HOW ARE OUR MONIES SPENT? the Public Expenditure Review in Eight Constituencies (2005/2006 – 2008/2009)

HOW ARE OUR MONIES SPENT? The public expenditure review in eight Constituencies (2005/2006 – 2008/2009)

The key role of ActionAid International-Kenya (AAIK) in the People’s Participation towards Equity.

HOW ARE OUR MONIES SPENT? The public expenditure review in eight Constituencies (2005/2006 – 2008/2009) PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009)

Prepared by

Dr. Wilfred Nyangena Lead Consultant Crosinox Kenya

Mr. George N. Misati Support Consultant Crosinox Kenya

Mr. Daniel Namenya Naburi Support Consultant Crosinox Kenya

A publication of ActionAid International Kenya ActionAid International Kenya P O Box 42814-00100 Tel: +254 20 4440440 /4/9 Nairobi, Kenya www.actionaid.org/kenya ACRONYMS/ABBREVIATIONS...... IV EXECUTIVE SUMMARY...... 1 Introduction...... 1 Objectives of the study...... 1 Methodology...... 1 PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) Key Findings and recommendations...... 2 V Allocative rationality/efficiency...... 3 Utilization and absorptive capacity...... 5 Utilization of CDF...... 5 Utilization of line ministry funds...... 5 The impacts of the funds...... 7

CHAPTER 1...... 9 INTRODUCTION...... 9 1.0 Background...... 9 1.1 Scope of the study...... 9 1.2 Theoretical perspectives...... 10

CHAPTER 2...... 11 METHODOLOGY...... 11 2.0: Study Design...... 11 2.1 Sampling ...... 12 2.2 Data Analysis ...... 12 2.2.1 Definition of ratios ...... 12 2.3 Study Limitations...... 12

CHAPTER 3...... 14 ANALYSIS OF DEVOLVED FUNDS...... 14 3.0 Overview of devolved funds...... 14 3.1 Local Authority Transfer Fund (LATF)...... 14 3.1.1 Allocations and Rationale ...... 14 3.1.2 National LATF Allocations...... 15 3.1.3 Local LATF allocations...... 15 Utilization and absorptive capacity...... 16 Capital Expenditure:...... 16 Fiscal authorities’ deficits and surplus...... 21 3.2 Constituency Development Fund (CDF)...... 22 PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) 3.2.1 Allocations and Rationale ...... 22 VI 3.2.2 National CDF allocations...... 22 3.2.3 Local level Allocation and balances...... 23 3.2.4 Utilization and absorptive capacity...... 24 3.3 General findings on devolved funds...... 28 Impact of the funds...... 31

CHAPTER 4...... 36 FINDINGS ON LINE MINISTRY BUDGETS...... 36 4.0 Overview...... 36 4.1 Allocative Rationale...... 36 4.2 National allocation...... 37 4.3 Local Allocation and Utilization...... 39 Development Expenditure in the Ministry of Agriculture...... 43 Development Expenditure in the Ministry of Health...... 45 Development Expenditure in the Ministry of Education...... 46 4.4 General findings – Line Ministries’ budgets...... 47 Impact of the funds...... 49

CHAPTER 5...... 52 CONCLUSIONS AND POLICY RECOMMENDATIONS ...... 52 5.0 Introduction...... 52 5.1 Allocative rationality/efficiency...... 52 Policy Recommendations...... 53 Impact of the devolved funds...... 55 Policy Recommendations...... 56

REFERENCES...... 57

APPENDIX I: SECTOR ALLOCATIONS PER CONSTITUENCY... 59 PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009)

APPENDIX II: SUMMARY PROFILE FOR THE FYS 2005 TO VII 2008 (AVERAGES)...... 62 SUMMARY FINANCIAL PERFORMANCE INDICATORS (%)...... 62

APPENDIX III: ANALYSIS OF LOCAL AUTHORITY ANNUAL REPORTS...... 63 Definition of variables...... 66 TOOLS AND INSTRUMENTS FOR THE STUDY...... 67 1. Key informant Survey...... 67 2. FRAMEWORK FOR FOCUS GROUP DISCUSSIONS...... 72 IN-DEPTH DISCUSSIONS ...... 73 ACRONYMS/ABBREVIATIONS

AAIK ActionAid International Kenya ASAL Arid and Semi Arid Land AIE Authority to Incur Expenses CDF Constituency Development Fund CBF Constituency Bursary Fund ERS Economic Recovery Strategy FPE Free Primary Education KIHBS Kenya Integrated Household Baseline Survey LA Local Authority LATF Local Authority Transfer Fund LASDAP Local Authority Service Delivery Action Plan MDGs Millennium Development Goals M&E Monitoring and Evaluation

PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) MTEF Medium Term Expenditure Framework RMLF Roads Maintenance Levy Fund VIII PER Public Expenditure Report PPE People’s Participation towards Equity EXECUTIVE SUMMARY

Introduction This study was carried out by ActionAid International-Kenya (AAIK) whose key role in the People’s Participation towards Equity (PPE) program is to enhance community participation in poverty reduction efforts. At the sub-national levels, there is a special focus on ensuring the participation of marginalized groups such as, persons with disabilities, women, children the youth and indigenous peoples towards poverty eradication.

The findings show that there has been an increase in the funds allocated to communities through the CDF, LATF and line ministry budgets. Also, the allocation of the funds has not translated into improved wellbeing of intended communities particularly in ensuring food security and availability of essential services such as infrastructure, electricity, water and healthcare...

Objectives of the study PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) The three objectives of this public expenditure review were to: 1. Ascertain the rationale in allocating the decentralized funds at National and Sub- 1 national levels. 2. Establish the absorptive capacities of districts, constituencies and counties. 3. Identify the impact(s) of the identified allocative rationale and absorptive capacities on eradicating poverty and inequality.

The study assesses the allocative rationale by looking at the basis of allocation of funds. It explains how CDF, LATF and line ministry budgets are apportioned to various development projects from the national to the local level. Utilization is explained in the use, form, manner or expenditure of the funds while absorptive capacities are expressed as ratios or percentages of amounts used on particular projects over the total allocations. The percentages or ratios have been used to do comparisons and assessments in this study. Analysis of allocative rationality and absorptive capacity are based on the existing government regulations and priority sectors in the Vision 2030. Analysis of the impact of devolved funds on the livelihoods of communities at the sub national level, has been done to establish their observable and non-visible effects on the beneficiaries at the sub-national level, conducted in eight sampled districts where ActionAid Kenya operates. They included Kuria (Kehancha), Busia (Budalangi), Mandera West (Takaba), Ijara (Masalani), Narok South (Ololunga), East Baringo (Tangulubei), Malindi (Lango Mbaya), and Tana River (Wenje) districts.

Methodology The study was designed to gather information at two levels of observation: the national and sub-national level. Both quantitative and qualitative data were collected through personal interviews with various key informants (District Commissioners, District Accountant, District development Officers, District Education Officers, District Agriculture/Livestock Officers, District Gender/ Women Official, District Procurement Officers, District Youth Officers, District Medical Officers and Local Authority representatives) and focused group discussions in 8 districts. Field work activities involved a survey to collect information on allocation and utilization/ absorptive capacities of line ministry budgets, Constituency Development Fund (CDF), local authorities Transfer fund (LATF) and establish the amount of money returned to Treasury annually. In addition to evaluate the impacts on poor and excluded people, local equity, service delivery and poor development trends.

Additional data from financial reports was used to complement and validate the findings. Secondary data was used to complement the survey data for the districts, constituencies and counties. While quantitative data was used for statistical analysis, every attempt was made to gather and incorporate qualitative data to complement the analysis of the allocation, absorptive capacities/utilization and the impacts of these funds in the community.

Informed consent was obtained from all respondents before being interviewed. Comparisons were made across the districts. In order to examine the impacts the study assessed awareness of funds, public participation in funds, accountability and transparency issues, operationalization of the funds, and challenges. In order to ascertain allocative rationality, PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) utilization/absorptive capacity ratios, percentages, tables and figures were used. The ratios 2 derived as percentages of utilization are the measures of absorptive capacities.

However, obtaining adequate financial data at the district level was challenging and calls for policy changes in information sharing on public funds especially in the line ministries. Most of the District Officials declined to give the information on financial aspects of the study. Therefore, the study used information from Government Budget estimates for analysis on development expenditures because they give a clear picture on line ministry priorities in the selected districts.

Key Findings and recommendations The study assessed the allocative rationality and absorptive capacities in regard to line ministry budgets and devolved funds. It also examined the impacts of these funds on the livelihoods of communities at the sub national level. This was possible through literature review and primary data obtained from key informants and focused group discussions in the respective districts.

Though the devolved funds are strategic and are supposed to be effective in improving the national response to poverty, inequitable resource distribution and general livelihoods of Kenyans, the number of people living below the poverty line has increased. The findings of this review indicate that there was a 30% increase of people living below the poverty line despite CDF and LATF funds. According to the Kenya Integrated Household Baseline Survey (KIHBS) 2005/06, Malindi had 65% of the people living below the poverty line in 2009 compared to 61% in 2006, while 83% of people in Galole were living below the poverty line in 2009 compared to 42% in 2006. In Mandera 90% of people were living below the poverty line in 2009 compared to 60% in 2006.There was, however, a marginal reduction in Budalangi from 70% in 2006 to 69% in 2009.

The increased poverty levels can be attributed to persistent challenges, such as lack of effective participation of local communities in selecting,prioritizing and implementing development projects, poor public finance management at national and sub-national levels, lack of institutional monitoring and evaluation mechanisms particularly those that involve the participation of Civil Society Organizations, and the fact that budget monitoring remains a bureaucratic process. These challenges can be addressed through capacity building at all levels of government; community empowerment in budget monitoring and evaluation, stipulation of adequate safeguards for local government funds, rigorous implementation of fiscal responsibility, public procurement and other strategic policies to strengthen economic management.

Allocative rationality/efficiency This study examined the extent to which the allocation of decentralized funds is consistent with policy priorities of the Vision 2030, and the key economic, social and political policies of priority to the Government .

The Government increased CDF allocations by 67% from 2003 to 2008, while LATF allocations increased by 60.6% from 1999 to 2009. The recurrent expenditure in the ministries of education, health and agriculture increased by 46%, 40% and 97% respectively. Development expenditure allocations increased by 209%, 153% and 380% PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) in the respective ministries, which shows that the government is committed to achieve its development objectives through these funds. 3

The government expenditure estimates on social services has increased over the years from Kshs. 128.9115 million in 2005/2006 fiscal year to 216.13057 million in 2008/2009. Expenditure on education increased tremendously by 57% from Ksh. 96,027.43 million in the year 2005/06 to Ksh. 151,676.85 million in 2008/2009. This is attributed to communities’ demand for improved education access through school infrastructure support by the government to achieve the MDG objectives.

At the sub-national level, budgetary allocations made during the review period were consistent with national priorities in terms of allocative efficiency. The allocation criterion was designed to ensure that funds are allocated in a predictable, transparent and fair manner as defined in the rules and regulations of the CDF and LATF Acts. The line ministries allocation criterion relies on district committees, which comprise of all stakeholders in respective sectors generating Annual District Work plans that outline the priority areas and the budgets which are sent to ministry headquarters for funding.

This study has established that there is unequal sectoral allocation. For example, key sectors like agriculture, water, health, roads and environment had low allocations in the CDF, with 2.9%, 10.4%, 10.3%, 6.4% and 0.3% respectively while education was allocated 44% of the total CDF funds in the sampled districts. A balance between health, education, and food security is vital for development. For a child to perform better in school he/she should be in good health, and have proper nutrition. The sectors that affect women such as agriculture, health and water received low allocations.

In the line ministries, sectoral allocations were erratic in that some sector programmes such as agricultural extension services were allocated 100% of the funds verses 0% in the management of food security . Poor prioritization in fund allocation has negative implications on food security and health services, and contribute to unequal sectoral development which subsequently reduces the pace of achieving the Vision 2030 and MDG objectives. From the study 63% of the respondents said that CDF projects were initiated by the community members, 22.2% felt that the projects are initiated by area Members of Parliament, while 14.8%, credited their councilors for initiating CDF projects. Also, 45.4%, 31.8%, 18.2% and 4.5% of the respondents credited community members, local councilors, local authority officials and district officials respectively for initiating LATF projects. Further still, 38.5%, 7.7%, 7.7%, 7.7%, 30.8% and 7.7% stated that educational projects are initiated by community members, MPs, local councilors, local authority officials, district officials and the government respectively. This indicates low levels of community involvement in project prioritization. CDF scores higher in allocative efficiency due to its bottom-up approach in its project cycle management (identification, prioritization, implementation and community ownership). These components lack in the line ministry projects where the approach is top-down.

