Expert Comment: Borrowed money must be spent on development projects

Our 47 counties are funded from equitable share, conditional grants and own revenue.

Borrowing is an option, but what I know is that there is no framework so far established in law to exploit this avenue of raising money.

Something needs to be done. The national government could guarantee the loan or other creative methods explored.

What counties borrow depends on their financial discipline and capacity to service the loan.

However, county governments can and should borrow only if the national government provides a guarantee.

The relevant county assembly must approve the borrowing plans while the Senate will play an oversight role.

When somebody gives you money, you have to show, clearly, that you can spend the money prudently and payback.

Anybody can borrow, provided they can repay the lender. The money borrowed must, however, be spent on projects that will, in turn, change the lives of Kenyans.

At present counties are complaining that disbursements from the treasury do not hit their accounts on time, causing planning and budget implementation challenges.

We must accept that counties inherited a bloated workforce from the defunct local authorities. 

But county executives are also hiring in an uncontrolled manner even though the law is very clear. You have to spend 70 per cent of your funding on recurrent and 30 per cent on development projects.

The culture of hiring without regard to skills and needs must be discouraged.

When the budget is being looked at by the Controller of Budget, the officers ensure the ratio is followed.

But after the controller approves, they rework the figures and distort the ratio to suit selfish objectives.

But even within the 70 per cent guidelines, the Public Finance Management Act says not more than 35 per cent should be spent on staff salaries and wages.

There are challenges. I think wages in this country are bloated both at the national and county levels.

Every effort must be made to bring the figures down because it is not sustainable. Otherwise, the values and purpose of devolution will be lost. 

Borrowing by counties must have proper legal structure anchored in law.

We do not want governors to just walk into a bank and borrow.

What every cent borrowed must be channelled into development expenditure.