Improved use of development budget signals robust growth

The absorption of development funds by government ministries and agencies has improved, raising hope for enhanced economic growth.

The Controller of Budget’s 2013/14 full-year review showed that Sh223.7 billion was spent on development projects, representing an absorption rate of 52 per cent.

This marks an improvement from the previous fiscal year when ministries only absorbed 44.4 per cent of the Sh437.1 billion they had been allocated.

READ: Ministries fail to spend development cash
The Controller of Budget Agnes Odhiambo, however, said the departments can do better.

“While the 52 per cent absorption is an improvement from the previous year’s performance, there is a need for enhanced efforts to achieve a higher absorption rate of development expenditure allocation,” she said.

Tedious procurement

Economic growth is largely dependent on investment in key areas such as infrastructure and energy. Less development spending, therefore, means less investment, denying the economy the spark it needs to flourish.

The country’s poor development spending record has partly been attributed to rigid procurement rules that slow down the awarding of contracts.

Procurement has also become tedious thanks to many court cases by losing bidders and governance activists.

Ms Odhiambo said the difference between development and recurrent expenditure remained too wide to stir up progress.

“The development expenditure absorption rate of 52 per cent is significantly low compared to the absorption rate for recurrent expenditure which stands at 96 per cent in the financial year 2013/14” the Controller said.

The pay to civil servants soared to Sh464 billion in the last financial year, more than 50 per cent of the tax revenues collected over the same period.

The wage bill stood at Sh521.6 billion or 13 per cent of GDP at the end of the last financial year, having risen from Sh458 billion previously.