Policy Recommendations 1. To improve allocative efficiency in the line ministries, the adoption of the Medium Term Expenditure Framework (MTEF) that links policy, planning and budgeting and PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) the adoption of Programme-Based Budgeting (PBB) are recommended. Community 4 awareness and participation in the line ministry projects at the sub-national level should be encouraged with a bottom-up approach in project management adopted. 2. Continuous capacity building for fund managers and the community social audit groups should be done on planning and priority setting, budgeting, administration, effective supervision, monitoring and evaluation. These should be set up at the district level to train communities in fundraising to supplement Government budgets. 3. To encourage efficiency in project identification, financial reporting, project planning, evaluation and supervision, standardization of designs, technical and financial parameters, and cost indicators for the frequently requested projects should be done. This will simplify documentation requirements to reduce bureaucratic procedures in the line ministries and LAs. Standardized annual work plans for infrastructure and procurement such as model plans for hospitals built by CDF funds should be used country wide for efficient control of budgets, absorption, and monitoring, and this will curb fraudulent project costing. 4. There should be a transparent and merit-based criteria for selecting funds committee members. Committee members should be competent, have integrity, ethics, good governance practices, accountability and strategic leadership skills. Regular audits in liaison with community audit teams should be done to increase transparency in the use of project funds, and audit findings made public. 5. All devolved funds including those of line ministries, districts and constituencies should be consolidated for consistency and harmony in projects implementation, to avoid duplication and double funding. 6. Increased budgetary allocations should be proportionate with the poverty levels, population size and geographical location. This will ensure availability of critical inputs like materials and equipment at the district level. The delays in disbursing funds and AIEs to the districts should also be addressed to ensure prompt disbursement of funds the district level. Allocations should be based on budgets prepared at the district level. Work plans should be generated from the grassroots level and provisional project plans validated before implementation to prevent inflated budgets. 7. Simple performance indicators for monitoring and evaluation should be developed to define and measure progress in achieving developmental goals and assess the effectiveness of the decentralized funds. The indicators could include public awareness and participation, frequency of public board committee meetings, supervisory and monitoring meetings, collection and banking as a percentage of collection, among other indicators. These should be published and reviewed periodically to compare inter district and sectoral performance.

Utilization and absorptive capacity In this study, absorptive capacity is defined as the extent to which line ministries, CDF and LATF managers can utilize the decentralized funds, in an effective and efficient manner. Absorptive capacity has two connotations: (a) Financial absorptive capacity, is the ability to co-finance programs and projects supported by line ministries, CDF and LATF, to plan and guarantee these national contributions in multi-annual budgets, and to collect contributions from the partners involved in various programs and projects. (b) Administrative capacity is the ability and qualifications of central and local authorities to prepare appropriate and timely programs and projects, fund and monitor their PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) implementation,, ensure coordination of partners involved, comply with administrative and reporting requirements, . 5

Utilization of CDF The study shows that 81.2% of the fund managers were satisfied by the way CDF is utilized, with 18.7% partially concurring, which is a good performance. While those interviewed on LATF only 23% felt the funds were utilized to their objectives, 38.5% failed to agree and 38.5% agreed partially which is a poor performance.

The education sector absorbed the largest share of total sectoral expenditure with an average of 44% followed by water (10.36%), health 10.25%, roads/ bridges 6.39% and others 7.73%. There are, however, challenges in the use of the devolved funds: 1. The absorptive capacity at the sub-national level is low and the effect is that the funds allocated do not positively impact in the short-term. 2. There is low public awareness and participation. 3. Inadequate technical capacity of local project committees for managing the funds and their activities. . 4. Inadequate funding, delays in disbursement of funds, and weak legal and institutional framework for accounting of funds and resources. Accounting is done manually by locals who lack prerequisite accounting skills. This has encouraged misappropriation of funds and embezzlements. 5. Higher levels of corruption in revenue collection in the LAs has affected service delivery. 6. Political interference in committee appointments, are other challenges experienced. 7. Conflicting policies- for instance, the criteria followed in awarding CDF bursaries is different from that of ministry bursaries. Also, procurement procedures are flawed and there are difficulties in identifying priority. 8. There is also over-dependency by communities on CDF whose attitude is that CDF is free money from the government.

Utilization of line ministry funds The study found out that an average 44.5% of the fund managers were satisfied with line ministries fund utilization. In health/medical services, 44.4% felt the utilization was partial and the other 11.1% did not agree on the manner in which the funds have been utilized. In Agriculture/Livestock/Fisheries, 50% felt the funds were utilized well, 14.3% did not agree and 35.7% partially agreed on how the funds have been used. In education, 50% agreed that the funds were utilized to their objectives and the other 50% partially agreed.

According to the fund managers there were problems with budget execution. These include:  Cash flow bottlenecks such as inadequate funding and delays in disbursement of funds and A.I.Es and slow procurement which comes in the way of utilization of the funds.  Under-staffing and inadequate technical capacity for managing the funds and their activities.  Weak institutional frameworks for accounting for the funds.  Lack of mechanisms to sanction decisions against the funds’ mandate. Hence line ministries development spending was lower than budgeted for, partly because the funds available to promote growth and poverty reduction were underutilized.. PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009)  Poor prioritization at the ministry level. Furthermore much of the funds are not utilized in 6 the acquisition of non-financial assets in the line ministries. For example, in the Ministry of Agriculture, agricultural extension programmes utilized 100% of the allocations in Ijara, Tana River, Malindi, Busia, Baringo and Kuria and did not utilize any amount in promoting food security, among thefood-poor districts.

Policy Recommendations To improve on the absorption capacity of line ministry budgets, LATF and CDF, the government should take the following measures: 1. Strengthen administrative capacity of personnel in line ministries and devolved fund agencies. 2. Ensure greater transparency in fund management by providing comprehensive information of public interest, and eliminating excessive bureaucracy and corruption in awarding financing for projects. . 3. Standardize the rules governing access to decentralized funds, particularly application requirements to hasten the approval process. 4. Ensure completion of audit reports on the implementation of Operational Programs by the Sector Work Groups (SWG), so that they can be approved by the Exchequer by the end of each financial year, as a condition for starting the reimbursements. 5. To increase the rate of decentralized funds absorption, the Central Government and Fund Management authorities should reduce the period for evaluating, selecting, contracting and approving funds for projects. Also, the legislative oversight on Ministry Development Agencies (MDAs) budgets is weak. Similarly, the civil society is weak in researching and scrutinizing government fiscal operations and related budgetary matters. The capability of the government and civil society in monitoring public finance needs to be enhanced.

The absorptive capacity at the sub-national level is low that the funds allocated do not impact positively in the short term. From the findings education on average utilizes 44% of the total CDF allocations in the sampled districts. On average it takes 17 years or more to educate a child from primary level to tertiary level for him/her to be ready for employment. The impacts of the funds All the funds show an increase in the amount allocated over time, which cumulatively should have a positive impact in the fight against poverty and inequality. In the financial records, allocation regulations have been followed, although the implementation of these budgets is not satisfactory. For example, there are anomalies in procurement procedures (such as in Galole CDF health center) with fraudulent cost variations, construction of sub-standard structures, alleged bribery in procurement of materials and contractors, unequal sectoral percentage allocations and poor prioritization.

The study established that 64% of the respondents were in agreement that infrastructure has notably improved through LATF funds. For example, markets are better equipped with sanitation facilities, slaughterhouses, health facilities and water projects. 6% attributed the clearance of council debts and timeliness in paying staff salaries to the existence of the fund. Another 6% of the respondents were convinced that there is better public participation in decision making especially with the use of public meetings (barazas) in discussing

community projects while a further 6% credits LATF for creating employment opportunities PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) to the local community. 18% of the respondents felt little or no impact because they lack information regarding the funds. 7

In addition, 25% of the respondents acknowledged that health services have improved, due to the construction of health centers in previously neglected areas and acquisition of ambulances. 17.5% recognized increased enrolment, retention and completion of school by students due to construction of classrooms, laboratories, desks, as well as supporting and equipping youth polytechnics. 25% noted an improvement in service delivery where with communities benefiting from access to water and irrigation projects by CDF especially in ASAL. There is, however, concern over prioritization of projects in that some regions and sectors are still neglected.

The study also established that 78% of the respondents acknowledged better health facilities and services compared to previous years, while 11% felt there has been positive change in terms of restructuring and infrastructure development in health and sanitation. 46% of the respondents felt that there has been an improvement in the socio-economic status of communities through agriculture/livestock funding in the districts while 18% felt that there has been diversification of the agricultural sector activities to incorporate crop and livestock farming and increased community participation in farming and livestock production. 6% noted that the funds assisted in restocking livestock after drought, and the remaining 6% noted no impact. Conversely, 11% felt that there has been no impact to be noted.

Policy Recommendations Based on the study findings the following interventions that target line ministry budgets, CDF, LATF and CBF are recommended: 1. Establishing efficient and adequate communication channels to enlighten local communities on the objectives of each fund. District and constituency information centers should be set-up where information on projects and funding details can be disseminated and shared. The district and constituency information offices should be principal in providing information on devolved funds and line ministry budgets. Websites highlighting district project development should be established to enable the public to follow up project progress. 2. Continuous capacity building for community social audit groups and other members, on planning and priority setting, budgeting, administration and effective supervision, monitoring and evaluation should be set up at the community level. Also, communities should be trained on fundraising to supplement government budgets. 3. Equity in fund allocation and participation of stakeholders in identifying projects at the local level should be done to integrate interests, activities and strategies of donor, private sector and NGOs within the district. This calls for restructuring the district fund committees to allow joint planning, budgeting, supervision, monitoring and evaluation of the district development projects. The recent initiative in the health sector of the district stakeholders’ forum in Kuria district and the Narok County Council is a move in the right direction as it allows stakeholder participation. 4 There should be transparent criteria for selecting funds committee members. This should be merit-based with minimum qualifications being first degree or equivalent. Committee members should demonstrate competence, integrity, ethics, governance and accountability skills, and strategic leadership. Project funds should be audited frequently in liaison with community social audit teams, and the audit findings made PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) public. 8 5 A single unit of development should be established at the local level to handle all the budgets. All devolved funds plus line ministry funds for the districts/constituencies should be consolidated to ensure consistency and harmony in the project implementation. 6 The district fund offices should be equipped and properly staffed to improve their capacity to deliver quality services . 7 The structuring of fund utilization should factor in cultural/ traditional practices such as nomadic lifestyles to ensure that men and women have equally participate in the project implementation. CHAPTER 1

INTRODUCTION

1.0 Background The amount of funds channeled from the Central Government through the line ministries and other devolved funds is exponentially increasing. It has been observed that weaknesses such as limited public oversight on existing resources, weak absorptive capacity, and mismanagement of the funds at the sub-national levels have not translated into desired PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) outcomes against poverty and inequality. 9 This study seeks to establish the problems or shortcomings in the allocation, utilization, absorptive capacity of selected districts and constituencies where ActionAid International Kenya (AAIK) operates. The study investigates the level of awareness, participation, accountability and transparency in the allocation and utilization of devolved funds, as well as impacts and challenges in the implementation of the funding projects. The study’s objectives are to: 1. Ascertain the allocative rationality presented at the National and sub-national levels. 2. Establish the absorptive capacities1 of districts, constituencies and counties. 3. Identify the impact(s) of 1 and 2 above on inequality, fund allocation and utilization in the targeted communities.

1.1 Scope of the study This study was limited to reviewing the utilization of line ministry and devolved fund budgets (CDF, LATF and CBF) in eight sampled districts namely Kuria, Busia, Mandera, Ijara, Narok, Baringo, Malindi and Tana River in, 2005/06 to 2008/09. It also seeks to establish the allocative rationality, absorptive capacities of the districts/constituencies and local authorities in the utilization of these budgets, and the amount of money returned to Treasury annually within the specified period.

The study gives an assessment of the impacts of the funds in the areas under study. It gives highlights the emerging trends and impacts of the funds on poor and marginalized, especially in promoting equity, better service delivery and pro-poor development. Lastly, it provides conclusions and recommendations on ways to improve the people social and economic conditions as established in the study.

1Absorptive capacity usually means the ability of a country or organization to receive aid and use it effectively. For example developing countries may receive enough money to enable all its children to attend primary school but owing to a lack of teachers, lack of schools or a poor administrative system, it is impossible to spend this money in the short term. Work must be done to train teachers, build schools and improve the efficiency of the system thus raising the country’s absorptive capacity (definition by European Union). 1.2 Theoretical perspectives The theoretical approach to this study is based on the concept of decentralization and participation. Devolution is one form of decentralization framework that lies within the continuum. Devolution has been defined as a process of transfer of political, administrative and fiscal management powers between central government and lower levels of government, primarily operating at city and regional levels (Potter, 2001).

