«MANDERA COUNTY BUDGET IMPLEMENTATION REVIEW REPORT FIRST QUARTER FY 2013 /2014 OCTOBER 2013 Office of the Controller of Budget Forward Mandera County ...»
Source: CRA Former councils were the main local revenue collectors. However they lack the skills and expertise required to raise the maximum expected of them. The county do not have and did not initiate a centralised platform for recording the locally collected revenue; this could lead to the unforeseen leakages. The collections were regularly swept from County Revenue Collection Account to County Revenue Account at Central Bank of Kenya (CBK).
2.0.1 Locally collected Revenues The total revenue collected over last three months was Kshs11 million. The collection for July was almost 3.7 million representing 33.2% of the total amount, August recorded 3.5 million representing 31.4% and in September, the county raised 3.9 million accounting for 35.4 % of the total revenues collected over the quarter.
There is huge disparity between the expected revenue and what is raised. The raised or collected amount account only 10 % of the total projected revenue for the quarter. The county initially predicted to raise 20 million monthly and during the revision of the budget, the county pushed up the expected revenues to be raised from within the county to 36 million.
The figure below shows disparity that exists between the predicted amount and what has been raised over last three months.
Mandera county budget implementation review report July-September 2013
Figure 2: Summary of monthly revenue collection Source: Revenue officer It is clear that variance is so big and it is persistent even over last quarter, the predicted does not seem to be rational. The county needs to revise this trend or to rationalise by sealing all the possible leakages.
It is of paramount importance that the county government to broaden the revenue base and find new and innovative ways of not only collecting but also recording the local revenues to eradicates the persistent leakages and to raise the maximum expected of the county for it to realise its expectations.
Table 2 shows the revenue analysis by sub-county. Even though the county lies strategically between two important borders, the county is not peeling the fruit of its strategic location. The sub-counties that lie on the borders would have been the biggest revenue generators due to cross border business like milk, charcoal and others. As indicated on the table the revenues are fairly low.
2.0.2 Exchequer release to the county From the 6.7 billion allocation, The national government has so far released 407 million to the county government, of this, 107.8 million was released early august, this was mainly from the unspent amount by the end of last financial year that has been refunded to the CRF, this was 99 million and about 7 million from the local revenue channels.
The county received also 53 per cent of the august tranche amounting 299,233,166. The 407 million was to fund the recurrent operations of the county as the county is yet to request for the developmental funds.
From the two exchequer releases, the county government planned to allocate for the recurrent operation of the county assembly an amount of Kshs 90 million representing 22 % of the total exchequer issues. The allocations for the executive headquarters was the highest at 37.3 % of the total release to the county and office of the governor/Deputy governor received a total amount of 42 million representing 10.4 per cent of the total exchequer allocation for the quarter.
Landing, housing and physical planning received the smallest share at around Kshs 1.8 million representing 0.44 per cent of the total exchequer issues, followed by the Finance and economic planning and livestock and veterinary services at 0.59 per cent of the total allocation representing 2,4 million respectively. Finance team received Kshs 22 million representing 5.4 % of the total exchequer to finance its recurrent operations. Figure 4 shows the sectoral exchequer release for the period under review with county executive services receiving the highest amount and land, housing and physical planning receiving the lowest share.
Figure 4 summary of the sectoral exchequer realease Source: county treasury
2.1 County Budget Expenditure The total recurrent exchequer allocations for the last three months for all departments was Kshs.
407million representing 6.2 of the whole county allocation for the financial year 2013/2014. The total recurrent expenditure for the period under review cumulatively stood at Kshs. 89.6 million which represents almost 22.1 per cent of the allocated estimates.
2.2 Total County Expenditure The total expenditure by the County Government as at 29th October is Kshs. 89.7 million representing 22 per cent of the whole exchequer release (Kshs 407 million) for the quarter. The major spending units is County executive that has absorbed a total amount of kshs 66.3 million representing 16,3 per cent of the total issues,it is followed by the County Assembly at almost 22 million accounting for 5.4 per cent and Financial Management Unit absorbed the least amount of kshs 1.5 million representing an absorption rate of 0.4 per cent. The table below shows the sectoral exchequer issues against their expenditures and their absorption rate
From Table 5, the County executive had the highest absorption rate, whereas the Financial Management Services had the least absorption rate. The County Executive absorbed the largest
share of the budget of Kshs 66.3 million of the total allocation, whereas Financial Management Services had the least utilisation of Kshs 1.5 million From the total allocated funds, Kshs..317 million was not absorbed by the county as at the mid of the October representing 78% of the total exchequer released The office of the controller of budget is yet to receive the sectoral monthly expenditure returns for the whole exchequer amount released despite its regular follow ups and attempts
2.3 Economic classification of the county Expenditure.
The county allocation was more of recurrent for the entire period, the report mainly analyses the exact recurrent expenditures incurred by the county departments that are majorly categorized into personnel emoluments and expenditures on operations and maintenances.
