Nairobi spent the least on development in first nine months of 2024/25 fiscal year, CoB report shows

Nairobi City County spent only 17 per cent of its budget on development for the first nine months of the 2024/25 financial year, which is the lowest among the 47 counties.

According to County Budget Implementation Review Report (CBIRR) by the Controller of Budget Margaret Nyakang’o, out of the Sh21.81 billion that Governor Johnson Sakaja’s administration received, only Sh2.43 billion was spent on development programmes while Sh19.38 billion on recurrent programmes, which comprised Sh12.27 billion for employee compensation and Sh6.12 billion for operations and maintenance.

“The Counties that had the lowest absorption rates of their respective approved development budgets included Nairobi City at 17 per cent, Embu at 16 per cent, Taita Taveta at 14 per cent, Lamu at 13 per cent, and Nakuru and Kisumu each at 10 per cent,” the COB noted.

This is even as the absorption rate for counties in the first nine months of the ending 2024/25 fiscal year improved to 26 per cent from the previous 22 per cent in the same period for the last financial year.

Busia County achieved a high absorption rate of its approved development budgets at 45 per cent, Garissa County and Mandera County attained 41 per cent each, Narok County attained 39 per cent, while Siaya and Nandi counties attained 36 per cent.

Apart from Nairobi, the absorption rate was also lower in Embu, Taita Taveta, Lamu, Nakuru, and Kisumu City.

During the reporting period, the County Governments reported outstanding pending bills stock of Sh172.51 billion, comprising Sh139.88 billion for recurrent activities and Sh32.63 billion for development activities.

Nairobi still leads with a pending bill of Sh115.69 billion, with Kiambu second at Sh5.60 billion, Machakos (Sh4.63 billion), Mombasa (Sh3.43 billion), Garissa (Sh2.62 billion), Kisii (Sh2.56 billion), Bungoma (Sh2.50 billion), Kisumu (Sh2.24 billion) and Busia (Sh2.04 billion).

Nyakang’o cited that the delays by the treasury to disburse an equitable share of revenue and parliament enacting the County Government Additional Allocations Bill 2024 were the top causes of hindrance in effective budget execution by the devolved units.

She also noted that the disparity in budget implementation by County Votes and Programs and the under-performance in Own Source revenue collection, together with the Non-Compliance with Legislation on Account Opening by County Governments, is a hindrance.

Non-adherence to pending bills payment plans, low expenditure on development programmes, high wage bill to revenue ratio, and delay in submission of financial and non-financial reports to the Controller of Budget have also been pointed out as factors leading to low budget execution.

The CoB has recommended that the remaining equitable share be disbursed on time, as she called the County governments that underperform in Own Source Revenue (OSR) should revise their revenue estimates downward.

“We request the expedited disbursement of additional funds during the remainder of FY 2024/25. County governments that underperform in Own Source Revenue (OSR) should revise their revenue estimates downward and work with other stakeholders to enhance revenue forecasting, and Funds must be equitably disbursed to all programmes and sub-programmes in FY2024/25,” Nyakang’o advised.

“County Treasuries need to submit account opening authorisation letters to the Controller of Budget as required by Regulation 82 of the Public Finance Management (County Governments) Regulations and adhere to their pending bills payment plans for the remaining period of FY 2024/25 even as they to focus on settling completed development projects in the remaining period of the financial year,” she added.

Nyakang’o also advised that the devolved units need to develop actionable strategies to reduce their wage bill to revenue ratio to 35 per cent by June 2028, as they ensure compliance with legal requirements for submitting quarterly financial and non-financial reports.