Scholars such as Kibua and Germano (2008:335), Kimenyi S. M (2005), Wanjiru G,(2008) propound that the benefits of decentralized development funds include improving local economic development and poverty reduction through increased community participation in decision-making, improved governance, , improved equity in resource sharing, improved government response, improve the quality of government service delivery, enhanced accountability in fund administration , enhanced political equity from greater political participation, education and training in leadership skills.

PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) “The wisdom of Crowds” by Surrowiecki (2004) emphasizes the importance of participation by demonstrating how the combined intelligence and input of groups of people can create 10 optimum conclusions about whatever they want to do. He states that: “Often crowds like markets or other forms of collective thought are smarter than the individuals who participated in them. The community, like the markets, is made up of diverse people with different levels of information and intelligence and yet when you put all those people together, they come up with generally intelligent decisions.”

Emphasizing the importance of participation, Surowiecki argues that, under the right circumstances, groups are remarkably intelligent, are often smarter than the smartest people in them. According to this approach, it is believed that masses may be wiser than the professional elites in making allocation and distribution priorities based on local knowledge. Thus, central planners have neither the information nor the incentives to make good decisions compared with the knowledge and incentives of decentralized economic actors (the people at large).

2 Kibua N .T and Mwabu Germano, (2008) Decentralization and Devolution in Kenya, p 335 CHAPTER 2

METHODOLOGY

2.0: Study Design The design of this study used a multipurpose design with a combination of an evaluative comparative approach, using cross-sectional data at different levels of observation, and qualitative and quantitative approaches. The study aimed at ascertaining the allocative rationality at national and sub-national levels, establishing the absorptive capacities PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) of the sampled districts and identifying the funds impact(s) on inequality in the targeted communities. Data was collected on allocation, utilization, awareness of funds, public 11 participation in funds, accountability and transparency issues, operationalization of the funds, impacts of the funds, challenges in implementation of the funds, and respondents’ suggestions on the future use of the funds.

The study was taken in two phases; an extensive literature review was undertaken to come up with the list of instruments to be used and the indicators for assessing the allocation, utilization and absorption capacities of devolved funds and line ministry budgets of the sampled districts. The targeted literature included national line ministry and district budgets, financial reports on CDF and LATF at the national and constituency level. AAIK publications, and devolved fund publications.

The second phase included conducting field research in the selected districts to clarify the conclusions drawn, and collect additional information to fill the gaps that had been identified during the literature review. Primary data was collected from selected line ministries using key informants and conducting focused group discussions.

Key informants were identified through their roles in the district, local council and constituency development agendas. They constituted direct managers of the devolved funds and AIE official holders, District Commissioners, District Accountants, District Development Officers, District Education Officers, District Agriculture/Livestock/fisheries Officers, District Gender/ Women Officials, District Procurement Officers, District Youth Officers, District Medical Officers and Local Authority representatives.

Members selected to participate in Focus Group Discussions were the direct beneficiaries at the local levels. The groups comprised of not less than seven members and not more than twelve members, and consisted of village elders, councilors, and representatives of youth, women, men, Non-Governmental Organizations and religious organizations, who were randomly selected. 2.1 Sampling The survey was conducted in eight districts, sampled in regions where ActionAid Kenya operates. The sampled districts included Kuria (Kehancha), Busia (Budalangi), Mandera West (Takaba), Ijara (Masalani), Narok South (Ololunga), East Baringo (Tangulubei), Malindi (Lango Mbaya), and Tana River (Wenje). These districts have low agricultural yields, and food security is a major problem. A total of one hundred semi-structured questionnaires were used and fourteen focused group discussions were conducted. Their views on allocations, absorption and impacts of these funds were recorded and transcribed for analysis.

2.2 Data Analysis Both qualitative and quantitative approaches were incorporated in the data analysis. This allowed extraction of core themes related to the objectives and the overall goal of the study. The masses of data collected was cleaned, coded and was subjected to SPSS statistical analysis and interpretation. Processed data was presented in percentages, cross-tabulations, graphs and pie-charts. PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) 2.2.1 Definition of ratios 12 The study uses set regulations by the local Authorities and pre-determined utilization guidelines to assess financial performance of the devolved funds. These are expressed as ratios and percentages. They include:

LATF Personnel Ratio: This is the total planned personnel expenditure divided by total expenditures.

LATF Capital Ratio: This is the amount allocated for capital expenditure divided by the service delivery component of the LATF. For example, regulations in FY 2007-08 stipulated that this ratio should be at least 64%.

Civic Ratio: This is the total actual amount spent on civic expenditure divided by the total recurrent expenditure. It represents the proportion of the recurrent revenue that is being spent on councilors.

Local Revenue Performance Ratio: This is the total actual revenues collected divided by the planned local revenue. Thus a ratio of 50% means that the LA is only collecting one half or what they had budgeted.

Recurrent Expenditure Ratio: This is total actual local recurrent expenditure divided by the planned recurrent expenditures. Thus, ratio of less than 100% indicates that the LA spent less than planned.

Capital Expenditure Performance Ratio: This is total actual expenditures divided by the planned capital expenditure. Thus, a ratio of less than 100% indicates that the LA spent less than planned.

Debt Resolution Performance Ratio: This is the total debt resolution payments divided by the planned debt resolution payment. Thus, a ratio of less than 100% indicates that the LA spent less than planned. 2.3 Study Limitations During the study the following limitations were experienced:  Non-cooperation by some of the key informants in line ministries in fear of financial audits.  Unwillingness of key informants to participate in the study due to either lack of time or unknown reasons.  Language barriers in conducting focus group discussions.  Missing data due to incomplete questionnaires and unpublished annual reports: the current 2008/2009 LATF Annual report, was unavailable, while there are discrepancies in the CDF annual reports for the financial year 2007/08.

The strategies used to minimize these problems included;  Scheduled callbacks at convenient times.  Use of Government financial publications.  Use of language interpreters by the researchers.  Use of the convention of averages to extrapolate. PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009)  Making cross checks with various sources, where possible. 13 CHAPTER 3

ANALYSIS OF DEVOLVED FUNDS

3.0 Overview of devolved funds Kenya has several operational decentralized funds, which generally aim at reducing socio- economic disparities and improving the well being of citizens. For example in 2006, funds disbursed through CDF, LATF, the District Roads Fund, the Constituency Aids Fund, the Constituency Educational Bursary Fund and Free Primary Education3 amounted to Kshs.

PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) 32.54 billion.

14 3.1 Local Authority Transfer Fund (LATF) LATF was established in 1999 through the LATF Act4, with the objective of improving service delivery, financial management, and reducing the outstanding debt of local authorities (LAs). LATF comprises 5% of the national income tax collection in a year and currently makes up approximately 24% of local authority revenues. At least 7% of the total fund is shared equally among the country’s 175 local authorities, and 60% of the fund is disbursed according to the relative population size of the local authorities. The balance is shared out based on the relative urban population densities. LATF monies are combined with local authority revenues to implement local priorities.

3.1.1 Allocations and Rationale The allocation criterion is designed to ensure that funds are allocated in a predictable, transparent and fair manner as follows;  A basic minimum lump sum of Kshs 1.5 million to all local authorities (6.6%).  Sixty percent allocated on the relative population of each local authority (60%).  The remaining 35.4% of LATF funds are allocated subject to LA meeting the performance account criteria.

LATF allocations are based on the formula below; LATF amount in region (X =Kshs 1.5 million + (60 percent) x Total National LATF Allocation budget) x population (X/total population)) + (33.4 percent x Total National LATF Allocation budget x urban population (X)/total population.)5

To access the LATF funds by LAs, all LAs must prepare a revenue enhancement plan, a debt resolution plan, and a Local Authority Service Delivery Action Plan (LASDAP). The LASDAP specifies prioritized projects and activities for which government and municipal funds should be disbursed. All LAs must formulate these plans in consultation with their local communities.6 This promotes community participation in the local planning process and ownership of programs and projects.

3 Kenya Republic, (2007) The Vision 2030 Government Printers Nairobi. 4LATF ACT number 8 of 1998 5Kibua et al (2008) pg 171 6 Republic of Kenya, 2001 3.1.2 National LATF Allocations The amount distributed through LATF has steadily increased nationally over the years from Kshs. 1 billion in FY 1999/2000, to Kshs 9.25 billion in FY 2007/20097 as presented in Table 3.1 and Figure 3.1 below.

Table 3.1: National LATF Allocations

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Year /2000 /01 /02 /03 /04 /05 /06 /07 /08 /09

Amount in 1 2.3 3 3 3.75 4 5 7.5 8.25 9.25 billions

Source: LATF Annual Report Financial Year 2007/2008

Figure 3.1: National LATF allocation trend

) . s

h 10 PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009)

Ks 8 ( s 6 15 KSHs in Billions illion 4 B 2 0 ount in in ount

0 1 2 3 4 5 6 7 8 9 Am /200 /200 /200 /200 /200 /200 /200 /200 /200 /200

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Finanacial Years

Source: Analysis of LATF Annual reports FY 2005/06 to 2007/08

3.1.3 Local LATF allocations Allocations of LAs for the periods 2005/06, 2006/07 and 2007/2008 are presented in Table 3.2 and Figure 3.2 below. The total budgeted allocations for the eight local authorities in the three financial years were Kshs 200,286,540, 200,286,540 and Kshs 321,682,224 million respectively. This is an average 60.6% increase in the years under review.

Table 3.2: Percentage change in LATF allocations

2005/2006 2006/2007 2007/2008 LGID LATF LATF LATF % change 211 KEHANCHA M.C 21,044,682 21,044,682 31,038,462.00 47.5 601 NAROK COUNTY 36,331,515 36,331,515 59,058,348.00 62.6 401 MALINDI COUNTY 19,825,383 19,825,383 31,854,102.00 60.7 61 BUSIA COUNTY 30,729,167 30,729,167 49,895,895 62 143 IJARA COUNTY 8,043,538 8,043,538 12,296,901.00 52.9 786 TANA RIVER 25,186,479 25,186,479 41,050,928.00 63 411 MANDERA COUNTY 30,502,305 30,502,305 50,038,292.00 64 16 BARINGO CC 28,623,471 28,623,471 46,449,296.00 62.3 Source: Analysis of LATF Annual Reports 2005/06-2007/08

7Annual Report Financial Year 2007/2008 Figure 3.2: LATF allocation trends

. 70,000,000 s h 60,000,000 Ks 50,000,000 2005/2006 LATF in in 40,000,000 ts

n 2006/2007 LATF 30,000,000 m o 20,000,000 2007/2008 LATF

Am 10,000,000 0

C Y Y Y Y R Y C . T T T T M T C A UN UN UN UN IVE UN O O R GO O O A O N C C C C N C I NCH I A A R A OK R TA R H R IND SIA E BA A L U IJA KE N A B ND M A M LAs

Source: Analysis of LATF annual Reports 2005/06-2007/08

Utilization and absorptive capacity

PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) The utilization of LATF funds is based on set regulations by the Local Authorities.8 A number of regulations in LATF administration are based on the planned expenditures other than 16 actual expenditures. Expenditures are apportioned under recurrent expenditure, capital expenditure, loan repayment and debt resolutions. Recurrent expenditure consists of the amount spent on personnel, operations and maintenance. Civic expenditures are presented separately and include expenditure on personnel, operations, the civic department and maintenance costs for the councilors. LAs are required to spend at least 50% of the service account money on capital expenditure and at most 60% of their total expenditure on salaries. Spending more than this threshold is regarded as not allocating enough for development of their areas per se. The ratios derived as percentages of utilization are the measures of absorptive capacities.

Capital Expenditure9: The capital projects section is split into two components –those capital projects reported by the LA as implemented during the current year and those that the LAs include in their estimates as projects to be implemented during the following year. The assessment of capital expenditure is calculated by using two ratios, average LATF capital (ALCR)10 and average capital expenditure ratio (ACEPR)11. See table 3.3 below:

Table 3.3: Average LATF capital and Capital expenditure ratio

LA Baringo Busia Ijara Kehancha Malindi Mandera Narok Tana River

ALCR 32.z6 31.7 39.5 37.8 44.3 41.2 72.2 37.9

ACEPR 74.2 74.8 63.5 127.9 111.9 79.7 77.6 63

Source: Analysis from LATF annual reports 2005/06-2007/08

8 LATF Act No. 8 of 1998 9Capital expenditure is same as Development Expenditure. 10ALCR-Average LATF capital ratio= Average total planned projects/LATF service delivery. 11ACEPR-Average capital expenditures performance ratio= Average total actual capital expenditure / Planned capital expenditures Figure 3.3: Average LATF Capital Ratio and Capital Expenditure Performance Ratio

140 120 n 100 80 ALCR 60 ACEPR 40 % utilisatio % 20 0 r ty a ty

coun coun county Kehanch Tana Rive Ijara county Busia Narok Malindi Baringo County Mandera county Local authority

Source; Analysis from LATF annual reports 2005/06-2007/08 PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) On average capital expenditure utilized about 84.1 % of the total LATF budgetary resources available in 2004/05 to 2007/08 in the eight local authorities under study. Capital expenditure 17 performance ratio is the total actual expenditure divided by planned expenditure thus a ratio of less than 100% indicates that the LA spent less than planned. Over the review period, absorption capacity of most LAs on capital projects has been below the set margin of 100% according to LATF regulations except Kehancha and Malindi with an ACEPR of 127.9% and 111.9% respectively, (See Table 3.3 and Figure 3.3 above).

