Why reports on counties' recurrent expenditure are misleading

In Summary

• What the Auditor General and the Controller of Budget do every year is to advertise how huge recurrent expenditure in the counties is.

• No government comes into power without employing key people in key places to implement its policies.

Auditor General Edward Ouko
Auditor General Edward Ouko
Image: FILE

A false impression has been created about the size of the wage bill in the counties. Not that the wage bill is not big; it indeed is. But that county governments create it deliberately is a fallacy. 

Indeed what the Auditor General and the Controller of Budget do every year is to advertise how huge recurrent expenditure in the counties is. It is argued that the counties spend a disproportionate sum of money on recurrent expenditure as opposed to development. Again true.

 The question to pose is why is this the case? The next question is: how can this be avoided? And this is where the treasury gurus fail us. They are erudite in the description and total neophytes in explanation. I want to deal with this mischief.

Kenyans will remember that in 2013, at the dawn of devolved government, an institution called the Transition Authority was created to provide a smooth exit from the former local government system to the new devolved system. Among the issues the Authority was supposed to handle was the assets and liabilities of the former local authorities and how they were to be appropriated or discarded by the 47 devolved governments. 

One of the liabilities that was completely glossed over by the authority was the bloated workforce that the local authorities left behind. To add insult to injury, the national government then offloaded to the counties its workers in ministries that were devolved. Again little attention was paid to the number of square pegs in round holes that the counties received from Nairobi as elements in their new public service. The culture of work by this lot was quite often prone to absenteeism and low productivity. Yet, being permanent and pensionable, they had to remain a burden in the wage bill of the new 47 devolved governments.

No government comes into power without employing key people in key places to implement its policies. The 47 new governors, expected to do wonders with devolution, could not possibly have depended on the public service it inherited to implement their manifestos and policies. They had to hire new people without dismissing the inherited permanent and pensionable ones from the old order. Here lies yet another cause for the bloated wage bill in the counties.

Given the above explanation on how the public service was bloated at the creation of devolution, and it inevitably had to grow given "the permanent and pensionable" predicament, what should the national government have done to avoid perpetuating this malaise?

First, the national government, at the beginning of devolution, should have changed the terms of service of ALL civil servants from permanent and pensionable to contracts renewable based on regular performance and productivity evaluations. Rather than treat performance evaluations as mere rituals in the public service as is the case now,  they should have been elevated to the level of the old Chinese civil service examinations which tremendously improved quality in the Chinese public service. Contract terms would have been used to systematically and regularly downsize the public service to the level of sustainability vis-a-vis the wage bill.

Two, having not done that, there is yet another option open to the Jubilee/Handshake government today. This is the option of the Golden Handshake. All monies recovered from corruption and the proceeds from recovered looted assets should be used to pay "separation packages" to those who choose to retire early from the County public services. With this in mind the government should then get very serious and result oriented in the fight against corruption since its outcome would help in improving efficiency and productivity in the public service.

Third, let me add that the above two initiatives would also lead to a higher proportion of revenue allocation to the counties which, in reality, should be between  45 per cent to 75 per cent of the national budget since it is in the counties where the people live and not in the concrete buildings where the national civil service works.

It is quite clear to me that both the Auditor General and the Controller of Budget have simply described to us what they have observed regarding the wage bill in the counties, and not explained the reasons behind the proportional relationship between the recurrent expenditure and the development expenditure. 

Granted that both the national and county governments err on the side of spending too much on recurrent expenditure, the high proportion of this in the counties is nonetheless due to two main factors. First, the bloated size of the public service is already given and received from the past. There is nothing the counties can do about it. Second, the Division of Revenue Bill gives a gross sum that leaves the onus of what is left for development entirely in the hands of the county governments. In the end, after paying the compulsory wage bill, what is left for development is nothing to write home about. It must, by sheer necessity, remain small.

The alarming proportion is also misleading in another sense. If the architects of the Division of Revenue Bill are aware that the counties are already burdened with an unusually big public service, one of the first things they need to do is to give counties conditional grants for paying wages while waiting for a process of downsizing which should include the Golden Handshake. 

Continuing to condemn the counties for spending too much money on wages without dealing with the causes of this phenomenon will not take us anywhere. Once the causal factors are known then prescriptions or solutions will follow logically. 

But we should not also gloss over other wasteful expenditures in both levels of government that, if checked, can reduce recurrent expenditure and release more money for development. Such cost saving measures are all related to the quality of governance in both levels of government. 

The fight against corruption should be extended to the fight FOR a political culture that emphasises integrity, honesty, democracy, social justice and mutual social responsibility WITHOUT Harambee. Then Kenya will get somewhere.