2.3.1 Personnel Emoluments These are the basic salaries for both permanents and temporary employee, personal allowances paid as part of salary and other allowances. Out of the 1967 million released for the salaries for the whole departments the county managed to absorb only 40 million representing 45 percent of the total expenditure of the county.
2.3.2 Operations and maintenance These are the expenses associated with the day to day operations that are incurred by the county departments apart from the allowances and salaries that are categorized under personnel emoluments.
The county allocated 210 million for the operations and maintenance, this also account for 90 percent of the exchequer utilized so far.
2.3.3 Development Expenditures The county did not plan for any expenditure on development in this quarter but it is eagerly and aggressively advertising for the tenders to embark on next quarter, hence there no expenditure on this classification.
Figure 5 shows the economic classification and it is clear from the figure that the county did not use a penny on developments but rather on operations and maintenance as well as salaries and allowances, Figure 5 Summary of the expenditure on economic classification
3 DEPATMENTAL REPORTS-RECURRENT AND DEVELOPMENTSThis section of the report clearly analyses the county departmental reports. Mandera county governments have used the 89 million on three major departments; the county assembly, the county executives’ services headquarters and the finance team.
The county departments were not majorly operationalized and that is why the county did not use any fund on these departments.
3.0 Mandera County Assembly
3.0.1 Key priorities for the departments The assembly is a legislative organ of the county that is mandated to oversee the county government public finance expenditure. It is composed of the 48 MCAs; 30 elected and 18 nominated. Article 185 of the COK 2010 and section 8 of the county government act contemplates the powers and mandates of the county assembly and it includes but not limited to;
It makes laws necessary for the functions and operations of the county governments.
May receive and approve plans and policies for managements and exploitation of the county resources and developments and managements of its infrastructure and institution.
It’s an oversight organ that oversees the functions of the executives with regard to budgets The departments’ allocation from the county treasury is 90,042,000.00 representing 22 percent of the whole exchequer issues to the county out of this the sector used 218,511,643 on personnel, operation and maintenance expenses representing an absorption rate of 8.6 percent of the whole exchequer issues.
In conclusion County Assembly plays a key role in budget and budget implementation and should be on the lead to ensure that the budgets presented to the assembly conform to the will of the people and are implemented as budgeted.
3.1 County executive service headquarters 3.1.1 Key priorities for the departments The county has ten executives departments, the mandate of the executive is to supervise administration and delivery of services in the county and all decentralized units of the county.
Article 179 of the constitution articulates the functions and powers of the executives The executive was not fully in operation as the county has just recently filled the position of chief officers who are the accounting officers hence the entire expenditure of the whole ten departments was under the vote of the county executive services headquarters.
The exchequer release for the department is 295 million representing 22 percent of the allocation for the entire sector.
3.2 Finance Management services 3.2.1 Key Priorities for the Department This department is the county treasury that is headed by the head of county treasury who is the accountant of the county government, and supported by the former council’s revenue collectors and administrators.
The overall responsibilities of the department is to perform all the activities of the county treasury as provided for under section 104 of PFM : this include overseeing the management of public finance and economic affairs of the county government as well as monitoring and evaluation of the key projects of the county.
In conclusion, the county treasury should ensure strict adherence of fiscal responsibility principles in order to ensure greater transparency in the budget and governance of the public finance. The department should consider, for example in drawing procurement plans and accurate cash-flow analysis.
4 CONCLUSION AND RECOMMENDATIONS
4.0 Challenges affecting implementation of budget The county budget implementation was hampered by the following various factors and will likely affect the smooth county budget implementation if not addressed on time.
4.0.1 Insecurity The major threat is insecurity; this hampered the development in the county for the last two decades since the fallout of Somalia regime. Being on the border of Somalia, Mandera County has also suffered greatly to the menace of the Alshabab that spilt over since the operation of linda nchi. There are regularly explosives and attack in the county that created unfavorable climate for the proper budget implementation.
4.0.2 Lack of Human capacity The county is having great challenges in human capacity; there are no adequate well trained staffs for the management of the public fund properly. The few on the ground lack the adequate skills required to operationalize the county treasury. There are no revenue officers apart from the defunct local authority staff that are under trained to handle the county revenue. Therefore, there is a dire need for the county to build necessary human capacity to fully operationalize the county departments that are now idle.
4.0.3 Delayed submission of financial reports and requirements Delay in submission of various financial reports from the county governments that are needed for monthly and quarterly reports. This delay poses questions on the financial framework of the county. The office of the controller of budget at the county has advised the county government to follow strictly the laid financial regulation by maintaining dully updated cash books, vote books and all accounting books, up to date the county is not maintaining them, hence the question on how the county is trucking its expenditures.
The office of the controller of budget is yet to receive the finance bill and the CIDP from the county treasury despite the request.
4.0.4 Manual financial transactions The county government of mandera employ manual system in all its financial transactions that poses great threat in budget implementation, this could lead to switching of fund for certain projects to another since the expenditure control system is also manual. Even though the national treasury has trained some few staffs on the usage and application of IFMIS and G-Pay, county government has opted for manual transactions of the county fund, hence no operationalization of the two systems. The county is yet to upload on IFMIS the recently revised budget.