Expenditure on personnel These includes all salaries, wages, allowances and benefits paid to officers and councilors of the LA and all salaries and wages, allowances and benefits paid to any contractor providing capital services or a consultant providing services directly to the public under contract with the LA. Civic expenditures represent the personnel, operation and maintenance costs for the councilors in allowances, meetings fees, and transport, among others. See Table 3.4 and Figure 3.4 below for the average LATF personnel ratio.

Table 3.4: Average LATF Personnel Ratio

L.A BARINGO BUSIA IJARA KEHANCHA MALINDI MANDERA NAROK TANA RIVER

ALPR % 52.5 48.3 38.2 52 41.7 33.4 51 40

Figure 3.4 Average LATF Personnel Ratio 60 50

% 40 30 ALPR 20 ALPR ALPR 10 0 r ty ty a ty ty ty oun Rive Coun coun coun coun c Kehanch ana Ijara T Busia county Malindi Narok Baringo Mandera LA

Source: Analysis from LATF annual reports 2005/06-2007/08 Personnel expenditure utilized about 44.6 % of the total LATF budgetary resources available in 2004/05 to 2007/08 in the eight local authorities under study. Personnel expenditure ratio is the total planned personnel expenditures divided by total expenditures. Thus a ratio of less than 60 % indicates that the LA spent less than planned.12 Over the review period, absorption capacity of most LAs on personnel expenditures have been below the set margin of 60 % according to LATF regulations as shown in Table 3.4 and Figure 3.4.

The personnel expenditures constitute a significant proportion of LAs expenditures. The analysis of the 2005/2006 and 2007/2008 annual reports shows that the lowest and highest paid employees are in Kehancha and Ijara earning an average Ksh. 11,658 and Ksh. 45,501 per month respectively, as shown in Table 3.5 and Figure 3.5.

Table 3.5: Average monthly pay per employee

L.A Baringo Busia Ijara Kehancha Malindi Mandera Narok Tana River

Av.Salary

PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) 23,723 14,902 45,501 11,658 20,649 16,262 17,081 24,321 /Month ksh.

Source: Analysis from LATF annual reports 2005/06-2007/08 18

Figure 3.5: Average salary per month

. 50000 40000 Kshs

30000 A S/M 20000

AMOUNTS 10000 0 I O IA A A K R S Y R Y HA Y ND Y R Y O Y E Y NG Y U T A T C T T T R T IV T I T IJ LI A R R B A N A M B OUN OUN OUN OUN ANDEOUN OUN OUN OUN EHAN M ANA C C C K C C C C T C

Source: Analysis from LATF annual reports2005/06-2007/08

The disparity in salaries is as a result of the differences in the number of employees and amounts allocated to salaries. Kehancha has 110 employees while Ijara has only 6 employees.

Data from the LATF annual reports summarized in Table 3.5 above on personnel ratio, indicate that all LAs adhered to this regulation during the review period. The 8 LAs planned to spend an average of 44.6% expenditures on personnel. Further analysis on personnel costs using combined actual personnel expenditure of LAs, (AESTR)13 indicate that during the financial years 2005/06 to 2007/08 shows that all the LAs adhered to the regulation.

12 LATF regulation on personnel expenditures requires all LAs to have adjusted their expenditure on a high level of 75% in 1999/2000 to utmost 60% by 2003 of the total authority expenditure. 13 AESTR- average expenditure on salaries % of total revenue Table 3.6 Average total capital, salaries and recurrent expenditures to average total revenues

LA ARETR ACETR AESTR

Baringo County 77.8 19.3 41

Busia county 63.1 21.5 25.6

Ijara county 71.1 17 22.1

Kehancha 62.1 29.7 28.8

Malindi county 58.1 25.7 19.2

Mandera county 56.9 28.6 14.7

Narok county 88.1 5.4 31.2

Tana River 50.1 19.9 20.5

Source: Analysis from LATF annual reports 2005/06-2007/08 PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) Figure 3.6 Average total capital, salaries and recurrent expenditures to average total revenue (n=8) 19 100 90 80 70 n 60 ARETR 50 ACETR utilizatio 40 AESTR of

% 30 20 10 0 r ty ty a ty ty ty Rive Coun coun coun coun coun Kehanch ana Ijara T Busia county Malindi Narok Baringo Mandera Local authorities (LA)

Source: Analysis from annual LATF financial Reports.

Figure 3.6 shows the relationship between the total expenditure on capital, salaries and recurrent expenditure on the total revenue. On average recurrent expenditures and expenditure on salaries in most LAs take a larger portion of the total revenue as compared to the revenues allocated to the capital expenditure (service delivery).

On average all the LAs spent 21% of their total revenues on capital expenditure/service delivery (ACETR),14 with the better performers in service delivery being Kehancha Municipal Council, Mandera County and Malindi County with absorptive capacities of 29.7%, 28.6% and 25.7% respectively. Poor performers were recorded in Narok County, Ijara and Baringo Counties with absorptive capacities of 5.4%, 17% and 19.3% respectively. This could be due to poor revenue collection, drought or misappropriation of funds that affect set targets.

14ACETR- average capital expenditure % of total revenue On average all the LAs spent 65.9% of the total revenues on recurrent expenditure (ARETR).15 Narok County recording highest of 88.1%, followed by 77.8%, Ijara County 71.1%, Busia County 63.1% and lowest recorded by Tana River with 50.1% as shown in Table 3.6 above. Generally, this reveals that what authorities plan to collect and spend and what they actually collect and spend is different. Regulation on capital expenditure is flawed as it is based on planned expenditures rather than actual expenditures.

Table 3.7: Average total capital, salaries and recurrent expenditures to average total revenues

20005/2006 2006/2007 2007/2008 ITEM Kshs. Kshs. Kshs.

LATF 200,286,540 295,653,058 321,682,224

RECURRENT EXP. 669,577,820 807468913 904110582

CAPITAL EXP. 74,995,458 130097527 150369191 PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) DEFICIT/SURPLUS 115,936,079 310,064,997 207380696

20 REVENUES 785,513,899 1,117,533,910 1,111,491,278 Source: Analysis from LATF annual reports 2005/06-2007/08

Figure 3.7 LATF and Capital Expenditure trends (n=8) )

s 350000000 h 300000000 Ks ( (

s 250000000 200000000 LATF 150000000 CAPITAL EXPEND 100000000

ount in Million in ount 50000000

Am 0 20005/2006 2006/2007 2007/2008 Financial years

Source: Analysis from LATF annual reports 2005/06-2007/08

Figure 3.7 shows an increasing trend between the LATF and Capital expenditure. The increase in the LATF allocation to LAs leads to an increase in the capital expenditure at almost the same rate.

Figure 3.8 Recurrent expenditures, revenues and balances trends

) 1,200,000,000 1,000,000,000

800,000,000 RECURRENT EXP 600,000,000 REVENUES 400,000,000 DEFICIT/SURPLUS 200,000,000 0 Amounts in millions (Kshs millions in Amounts 20005/2006 2006/2007 2007/2008 Financial Years

Source: Analysis from LATF annual reports2005/06-2007/08

15ARETR- average recurrent expenditure percent over total revenue According to the LATF Act, there is consensus that all LAs are to repay outstanding loans by the year 2010. From Figure 3.8 it can be concluded that since 2006/2007 financial year; the trend on deficits is decreasing to a minimum.

Fiscal authorities’ deficits and surplus Uncommitted deficits/surpluses represent the amount remaining with LA after paying recurrent expenditures, the capital expenditures, the loan repayments and debt resolution repayments. If positive, it is a saving that can be carried forward, while a negative is an increase in debt. Table 3.8 is a summary of deficits/surpluses of the eight LAs:

Table 3.8 Summary of deficits/surpluses

ADS ( Average Deficit/Surplus) L. A 2005/2006 2006/2007 2007/2008 Total Average Baringo County -11,045,996 134,298 2,520,830 -8,390,868 -2,796,956 Busia county 5,926,479 3,458,918 -5,656,321 3,729,076 1,243,025 Ijara county 605,800 -4,517,610 1,576,014 -2,335,796 -778,598.66 PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) Kehancha 4,296,976 -5,472,906 -537,850 -1,713,780 -571,260 Malindi county -346,995 9,828,060 11,021,953 20,503,018 6,834,339.33 21 Mandera county -211,363 -7,190,335 -3,046,703 -10,448,401 -3,482,800.33 Narok county -23,104,549 57,560,225 -46,411,139 -11,955,463 -3,985,154 Tana River 13,971,708 11,545,344 8,908,197 34,425,249 11,475,083 Source: Analysis from LATF annual reports 2005/06-2007/08

Therefore, Baringo, Ijara, Kehancha, and Narok counties had deficits within the three financial years. This means that these LAs did not cover all their expenditures within the three years thus increasing their indebtedness and inefficiency in service delivery. Interviews with some respondents revealed that there were underlying problems as implied below:

Councilor Takaba “LATF is only known to the treasurer and town clerk, as they are the only ones who use these funds. I have only seen the LATF money once, we applied for 2 million but we got only 1 million shillings. We collect about 600,000 to 700,000 shillings monthly, but I never know where it goes”. Note that the cess collectors are the most corrupt and they are the ones who are building houses here in Takaba .There is usually no money left in the accounts. Backdated cheques are common here in Takaba and many of them are fraudulent. So when LATF money comes it is swept away to pay suspicious debts. The officers don’t even reside here but are in Nairobi as we speak, but as soon as the money comes, they will be here to share the money. Let me ask you people…If we have to pay a transfer allowance of 700,000 shillings to one officer who has been transferred, where are we headed? The clerks are paying themselves five months salary advances, do you expect balances then?”

The study revealed that the LAs face similar challenges which include lack of timeliness and adequacy of funds and resources, weak legal and technical framework for accounting of funds and resources. In addition, there is a lack of qualified technical personnel, political interference, weak legal and institutional framework for running the fund and lack of technical capacity for fund management. There is also corruption and lack of accountability in revenue collection, difficultly in monitoring budget implementation . 3.2 Constituency Development Fund (CDF) CDF was established in 2003 through the CDF Act.16 The fund aims to control imbalances in regional development brought about by partisan politics. It targets all constituency-level development projects, particularly those aiming at combating poverty at the grassroots. The fund comprises an annual budgetary allocation equivalent to 2.5% of the government’s ordinary revenue. A motion seeking to increase this allocation to 7.5% of government revenue was recently passed in Parliament. Seventy five percent of the fund is allocated equally amongst the 210 constituencies. The remaining 25% is allocated according to constituency poverty levels.

3.2.1 Allocations and Rationale The rules and regulations defining the operations of the fund are contained in the CDF Act. Allocations to respective constituencies are guided by the formula below:

CDF Allocation = (0.75 by CDF) divide by 210) + (0.25 by CDF) by WCP) where CDF is the total allocation less (3% administration costs + 5% for emergency) WCP is the constituency PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) contribution to national poverty.17 22 3.2.2 National CDF allocations The CDF allocation trend shows that there was a gradual increase in allocation from Ksh. 1,260,000,000 in 2003/04 to Ksh. 9,797,000,000 in 2007/08.18 This is a 677% increase in 5 years from its inception in 2003. This shows that the larger percentage of GDP is channeled to this fund as shown in Table 3.9 and Figure 3.9. This large amount of funds shows government commitment to meet its development targets through decentralized funds.

Table 3.9: National CDF allocations

Year 20003/2004 2004/2005 2005/2006 2006/2007 2007/2008

Amount 1,260,000,000 5,431,999,997 7,028,619,994 9,736,860,002 9,797,000,000 allocated

Source: Analysis of data from CDF secretariat.

Figure 3.9 National CDF allocation trend

12,000,000,000

10,000,000,000 s h 8,000,000,000 Ks

in 6,000,000,000 AMOUNT ALLOCATED ts

oun 4,000,000,000

Am 2,000,000,000

4 5 6 7 8

2003/200 2004/200 2005/200 2006/200 2007/200 Financial Years

Source: Analysis of data from CDF secretariat.

16 The Kenya Gazette Supplement No. 107, (Act No. 11) of 9th January 2004. 17Individual Constituency allocation based on poverty levels is obtained by dividing 25% of the annual national fund by the national poverty index multiplied by the constituency poverty index. 18CDF Secretariat 3.2.3 Local level Allocation and balances Table 3.10 and Figure 3.10 show the funds allocated and disbursed for the period between 2005/06 and 2008/09.The funds are allocated to particular projects within the constituencies and cannot be reallocated to other projects. In the event a given project is cancelled or discontinued, such funds must be returned to the fund and credited to the constituency’s account. At the end of every financial year all receipts, savings and accruals to the fund as well as balances are retained and cumulated for the following year.

