Out of the total expenditure for the County, Kshs. 567 million (72%) was spent
on personnel emoluments and Kshs. 200 million (25%) on operations and maintenance
while Kshs. 20 million (3%) was spent on debt repayment. Mombasa County also owes
the National Government Kshs. 382.8 million in salaries paid in the first quarter to staff
seconded to the County for the devolved functions.
Further analysis on operations and maintenance expenditures show that travel costs and
subsistence allowances accounted for Kshs. 22 million (11%), conferences, hospitality and
catering costs were Kshs. 13 million (7%) and training costs accounted for Kshs. 16 million
(8%). The remaining Kshs. 149 million (74%) was spent in various categories of operations
and maintenance such as sitting allowances for MCAs, printing and fuel costs for the county
operations.
The County has not fully adopted the IFMIS and G-Pay system and prefers to use manual
system that involves issuance of cheques for payments. The County also experienced
an extended period of industrial action that affected collection of local revenue. It is
recommended that the County fully operationalises the IFMIS and G-pay system to enhance
financial accountability and reporting. The County also needs to put in place and enhance
existing internal control systems in collection of local revenue to minimize leakages.

 

NAIROBI COUNTY

The FY 2013/2014 Budget estimate for Nairobi City County is Kshs. 25.2 billion of which
Kshs. 7.6 billion (31%) has been allocated for development expenditure while Kshs. 17.6
billion (69%) has been allocated for recurrent expenditure. The County has set aside Kshs.
119 million as an Emergency Fund. The County expects to finance the Budget from the
national equitable share and conditional grant of Kshs. 9.9 billion and Kshs. 15.9 billion

raised through local revenue sources.
During the period under review, the County had total revenue of Kshs. 2.9 billion comprising
of Kshs. 370 million unspent balance carried forward from the previous financial year
2012/2013, national equitable share of Kshs. 1.62 billion and local revenue of Kshs. 1.28
billion. The local revenue fell short of the projected Kshs. 5.42 billion for July to September
2013. However, the potential of attaining targeted revenue estimates has been boosted by
the County Finance Revenue Act, 2013 which is under implementation combined with the
concerted efforts to sensitize the public on its benefits.
The exchequer release to the County was Kshs. 598 million comprising of Kshs. 188 million
and Kshs. 410 million released in August and September, 2013 respectively. The total
expenditure was Kshs. 2.78 billion where Kshs. 802 million; Kshs. 782 million and 1.2
billion were used in July, August and September respectively. This implies that Kshs. 2.2
billion was spent directly at source without approval by the Controller of Budget contrary
to Section 109 (6) of the PFM Act. The County Executive spent Kshs. 2.52 billion while the
County Assembly spent Kshs. 258 million. Out of the total expenditure Kshs. 1.8 billion
(65%) was used for personnel emoluments, Kshs. 452 million (16%) on operations and
maintenance, Kshs. 459 million (16%) on development and Kshs. 68 million (2%) on
debt repayment. Nairobi County is expected to refund Kshs. 1.20 billion to the National
Government for salaries paid in the first quarter to staff seconded to the County for the
devolved functions.
Further review of operations and maintenance expenditure shows that travel costs and
subsistence allowances accounted for Kshs. 10.6 million (2.3%), conferences, hospitality
and catering costs were Kshs. 36.3 million (8%) while training costs accounted for Kshs.
15.3 million (3.4%). The County spent Kshs. 394.9 million on other expenditures under
operations and maintenance such purchase of office furniture and fittings, printing and
advertising, routine maintenance, insurance and, fuel costs among others.
Budget implementation during the period under review was adversely affected by staff
unrest that also led to declining revenue collection particularly in the month of August,
2013. Other challenges include the partial operationalization of IFMIS and concurrent use of
LAIFORMS to collect revenue. There is need to continuously monitor and enhance internal
control systems in local revenue collection to minimize leakage. It is also recommended
that the County should fully operationalize IFMIS and G-Pay.

 

NAKURU COUNTY

Nakuru County is implementing a balanced Supplementary Budget of Kshs. 10.32 billion.
The Budget consist of recurrent expenditure estimates of Kshs. 7 billion (70%) and
development expenditure estimate of Kshs. 2.73 billion (27%) while Kshs. 300 million
(3%) was allocated for planned debt repayments. The sources of revenue for the County
Budget in the FY 2013/2014 include the equitable sharable of revenue of Kshs. 6.36 billion;conditional grant for level 5 hospital estimated at Kshs. 600 million and local revenue
collections estimated at Kshs. 3.08 billion.
During the period under review, the County received Kshs. 496 million of national sharable
revenue and collected Kshs. 181 million from local sources as well. Local revenue generation
for the first quarter of the FY 2013/2014 accounted for 6 per cent of the annual local revenue
target. The monthly collection of local revenue was Kshs. 68 million; Kshs. 54 million and
Kshs. 58 million in July, August and September, 2013 respectively. Performance of local
revenue collection is expected to improve with the enactment and implementation of the
County Finance Bill.
The exchequer issues were Kshs. 677 million during the period July to September, 2013.
This amount was released in three tranches of Kshs. 97 million in July, Kshs. 75 million in
August and Kshs. 505 million in September, 2013. During the period, the total expenditure
by the County was Kshs. 404 million. The County spent Kshs. 7 million in July; Kshs. 164
million in August and Kshs 233 million in September, 2013. An expenditure analysis by
spending units reveals that the County Executive spent Kshs. 377 million while the County
Assembly spent Kshs. 27 million.
Further analysis of the expenditure shows that the County spent Kshs. 290 million on
personnel emoluments; Kshs. 114 million on operations and maintenance. Nakuru County
owes the National Government Kshs. 670.9 million in salaries paid in the first quarter to
staff seconded to the County for the devolved functions.
Out of the total expenditure on operations and maintenance, Kshs. 23 million (20%) was
spent on travelling, Kshs. 23 million (20%) on conferences, hospitality and catering while
Kshs. 4 million (4%) was spent on training. Further, the County spent Kshs. 7 million on
sitting allowances for the Members of the County Assembly while Kshs. 57 million was
spent on other categories of operations and maintenance such as printing and stationery,
motor vehicles maintenance, office utilities among others.
The County encountered a number of challenges in budget implementation including delays
in preparation and submission of departmental plans, policies and priorities; slow roll out of
IFMIS; and lack of physical infrastructure and human capacity. The office proposes stringent
expenditure control especially on utilization of hospitality services, allowances, and training
expenses. There is also need for the County to fully operationalize IFMIS to improve on
the financial framework so that accurate and reliable financial reports can be given to the
various stakeholders. Further, the County need to build human capacity on budget and
budget implementation and ensure that revenue collected is regularly transferred to the
County Revenue Fund as stipulated in Section 109(2) of the Public Finance Management
Act of 2012. The CEC Finance should ensure proper guidelines on budget preparation are
provided to the County Government including the usage of Program Budgeting instead of
itemized budget as provided for in PFM Act, 2012 Second Schedule (12).

 

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By Mzee Posted in kenya

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