Table 3.10: Constituency Allocation Schedule

CDF allocation schedule for the financial years 2005/2006, 2006/2007/, 2007/2008 and 2008/2009

% of Constituency 2005/2006 2006/2007 2007/2008 2008/2009 TOTAL Allocation

Budalangi 30,007,045 41,569,241 41,825,994 51,057,944 164,460,224 12

Baringo East 29,865,861 41,373,656 41,629,202 50,817,715 163,686,434 12 PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) Kuria 40,335,481 55,877,389 56,222,517 68,632,107 221,067,494 16

Narok South 38,521,771 53,364,827 53,694,437 65,546,022 211,127,057 15 23

Galole 29,359,133 40,671,678 40,922,888 40,922,888 151,876,587 11

Malindi 37,931,439 52,547,030 52,871,589 52,871,589 196,221,647 14

Mandera West 31,132,673 43,128,591 43,394,976 43,394,976 161,051,216 11

Ijara 28,373,651 39,306,474 39,549,252 40,934,307 148,163,684 11

Total 265,527,054 367,838,886 370,110,855 414,177,548 1,417,654,343 100

Source: CDF secretariat.

Figure 3.10 CDF Allocations (n=8)

Mandera West Ijara 11% 11%

Budalangi 12% Malindi 14%

Baringo East Galole 12% 11%

Narok South Kuria 14% 15%

Source: Analysis of Table 3.10

Figure 3.10 shows a tendency towards equal distribution of CDF funds at the local level. However, Kuria, Narok South, and Malindi have a higher share of the pie with 16%, 15% and 14% respectively. The rest have an average of 11.4%. This is due to the fact that population and poverty levels are key determinants in the allocation procedure. Figure 3.11: CDF allocation trends since 2005/06 to 2008/2009

80,000,000 70,000,000 60,000,000 2005/2006 50,000,000 2006/2007 40,000,000 2007/2008 30,000,000 20,000,000 2008/2009 10,000,000 0

i t a h e i t a jar Kuri alol I G Malind Budalang Baringo Eas Narok Sout Mandera Wes

Source: CDF secretariat

PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) Table 3.11 e shows the variance in CDF allocations for the four financial years in the selected constituencies. 24 3.2.4 Utilization and absorptive capacity According to the CDF Act, expenses for running constituency project offices should not exceed 3%, 2% environment, bursary 15%, sports 2%, CDFC vehicle 3%, M&E 2% and others share 68% of annual constituency allocations. Each constituency is required to set aside 5% as an emergency reserve. Figure 3.12 below is a breakdown of pre-determined utilization schedule of CDF funds by constituencies. The ratios derived as percentages of utilization are the measures of absorptive capacities.

Figure 3.12: Break down of CDF pre-determined utilization after the Amendments of the Act 2007

Administration Emergency 3% 5%

Bursary 15%

sports 2%

others Environmental 68% 2% M &E 2%

CDFC Vehicles 3%

Source: CDF Secretariat

The pre-determined 32% of annual allocations of CDF funds is utilized in accordance to the guidelines outlined in the amended CDF Act of 2007, while 68% that falls under others is subject to communities identifying, prioritizing, implementing and managing projects in education, health, water, agriculture, roads/bridges and security. Table 3.11 shows the in CDF expenditure analysis using the Medium Term Expenditure Frame Work (MTEF) as shown in Appendix 3. The education sector absorbed the largest share of total sectoral expenditure of 44% between 2005/06 and 2008/09, Water- 10.36%, Health-10.25%, roads/bridges 6.39% and others-(-7.73%-.

Table 3.11: CDF Expenditure Analysis by Medium Term Expenditure Framework

Malindi Galole Ijara Mandera Baringo Narok Budalangi Kuria SECTORS % % % % % % % % Total % Aver. %

Administration 1.69 2.8 2 2.80 2.80 3.00 2.90 3.00 20.99 2.62

Emergency 4.09 5.8 4.1 5.40 5.60 4.30 5.7 4.10 39.09 4.90

Bursary 10.88 9.9 9.1 7.90 10.00 5.40 2.90 6.40 62.48 7.80

M &E 1.94 1.8 0.8 1.10 1.50 0.70 0.70 0.70 9.24 1.20

Recurrent 0.0 0.7 0.00 0.00 0.00 0.00 0.20 1.10 2.0 0.25 Expenditure PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) Sports 0.24 0.4 0.6 0.00 0.70 0.00 0.00 0.00 1.94 0.20

Environment 0.0 0.4 0.8 0.40 0.00 0.00 0.40 0.10 2.1 0.26 25

Education 24.91 36.2 44.10 41.50 43.30 45.60 55.10 61.30 352.01 44.00

Health 10 24 6.20 2.80 6.80 7.80 12.30 12.10 82 10.25

Water 4.45 5.4 2.40 34.30 10.30 22.60 3.30 0.10 82.85 10.36

Agriculture 5 0.0 1.30 0.00 9.30 0.80 6.90 0.00 23.3 2.90

Roads/ 9 0.0 23.20 2.10 4.30 6.40 1.8 4.30 51.1 6.39 Bridges

Others 27.8 12.6 4.60 1.70 4.20 2.70 6.8 1.40 61.8 7.73

Security 0.0 0.0 0.80 0.00 1.20 0.70 1.00 5.40 9.1 1.14

100.00

Source: Analysis of Data from CDF secretariat

For ease of a comparative analysis the sampled eight constituencies were split into two regions (1 and 2). Region 1 comprised of Malindi, Galole, Ijara and Mandera while Region 2 comprised of Baringo East, Narok South, Budalangi and Kuria.

Figure 3.13: Utilization trends Region 1 Per sector utilization on priority areas in Malindi,Galole,Ijara and Mandera West 50 45 40

n 35 Malindi 30 Galole 25 20 Ijara utilizatio 15 % Mandera 10 5 0 n y y e s t n h r e s y E t t te & tur tio a tur M por S Heal W Bursar /Bridge OthersSecurit Educa Emergenc xpendi Agricul t E Environmen Administratio Roads

Recurrenc Sectors

Source: Analysis of data from CDF Secretariat Key sectors like agriculture, water, health, roads, sports and environment had low attention in terms of prioritization. Utilization of CDF funds in Malindi Constituency reveals that on average Malindi has observed the minimum CDF regulations of allocating these funds. The education, agriculture, water, and health sectors utilized about 24.9 %, 5%, 4.4% and 10% respectively of the total CDF budgetary resources made available in the review period. The prioritization criteria is, however, questionable in terms of livelihoods in the districts with 63% of its people living in absolute poverty , 76% are rural poor and 68% do not have enough to eat while 20.3% of the population is employed in agriculture and livestock sectors19.

Galole constituency utilized a larger proportion of about 36.2 % of CDF allocation on education, within the review period. This is within the regulation of not apportioning more than 50% in one sector. Water, agriculture, roads and environment only received 5.4%, 0%, 0% and 0.4% respectively despite being classified under ASAL (arid and semi arid lands).Agriculture is the largest source of employment in the district, absorbing 82.3% of

PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) the working population and providing food, thus reducing poverty, which has increased from 42% in 2006 to 83% in Galole 200920. 26 Ijara utilized a larger portion of CDF funds (44.1 %) on education within the review period. This is higher compared to that of Malindi and Galole. Also, a substantial amount of money was utilized in roads, agriculture and water, that is, 23.2%, 1.3% and 2.4 % respectively.

Mandera West on average utilized 41.50% on education, 34.3% on water, 2.8% on health, 0 % on agriculture and 2.1% on roads. Agriculture was not allocated any funds due to extreme drought hence lack of water to develop the agricultural sector. Feasibility studies and research on improving the livelihoods of people in Mandera are paramount to interventions on poverty: agriculture and rural employment have to be considered because these sectors employ 10% and 13% of the populace respectively. In 2009 the proportion of people living below the poverty line was 90% compared to 60% in 2006, an increase of 30% despite resources like CDF and LATF being channeled to the district21.

Figure 3.14: Utilization trends Region 2

Per sector Utilization in priority areas in Baringo East, Narok South,Budalangi and Kuria 70.00

60.00

50.00 n Baringo 40.00 Narok South 30.00 Budalangi utilizatio

% Kuria 20.00

10.00

0.00

n y y e s t n h r e s y E t t te & tur tio a tur M por ursar S Heal W Others B /Bridge Securit Educa Emergenc xpendi Agricul t E Environmen Administratio Roads

urrenc c Sectors Re

Source: Analysis of data from CDF secretariat

19 Malindi District Development Plan, 2009 20 Tana River District Development Plan, 2009, 21Mandera District Development Plan 2009 The CDF allocations in Baringo East Constituency indicate that Education, Health, Water and Agriculture sectors utilized 43.3%, 6.8%, 10.3% and 9.3% respectively. A large portion was allocated to education while agriculture . Despite an increase in the allocation in CDF and LATF, the number of people living below the poverty line has increased from 56% in 2006 to 73% in 2009 Baringo East has incidences of poverty is widespread and evenly distributed. The most affected people are pastoralists, small-scale farmers, female-headed households, people with disabilities, the landless and children. Agriculture, which employs 58.6% of males and 61% females,22 should get increased fund allocation.

Narok South constituency, on average utilized 45.6% on education, 22.6% on water, 6.4 % on roads and bridges. The region has agricultural potential particularly commercial wheat farming, more funds should be apportioning in agriculture rather than the meager 0.8% In Budalangi Constituency, the education sector was apportioned more than the required minimum of 50% in one sector, but instead utilized about 55.1% thus violating the same regulation. Emergency portion it is slightly more by 0.7%. However, Budalangi is flood prone thus requires reasonable amounts for emergency preparedness. Roads, agriculture, PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) and water utilized 1.8%, 6.9% and, 3.3% respectively. Despite the district being endowed with fertile land and adequate rainfall, there are high poverty incidences with marginal 27 reduction from 70% in 2006 to 69% in 200923

Kuria Constituency utilized an average of 61.3% in the education sector which is against CDF regulations within 2005/2006 to 20008/2009. No amounts have been utilized in agriculture, yet it is a region with a high agricultural potential where the larger portion of the population is employed. Allocation on security is higher at 5.4% as compared to other constituencies. This is in line with security problems in the area.

Figure 3.15: Aggregate percentage composition of total sectoral utilization

Security Administration Others 1% 3% Emergency 8% Roads/Bridges 5% 6% Bursary 8% Agriculture M &E 3% 1%

Recurrenct Water Expenditure 10% 0%

Sports 0% Environment 0% Health Education 10% 45%

Source: Analysis of data from CDF secretariat

Problems experienced in fund management

CDF There is inadequate technical capacity for managing the funds and their activities, and local project committees are the most affected because most of their members are illiterate. This is due to lack of capacity building and training. Other problems include:

22Baringo District Statistical Office-2008 23Busia Development Plan 2009  Inadequate funding and delays in disbursement of funds.  Political interference in committee setup, some staffs are political appointees who complicate operations.  Weak legal and institutional framework for accounting of funds and resources. Most accounting procedures are done manually by locals who lack prerequisite skills. This leads to misappropriation and embezzlement of funds.  Conflicting policies- that is the criteria followed in awarding CDF bursaries verses Ministry Bursaries.  Flawed procurement procedures.  Difficulty in identifying priority projects in case of multiple priorities.  Over dependency by communities on CDF; communities have the attitude that CDF is free money from the government.

There are lessons to learn from the case study below :

PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) “Money allocated 4 years ago was released last year 2009; this is because Galole CDF account was frozen. A lot of irregularities and corruption led to this because of the 28 MP’s personal assistant’s mistakes in contract procurement. The National Monitoring Committee and Kenya anticorruption had to be brought in to examine. There is a pending court case in which the contractor Tana River Investments LTD of Mr. Kaseme is liable. The contractor did a substandard job at the cost of kshs 6.9 million. We are told the initial project of the health center was Kshs 3.4 million but the actual amount paid out according to records is Kshs 6.9 million, 6 years have passed for the dispensary to be completed. The dispensary is deplorable and the community here is not ready to use it because it was condemned by the ministry of works and health officials and the DC. Furthermore we were not involved. The committee that we had elected to be in charge of this project was dismissed before the project was over because they opposed decisions between the contractor and the district committee. In Galole constituency, the CDF money benefits one person – a person in the office and a contractor. Wearenot free to discuss this because we might be victimized. “They have the power to decide” We have to bribe to get CDF money by parting with 10% of the project money before we get things done. We have been chasing for 500,000/= for our farms but never succeeded because we do not have the 10%.”

CBF The problems experienced in the administration of the CBF include:

 Fund inadequacy and delays in disbursement. Weak legal and institutional framework of accounting for funds.  Lack of transparency in selection criteria of needy beneficiaries.  Lack of allowances for administration purposes.  Difficulty in disbursing cheques especially when students transfer to other schools.

3.3 General findings on devolved funds The level of awareness on these funds varies from one district to another depending on their impact at the grass root level. About 97%of the respondents were aware of CDF followed by Njaa Marufuku (88%), CBF (63%), and LATF (47%) and Arid Lands 33%. However, in Narok South LATF scored 100% in terms of awareness because of the best practice of the council using an additional 19% of its total revenue for service delivery in the county. See summary in Table 3.12.

Table 3.12: Awareness levels of devolved funds

Name of CDF LATF CBF NJAA M ARID LANDS Constituency

Budalangi 100% 57% 100% 100% 0 Mandera West 100% 33% 44% 100% 100% Baringo 100% 50% 58% 100% 100% Ijara 100% 41% 65% 100% 0 Kuria 73% 20% 33% 0 0 Galole 100% 50% 75% 100% 0 Narok South 100% 100% 100% 100% 100 Malindi 100% 24% 28% 100% 0

Average % 97% 47% 63% 88% 38% PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009)

Source: Focused group discussions analysis 29

Fund utilization When respondents were asked if the budgets have been true to their objectives in the manner in which they have been operationalized, 81.2% were satisfied by the way CDF is utilized, with 18.7% partially concurring with them. On LATF only 23% of those interviewed felt the funds were operationalized to their objectives, 38.5% failed to agree and 38.5% agreed partially. On CBF, 45.5% of the respondents agreed that the funds were operational to their objectives, 9% disagreed and the remaining 45.5% agreed partially. See Figure 3.16.

Figure 3.16: Fund operationalization

Source: Key informant interviews

Project Initiation From the survey 63%, 22.2% and 14.8% of the respondents felt that CDF projects are initiated by the community members, local Members of Parliament and local councilors respectively. While 45.4%, 31.8%, 18.2% and 4.5% of projects in LATF are initiated by Community members, Local councilors, Local authority officials and District officials respectively. Further, 45.4%, 18.2%, 18.2% and 18.2% of projects funded by CBF are initiated by Community members, MPs, Local councilors and District officials respectively.

Figure 3.17 represents the level of satisfaction of the respondents on processes involved in initiating projects financed through CDF, LATF and CBF.

Figure 3.17: Satisfaction Levels in project initiation

PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) CDF LATF CBF Very satisfied 66.7 35.7 50 30 No opinion 11.1 28.6 25 Dissatisfied 22.2 28.6 25 Very dissatisfied 0 7.1

Source: Key informant interviews

Tables 3.13, 3.14and 3.15 represents the levels of satisfaction with public participation, availability of information, awareness, decision sanctioning, relevancy of funds to projects, accountability and transparency.

Table 3.13: Opinions on CDF

Strongly Agree No Disagree Strongly Do not Statement agree % % opinion% % disagree% know%

Transparency on funds 38.9 50 0 11.1 0 0

Sufficiency of 55.6 38.9 0 0 5.6 0 information

Relevancy of funds in 44.4 55.6 0 0 0 0 projects

Clarification of things 41.2 47 0 11.8 0 0 from bodies

Decisions taken are 29.4 47 11.8 11.8 0 0 satisfactory

Decisions within 47.1 41.2 0 5.9 5.9 0 respective mandate

Ability to sanction decisions against fund 29.4 41.2 11.8 17.6 0 0 mandates

Mechanisms exist to sanction actions/ 41.2 41.2 11.8 5.9 0 0 decisions against fund mandate

Source: Key informant interviews

Table 3.14: Opinions on LATF

Strongly Agree No Disagree Strongly Do not Statement agree % % opinion% % disagree% know%

Transparency on funds 21.4 35.7 14.3 21.4 7.1 0

Sufficiency of information 21.4 35.7 7.1 21.4 14.3 0

Relevancy of funds in 14.3 64.3 14.3 0 7.1 0 projects

Clarification of things from 7.7 53.8 23.1 0 15.4 0 bodies

Decisions taken are 15.4 38.5 7.7 30.8 0 7.7 satisfactory

Decisions within respective 23.1 46.2 0 15.4 7.7 7.7 mandate

Ability to sanction PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) decisions against fund 7.7 23.1 7.7 46.2 15.4 0 mandates 31

Mechanisms exist to sanction actions/decisions 15.4 30.8 7.7 30.8 15.4 0 against fund mandate

Source: Key informant interview

Table 3.15: Opinions on CBF

Statement Strongly Agree No Disagree Strongly Do not agree % % opinion% % disagree% know%

Transparency on funds 12.5 50 12.5 25 0 0

Sufficiency of information 37.5 25 12.5 25 0 0

Relevancy of funds in 25 50 25 0 0 0 projects

Clarification of things from 25 37.5 25 12.5 0 0 bodies

Decisions taken are 25 37.5 25 12.5 0 0 satisfactory

Decisions within respective 28.6 42.9 14.3 14.3 0 0 mandate

Ability to sanction decisions 42.9 14.3 14.3 28.6 0 0 against fund mandates

Mechanisms exist to 28.6 14.3 42.9 14.3 0 0 sanction actions/decisions against fund mandate

Source: Key informant interviews

Impact of the funds

CDF Figure 3.18 summarizes responses given by respondents from different constituencies on the impacts of CDF. Figure 3.18

Improved Increased livelihoods enrollment in schools 7.5% 7.5% Construction of learning institutions 15%

Enhanced service delivery 25%

Improved health 25%

Retention and completion in schools 17.5% Achievement of CDF objective 2.5%

PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) Source: Key informant interview

32 From the analysis above, 25% acknowledged that there has been improved health services mainly through construction of health centers in areas that were previously neglected and acquisition of ambulances, while 17.5% acknowledged increased enrolment, retention and completion of school by students through construction of classrooms, laboratories, purchase of desks as well as supporting and equipping youth polytechnics. Twenty five percent noted an improvement in service delivery where community largely benefits from access to water and irrigation projects especially in ASAL. There is, however, concern over prioritization of projects.

LATF Sixty four percent of the respondents agreed that infrastructure has improved through LATF as there are better equipped markets with sanitation facilities, slaughterhouses, health facilities and water projects, while 6% attributed the clearance of council debts and timeliness of paid staff salaries to the existence of the fund. The other 6% were convinced that there is better public participation in decision making especially where community projects are conducted through public meetings (barazas). A further 6% equated employment to the local community and 18% felt little or no impact because they lack public education on the funds. See figure 3.19.

Figure 3.19: Impacts of LATF in various districts

Little or no impact 18%

Employment to local community 6%

Public participation in decision making Improved 6% infrastructure 64%

Bad debts cleared 6%

Source: Key informant interview CBF According to 39% of the respondents, CBF has enabled bright and needy students to access education by providing schools fees. Hence 20% of the respondents noted improved academic performance in schools, while 20% noted a higher enrollment rate by students especially from poor families who had previously dropped out of school. Also, 7% said transition, retention and completion of schools by students especially in secondary level has been attained whereas the remaining 7% are yet to see visible impacts since the funds are not adequate to cater for the high number of students who apply for the bursaries, as evidenced in the statement below:

Women in Takaba: “We have heard about the bursary but none of us has benefited. There are a few who have been assisted elsewhere, but we have not seen or known anybody close here, except one needy student in Takaba. There are many needy children in our community but we do not get help.” PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) Figure 3.20: Impacts of CBF in various districts 33 Saved girls from early marriages Little or no impact 7% 7%

Improved Performance in schools Bright and 20% needy students access education 39%

transition, retention & completion of schools 7%

Higher enrollment in Sec Schools 20%

Source: Key informant interviews

Impacts of CDF, LATF, CBF Figure 3.21 shows the opinions of respondents on the CDF, LATF and CBF funds. The impact of CDF and LATF was recorded a very positive while that of CBF had a positive impact.

Figure 3.21: Opinions on impacts of CDF, LATF & CBF

CBF 10 80 10 13.3 do not know no impact at all LATF 13.4 very negative positive 73.3 negative very positive

CDF 27.8 72.2

0 20 40 60 80 100

Source: Key informant interviews

PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) The impact has been positive in the marginalized areas. The following is an example from East Pokot District: 34 Mr. Victor a Headmaster, praised CDF for fully initiating the only mixed single stream secondary school in Tanglubei division. However, he noted that the enrollment of both genders is imbalanced there were more boys (100) and only 14 females. In 2009 seventeen candidates scored above 300 marks in K.C.P.E- 14 males and 3 females. He cited customs and traditions, low esteem of girls, ignorance and low sensitization as factors contributing to low enrolment of girls in school. The girl child is

Inequality aspects

a) Allocations: There is evident unequal sectoral allocation, especially in the education sector at both national and sub-national levels, utilizing about 50% and 45% of the total budgets respectively. This implies that other vital sectors like health, agriculture, water, environment and security share the remaining percentage. This leads to unequal development at both levels making it a challenge to the realization of the Millennium Development Goals (MDGs) and Vision 2030 objectives.

The absorptive capacity at the sub-national level is so low that the funds allocated do not have positive responses within the short term. Therefore allocating 45% in education will mean that the Government has to expand the employment opportunities to absorb the school leavers.

b) Gender and allocations Allocating more funds in education leaving agriculture and health affects women livelihoods. This is because rural women contribute more in agricultural production and utilize more of the health care facilities. c) Participation and awareness There is disparity in the dissemination of information and awareness at the sub-national levels. A general observation made from focus group discussion is that most respondents revealed that both women and men do not have equal chances, only committee members make decisions and only the elitesare invited to the public meetings.

Chief Takaba “we are not involved in all these funds, we don’t know what they are for. I am an elder in this village but I have never been invited to any meetings about these funds worse still our women and youth are not involved in decision making; it is the men who decide for them, women are not allowed to sit with men while the youth (young men) have to go out and fend for livestock- what time do they contribute?”. PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009)

35 CHAPTER 4

FINDINGS ON LINE MINISTRY BUDGETS

4.0 Overview This survey focused on four key line ministries which include agriculture, education, water and health in the eight sampled districts. The study analyses the allocative rationality, absorptive capacity trends in regard to the national and district budgets and their impacts in the local communities. It also looks at the recurrent and development expenditures and

PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) also gives a detailed analysis of fieldwork findings on the impacts and challenges of these funds in the sampled districts. 36 Obtaining adequate financial data at the district level was challenging and calls for policy changes in information sharing on public funds. Most of the District Officials declined to give the information on financial aspects of the study. Therefore, the study used information from Government Budget estimates for analysis on development expenditures. Budget estimates figures on allocation deviations from actual expenditure as compared tothe approved estimates on aggregate level (excluding interest on public debt and foreign donor funding development) were 0.1% for 2005/06,-3.9% for 2006/07 and -2.2% for 2007/08 is a basis of analysis. There was marginal overspending of total primary expenditure in 2005/06 and under-spending in 2006/07 and 2007/0824.

4.1 Allocative Rationale Allocations were based on the Economic Recovery Strategy (ERS) since the period under review is within the ERS period. The key ERS policy priorities centered on economic growth, equity, poverty reduction and governance which were extended into the Vision 2030 strategy. The priorities to the new and on-going programmes focusing on poverty reduction and attainment of the Millennium Development Goals are taken into account when prioritizing and allocating budgetary resources.

According to the Public Expenditure Review 2009, actual budget preparations start with the Medium Term Expenditure Framework (MTEF) budget preparation guidelines, which provide information on how Sector working Groups (SWG) should undertake Ministerial Public Expenditure Reviews (MPERs)25 and prepare sector budget proposals, which form the basis for formulating itemized and programme-based proposals.

The budget preparation is based on the MTEF cycle, which comprises planning, implementation and monitoring and evaluation. Currently, there are ten Medium Term Plans (MTP) sectors, with each sector comprising sector ministries. The composition of MTP sector ministries differs from the MTEF composition of sector ministries.

24 Republic of Kenya, Public Expenditure Review, 2009 pp.72 25 Republic of Kenya Public Expenditure Review 2009, pp 62, 67, 68. Basically, the budget formulation and execution process is based on administrative and economic classification using Government Financial Statistics (GFS) standards for consistent reporting. The cost item structure is in line with GFS 1986, and the structure reflected in level 1 through to 5 reflects the budget and Government’s administrative structure. The geographic coding provides information on spending at provincial and district levels. See table 4.1.

Table 4.1: Classification of the Budget

Level Category Representing

1 Recurrent/Development Recurrent or Development

2 Vote Ministries and main administrative entities/budget responsibility

3 Sub-vote Government sub-function/units/funds

4 Head Departments/administrative function PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) 5 Sub-Head Administrative unit 6 Item Nature of cost 37 7 Geographic Province sub-divided into districts

Source: Public Expenditure Review 2009

In the MTEF, expenditure ceilings, with subdivisions into estimate expenditure votes are provided. The sectors are Productive, Physical infrastructure, Education, Health, Governance, Justice, Law and Order, Public administration, Manpower and Special Programmes, National Security, and information and Communication Technology. In a recent development in 2009, MTEF planning, Medical Services, Public Administration, Education and Labor were grouped into one Sector Working Group (SWG) called Human Resources Development Sector, with a sector ceiling. District Committees comprising of all stakeholders in the sector come up with Annual District Work plans outlining the priority areas and the budgets which were sent to ministry headquarters for funding.

According to the Public Expenditure Review 2009, exchequer releases were close to the original approved budgets. This was attributed to improved budget preparation process and more restrictions on excessive re-allocation, with re-allocation from personnel expenses, core poverty programmes, and priority areas in respect to functions of the Ministry and departments excluded. This study therefore is based on the fact that approved budget estimates were funded through the Exchequer to various development projects as planned.

4.2 National allocation Table 4.1 and Figure 4.1 summarize the national allocation trends in Agriculture, Education and Health sectors. Table 4.1: National allocation and trends

Ministry 2005/06 2006/07 2007/08 2008/09

Rec. Dev. Rec. Dev. Rec. Dev. Rec. Dev.

Education 89,204.84 6,822.59 100,490.76 8,748.15 114,014.46 10,894.13 130,572.13 21,104.72

Health 19,479.22 3,484.58 21,259.88 6,257.80 23,610.52 6,672.02 27,303.11 8,818.79

Agric. 6,839.05 3,081.22 8,987.77 5,153.85 14,011.70 6,448.59 13,537.61 14,794.21

Source: Economic Survey 2009. Key: Rec.- Recurrent Dev: Development

Figure 4.1: National expenditure trends for education, health and agriculture

200,000.00

150,000.00 PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) ) Millions

s Rec. h in

100,000.00

38 (Ks Dev 50,000.00

Amounts 0.00 2005/06 2006/07 2007/08 2008/09 Financial yrs

Source: Analysis from table 4.1

The government expenditure estimates on social services increased over the years from Ksh. 128.9115 million in 2005/2006 financial year to Ksh. 216.13057 million in 2008/2009.26 Expenditure on education increased tremendously by 57% from Kshs 96,027.43 million in the year 2005/06 to Ksh. 151,676.85 million in 2008/2009. This is attributed to communities’ demand for improved education access through school infrastructure support by the government to achieve the MDG objectives. See figure 4.2.

Figure 4.2: National sector expenditure trends ) 160,000.00 140,000.00 120,000.00 100,000.00 Education 80,000.00 Health 60,000.00 Agric. 40,000.00 20,000.00 0.00 Amounts in Millions (Kshs. Millions in Amounts 2005/06 2006/07 2007/08 2008/09 Financial yrs

Source: Analysis from table 4.1

26 Economic Survey, 2009 p 10 The education sector utilized about 98.6% of the total funds available for the sector, in 2004/05 to 2007/08 with average recurrent and development utilization being 98.6% and 74.1% respectively. Over the review period absorption capacity of the ministry has improved particularly on development projects, where it increased from 63.6% in 2004/05 to 92.4% in 2007/08.

4.3 Local Allocation and Utilization The Government Budget estimates were used to establish local utilization and absorptive capacities at the district level. The estimates were used for analysis on specific ministry development expenditures, which were channeled to the district level through various ministry programmes. The estimates were used because the districts visited are newly created and financial data was unavailable, and in most cases the officers declined to give financial data on allocations, expenditure and balances. Those interviewed stated that it is against Government regulations to share such information with the public. Nevertheless, the allocations and utilization was analyzed under respective ministries as follows: PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) Development expenditure in the Ministry of Water and Irrigation The Ministry of Water and Irrigation allocated funds for general administration and planning, 39 salaries and expenses, research, feasibility studies, project preparation and design, project supervision and rehabilitation of civil works, water conservation and dam construction, civil works and rehabilitation in the sampled districts.

This study focused on the funds allocated to specific development projects in the districts by the Ministry of Water and Irrigation which include Special Water Programmes (SWP), Flood Control and Land reclamation (FCLR), National Water Conservation and pipe line cooperation (NWCPC). Table 4.2 is a summary of annual allocations to the sampled districts.

Table 4.2: District Allocations Ministry of Water and Irrigation

NATIONAL ALLOCATIONS 2005/06 2006/07 2007/08

Water programmes 1,729,937,695 1,257,700,000.00 1,218,000,000.00

Flood control &Land Reclamation 388,541,000.00 579,991,514.00 620,998,414

National water conservation 821,750,000.00 1,731,500,000.00 1,733,500,000.00

TOTALS 2,940,228,695 3,569,191,514.00 3,572,498,414.00

AMOUNTS ALLOCATED PER DISTRICT

District 2005/06 2006/07 2007/08

Mandera 37,000,000.00 64,500,000.00 78,800,000.00

Ijara 32,000,000.00 41,000,000.00 28,400,000.00

Tana River 59,000,000.00 49,000,000.00 48,250,000.00 Malindi 21,400,000.00 37,000,000.00 29,000,000.00

Busia 41,500,000.00 50,000,000.00 56,000,000.00

Baringo 21,500,000.00 58,200,000.00 27,100,000.00

Kuria 22,000,000.00 11,500,000.00 11,000,000.00

Narok 26,300,000.00 56,500,000.00 10,000,000.00

PROPORTION OF NATIONAL BUDGET ALLOCATION (% of allocation)

2005/06 2006/07 2007/08

District 2,940,228,695 3,569,191,514.00 3,572,498,414.00

Mandera 1.26 1.81 2.2

Ijara 1.09 1.14 0.79

PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) Tana River 2 1.37 1.35

Malindi 0.73 1.03 0.81 40 Busia 1.41 1.4 1.56

Baringo 0.73 1.63 0.76

Kuria 0.75 0.32 0.3

Narok 0.89 1.58 0.27

Utilization as % of allocation

District SWP FCLR NWCPC

Mandera 24.40% 0% 75.60%

Ijara 27.60% 0% 72.40%

Tana River 35.80% 16% 48.20%

Malindi 53.80% 0% 46.20%

Busia 26.10% 69.80% 4.10%

Baringo 30.40% 2.20% 67.40%

Kuria 68.50% 0% 31.50%

Narok 45.60% 0% 44.40%

Source: Analysis of Estimates of Development expenditure of Government of Kenya. Key: Special Water Programmes (SWP), Flood Control and Land Reclamation (FCLR), National Water Conservation and Pipeline Corporation (NWCPC).

The funds allocated were utilized in three key sectors: rural and special water, flood control and land reclamation, and national water conservation programmes. Utilization largely depended on regional needs for water and irrigation as depicted in Table 4.2 above. All the districts utilized funds in special water programmes and national water and conservation pipeline corporation projects. However, Busia, Ijara and Baringo utilized 69.8%, 16% and 2.2% respectively in flood control and land reclamation projects. This recorded an improvement in water availability and access in the districts over the review period. For example, there was improvement in Mandera District as shown in table 4.3 below. Table 4.3: Mandera District water access statistics

Description 2006 2009

House Holds with access to piped water 4,865 1,800

House Holds with access to potable water 4,657 4,720

Number of permanent rivers 0 -

Number of wells/boreholes 30 180/23

Number of water pans/dams 36 43

Average distance to portable water point 20 km 10

Source: Mandera District Development Plan 2009

However, from focused group discussions the objectives of the water ministry budgets are not satisfactory due to the fact that the districts have serious water problems. The following sentiments were captured: PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) Women in Mandera west “We have a big problem with water, we hear of funds for water but we don’t know where they go –, we hear money has been released but they 41 say it is late and we have to wait until it is available”.

Social Audit team, Ijara “Strengthen the positions of social audits; we don’t have any legal backing. We don’t have the ability to enforce our presence in our communities. We have the capacity to build this community; sensitize the objectives of these funds. On transparency, there are complaints we raise issues but nothing is done. There are no visible projects by the National Water corporation Services they are the most corrupt –) they are lying to us about building water pans”.

Development Expenditure in the Ministry of Livestock Development Funds in the Ministry of livestock are used for general administration and planning, salaries and expenses, , regulatory management of livestock, livestock development and veterinary services. This study focused on the funds allocated to specific development projects in the districts by the Ministry of Livestock such as livestock development and veterinary services, as shown in Table 4.4.

Table 4.4 District Allocations and Utilization in the Ministry of Livestock

AMOUNTS ALLOCATED PER DISTRICT

District 2005/06 2006/07 2007/08 2008/09

Mandera 3,345,250.00 3,476,000.00 11,057,200.00 8,811,700.00

Ijara 0 0 7,099,200.00 9,428,450.00

Tana River 5,693,263 5,807,265.00 10,342,530 7,835,110.00

Malindi 3,727,914.00 3,274,115.00 7,902,310 5,297,530.00

Busia 100,000.00 0 846,680.00 1,067,275.00

Baringo 7,224,340.00 6,033,550.00 8,966,345.00 7,148,437.00 Kuria 1,000,000.00 0 0 0

Narok 7,815,612.00 5,348,090.00 2,000,000.00 800,000

PROPORTION OF NATIONAL BUDGET ALLOCATION (% of allocation)

2005/06 2006/07 2007/08 2008/09

National Allocation 807,191,460 1,177,154,420.00 927,588,470.00 1,054,938,850

Mandera 0.4 0.3 1.2 0.8

Ijara 0 0 0.8 0.9

Tana River 0.7 0.5 1.1 0.7

Malindi 0.5 0.3 0.9 0.5

Busia 0.01 0 0.1 0.1 PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) Baringo 0.9 0.5 0.9 0.7

42 Kuria 0.1 0 0 0

Narok 1 0.5 0.2 0.1

UTILIZATION % OF ALLOCATION livestock development Evener services

Mandera 100% 0%

Ijara 100% 0%

Tana River 96.60% 3.40%

Malindi 100% 0%

Busia 100% 0%

Baringo 97.80% 2.20%

Kuria 100% 0%

Narok 85.60% 14.40%

Source: Analysis of Estimates of Development expenditure of Government of Kenya.

There was a decrease in allocations in the financial year 2007/08 due to non-provision of one-off expenditures that were provided for in the last financial years, and that isequipment for fighting the Avian Flu and restocking of livestock.

The livestock sector dominates in economic activity generating income for the populace in these districts. Their incomes come from consumption or sale of livestock products. For example, in Tana River District agriculture and livestock employs 82.3% of the people, that is 56,018 farmers in the population27.Therefore, there is need to increase the allocations and reduce inequality in ministry allocations especially in these districts.

There are disparities in the allocation and utilization of funds in the selected districts. Mandera, Ijara, Malindi, Busia and Kuria utilized 100% of their funds in livestock development and none on veterinary services. Tana River, Baringo, and Narok utilized 96.6%, 97.8% and 27 Source: Tana River District Development Plan, 2009 85.6% respectively on livestock development, utilizing smaller percentages on veterinary services.

In the focused group discussions, most respondents felt that prolonged drought that led to lack of water for developing the agricultural sector resulted in the deterioration of the pastoralist way of life and livestock development. Erratic rainfall and the distances to water sources and pastures have poorly rejuvenated the pastures. There is, therefore, need to address the water problem in order to increase efficiency and create food security.

Development Expenditure in the Ministry of Agriculture In the ministry of agriculture, development expenditure includes general administration and planning, regulatory management of inputs, promotion of agriculture and private sector development, facilitation and supply of agricultural extension services and extension research, information management for agriculture sector, monitoring and management of food security, crop and pest control and protection of natural resource base for agriculture. PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009)

This study focused on the funds allocated to specific development projects in the districts 43 by the Ministry of Agriculture which include supply of agricultural extension services, monitoring and management of food security and protection of natural resource base for agriculture, as shown in Table 4.4.

Table 4.4: District Allocations Ministry of Agriculture

AMOUNTS ALLOCATED PER DISTRICT

District 2005/06 2006/07 2007/08

Mandera 0.00 26,212,000.00 25,850,000.00

Ijara 0 0.00 1,850,000.00

Tana River 0 2,420,660.00 850,000

Malindi 0.00 6,437,000.00 22,175,175

Busia 0.00 1,193,260 850,000.00

Baringo 0.00 1,390,026.00 850,000.00

Kuria 0.00 0 850000

Narok 0.00 539,150.00 25,000,000.00

PROPORTION OF NATIONAL BUDGET % of allocation ALLOCATION

2005/06 2006/07 2007/08

National Allocation 2,183,182,619 3,928,083,540.00 3,841,264,800.00

Mandera 0 0.7 0.7

Ijara 0 0 0.1

Tana River 0 0.06 0.02

Malindi 0 0.2 0.6 Busia 0 0.03 0.02

Baringo 0 0.04 0.02

Kuria 0 0 0.02

Narok 0 0.01 0.7

Utilization % of Allocation

Management of Agricultural Protection of natural food security extension resources

Mandera 0% 1.60% 98.40%

Ijara 0% 100% 0%

Tana River 0% 100% 0%

Malindi 0% 100% 0%

Busia 0% 100% 0%

PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) Baringo 0% 100% 0%

Kuria 0% 100% 0% 44 Narok 0% 0% 100%

Source: Analysis of Estimates of Development expenditure of Government of Kenya.

It is important to note that there were no allocations to these districts during the financial year 2005/06. A question would arise why allocations were not made then.

Agriculture is the dominant industry in all the districts which are, however, food deficit areas. Agriculture is not technologically developed and techniques of cultivation, planting, food storage and processing are less developed than in most rural areas of Kenya. Ministry of agriculture has a programme on the management of food security; however in the years under review the ministry did not allocate any money for the programme in the districts, in which, a most of the people do not have enough to eat. For example, in Malindi 68% of the populace do not have enough to eat. This raises a question on allocative rationality in the ministry of Agriculture28.

Agricultural extension programmes utilized 100% of the allocations in Ijara, Tana River, Malindi, Busia, Baringo and Kuria. Mandera and Narok utilized 1.6% and 0% respectively. Conversely, Mandera utilized 98.4% and Narok 100% on the protection of natural resources for agricultural production while the rest did not utilize any amounts on the protection of natural resources for agricultural production.

Some of the challenges identified by the respondents include natural calamities like drought and floods that negatively affect agriculture and livestock farming, inadequacy and delays in fund disbursement, lack of financial intermediaries to support farming and weak legal and institutional framework for running the funds. In addition, there is lack of modern technology to boost agricultural production, bureaucratic procedures which create bottle necks, poor road network connecting rural areas, and conservative communities (cultural parity) which are reluctant to embrace new ideas. Finally, there are isolated cases of insecurity/clashes from time to time (Kehancha, Tangulbei, Pokomo) which affect the livestock sector.

28 Malindi District Development Plan 2009 Development Expenditure in the Ministry of Health Development expenditure in the ministry of health includes general administration and planning, construction of buildings, equipment, curative health, preventive medicine and promotive health services, integrated rural health and family planning, health training and research, Kenyatta National Hospital, Moi Teaching and Referral hospital, and medical supplies. Table 4.5 shows an increase in the funds allocated to the Ministry of Health.

Table 4.5: National Health Programmes allocation

NATIONAL ALLOCATIONS MINISTRY OF HEALTH

2005/06 2006/07 2007/08

National Development Budgets 6,590,204,900 6,984,343,850 9,114,889,240

Curative Health 1,091,522,760 798,800,002 867,861,758

Preventive medicine and promotive health 2,431,153,400 4,608,105,842 6,249,698,335 PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) Health training and Research 76,000,000 50,000,000 220,000,000

Rural Health services 1,135,120,150 1,163,341,316 1,703,329,147 45

Medical supplies coordination unit 50,000,000 50,000,000 50,000,000

Source: Analysis of Estimates of Development expenditure of Government of Kenya.

It was difficult to establish the rationale of district allocation in the health sector because there are no clear guidelines on whether the Ministry of Health uses unitary estimates or budget estimates from district work plans generated by District Health Management Teams (DHMT). In allocations, there was increased funding to rural health services and curative health as an effort to reach out to the rural areas.

On average the health sector utilized 82.7% of the total budgetary resources made available in the period 2004/05 to 2007/08, with average recurrent and development utilization being 98.1% and 44.7% respectively in the same period29.

The respondents indentified the following challenges in the ministry of health:  Inadequate technical capacity for managing the funds and their activities due to lack of capacity building and training.  Inadequate funding and delays in disbursement of funds and AIEs.  Increase in the number of health centers without an equivalent increase in qualified health personnel and medical supplies.

Mandera District has two hospitals, eight dispensaries with a bed capacity of sixty; a doctor- patient ratio of 1:124,000; a nurse- patient ratio of 1:7,000. The average walking distance to a health facility is 40 km30. While in Busia District there is one district hospital one sub-district hospital, eighteen dispensaries, five health centres and twenty four clinics. In addition, there are two private nursing homes, one private health centre and twenty eight private clinics and the average distance to the nearest health facility is 5km with a doctor- population ratio of 1:21,87531. This shows disparities in resource allocation at the ministry level.

29 Public Expenditure Review ,2009 30 Mandera District Development Plan 2009 31 Busia District Development Plan 2009 Development Expenditure in the Ministry of Education The reporting system in the Government budget estimates did not indicate any specific projects at the district level. The District Work Plans generated from the districts are used as the basis of allocations by the Education ministry. The ministry utilizes funds on quality assurance and standards, basic education, higher education, policy and planning and technical education. Allocations for financial years 2005/06 to 2007/08 are shown in table 4.6:

Table 4.6

NATIONAL ALLOCATIONS MINISTRY OF EDUCATION

2005/06 2006/07 2007/08 National Development Budgets 3,658,140,980 4,620,776,723 5,583,412,465

Basic Education 2,568,062,840 1,857,678,190 495,233,200

Quality Assurance and PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) standards 5,000,000 0 473,430,600

46 Higher Education 517,000,000 547,000,000 888,000,000 Policy and planning 4,408,271,880 426,000,000 3,603,179,265

Technical Education 27,000,000 0 0

Source: Analysis of Estimates of Development expenditure of Government of Kenya.

The education sector utilized about 98.6% of their total budgetary allocation in 2004/05 to 2007/08, with the average recurrent and development utilization being 98.6% and 74.1% respectively . Over the review period, the budget absorption capacity of the ministry improved, particularly in the development budget where the absorptive capacity increased from 63.6% in 2004/05 to 92.4% in 2007/08.32

In the basic education programme there are special secondary schools, training field services, adult basic education, and school milk and feeding programs. From the allocations, it is evident that technical education receives a low concern because it did not receive any allocations in the financial years 2006/07 and 2007/08, and this impact negatively on the technological advancement and job creation.

With the introduction of free primary education in 2003, there was a marked increase in enrolment for male and female pupils. Overall enrolment peaked in 2004/5, declined in 2006 then increased in 2007. At the secondary level, the gross enrolment rates were higher for boys than for girls from 2002 to 2007, which means that additional funds in basic education are needed to cater for the increase.

The following challenges were cited by the respondents:  Delays in fund disbursement.  Weak institutional framework for accounting for the funds.  Lack of mechanisms to sanction decisions against the funds’ mandate  Inadequacy of the funds to cater for high enrollment rates  Increased dependency on government funding.

32 Public Expenditure Review ,2009 4.4 General findings – Line Ministries’ budgets Key informants were interviewed in the districts and their views on fund allocations, utilization and balances, impacts, challenges and recommendations on line Health/Medical, Agriculture/Livestock/Fisheries and Education budgets recorded. Figure 4.3 presents levels of opinions on fund operationalization. Opinions offer a window into which perceptions are collected to ascertain whether beneficiaries are getting services.

Figure 4.3: Fund operationalization

10 PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009)

0 NO YES PARTIALLY NO 47 OPINION HEALTH/MEDICAL 44.5 44.4 11.1 0 AGRIC 50 35.7 14.3 0 EDUCATION 50 50 0 0

Source: Analysis of key informant views

Operationalization The respondents were asked if the budgets have been true to their objectives in the manner in which they have been operationalized, and 44.5% were satisfied with line ministries fund utilization in health/medical services, 44.4% felt the utilization was partial and the other 11.1% did not agree on the manner in which the funds have been operationalized.

In Agriculture/Livestock/Fisheries, 50% of the respondents felt the funds were operational to their objectives, 14.3% did not agree and 35.7% partially agreed on how the funds have been operationalized. While in Education 50% agreed that the funds were operational to their objectives and the other 50% partially agreed.

Project Initiation On initiation of projects, 38.5% of the key informants stated that educational projects are initiated by community members, 7.7% by MPs, 7.7% by local councilors, 7.7% by L.A officials, 30.8% by district officials and 7.7% by the government. On the other hand, 61.5% and 38.5% of projects in agriculture/livestock and fisheries are initiated by Community members and District officials respectively. In the Education sector, 44.4% of the respondents said that community members initiate the projects, 11.1%, 11.1%, 22.2% and 11.1% cited MPs local councilors, district officials, and the government respectivelyas having initiated projects.

Figure 4.4 represents opinions collected to verify whether the respondents are satisfied with the processes involved in initiating projects supported by line ministries funds in Health/ Medical services, Agriculture/Livestock and Fisheries and Education. Figure 4.4: Satisfaction levels in project initiation

FISHERIES 50 50

0 28.6 EDUCATION 71.4 dissatisfied no opinion 18.2 18.2 very satisfied AGRIC 63.6

25 HEALTH/MEDICAL 37.5 37.5

0 20 40 60 80

Source: Analysis of key informant views

The Tables (4.5, 4.6 and 4.7) below represent opinions drawn from statements designed to PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) capture the level of satisfaction of respondents in terms of public participation, availability of information and awareness, ability to sanction decisions, relevance of funds in projects, 48 accountability and transparency in the utilization of funds.

Table 4.4: Opinion on Health/Medical Funds

Strongly Agree No Disagree Strongly Do not Statement agree % % opinion% % disagree% know%

Transparency on 12.5 50 12.5 12.5 12.5 0 funds

Sufficiency of 12.5 62.5 12.5 0 12.5 0 information

Relevance of 12.5 75 12.5 0 0 0 funds in projects

Clarification of 25 62.5 12.5 0 0 0 information

Decisions taken 12.5 75 12.5 0 0 0 are satisfactory

Decisions within respective 12.5 87.5 0 0 0 0 mandate

Ability to sanction decisions against 12.5 75 0 12.5 0 0 fund mandates

Mechanisms exist to sanction actions/decisions 12.5 75 0 0 0 12.5 against fund mandate Table 4.5: Opinions on Agriculture/Livestock/Fisheries

Strongly Agree No Disagree Strongly Do not Statement agree % % opinion% % disagree% know%

Transparency on funds 16.7 50 8.3 25 0 0

Sufficiency of 33.3 41.7 10 16.7 8.3 0 information

Relevancy of funds in 58.3 41.7 0 0 0 0 projects

Clarification of 33.3 50 0 16.7 0 0 information

Decisions taken are 8.3 66.7 8.3 16.7 0 0 satisfactory

Decisions within 33.3 58.4 0 8.3 0 0 respective mandate

Ability to sanction decisions against fund 8.3 41.7 25 25 0 0

mandates PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009)

Mechanisms exist to sanction actions/ 49 16.7 58.4 8.3 8.3 0 8.3 decisions against fund mandate

Table 4.6: Opinions on Education Funds

Strongly Agree No Disagree Strongly Do not Statement agree % % opinion% % disagree% know%

Transparency on funds 25 62.5 0 12.5 0 0

Sufficiency of information 50 37.5 0 12.5 0 0

Relevancy of funds in 42.9 42.8 14.3 0 0 0 projects

Clarification of information 37.5 62.5 0 0 0 0

Decisions taken are 25 50 12.5 12.5 0 0 satisfactory

Decisions within 37.5 50 12.5 0 0 0 respective mandate

Ability to sanction decisions against fund 12.5 50 25 12.5 0 0 mandates

Mechanisms exist to sanction actions/decisions 12.5 62.5 0 0 0 25 against fund mandate

Impact of the funds

Impact in the Health/Medical Services Figure 4.5 shows a summary of responses by respondents from the different districts on the impact of the funds on Health/Medical services. Figure 4.5: Impact of funds on Health/medical services

11% 11%

Restructuring & Infrastructure dev. Better health facilities & Services Little or no impact

78%

Source: Analysis of key respondents’ views

Seventy eight of the respondents acknowledged better health facilities and services compared to previous years, while 11% felt there has been positive change in terms of restructuring and infrastructure development in health and sanitation. However 11% felt that there has been no impact to be noted. PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) Forty six percent of the respondents felt that there has been an improvement in socio- 50 economic status of communities through agriculture/livestock budgets in the districts, while 18% of respondents felt that there has been diversification of activities in agricultural sector to incorporate farming and livestock as opposed to pastoralism only. There is also increased community participation and advice on farming and livestock production. Also, 6% noted that the funds assisted in restocking livestock after drought, while the remaining 6% noted no impact.

Figure 4.6: Impacts of funds in Agriculture/Livestock/Fisheries

6% 12% 12% farmers get advice on farming crops 6% restocking of livestock diversification of activities improved socio-economic activities 18% increased community participation little impact 46%

Source: Analysis from key respondents’ views

Impact the funds in the education sector In Education, 50% of the respondents reported higher enrollment rates in schools although the capacity to handle the numbers is low. This has compromised the quality of education as cited by the 10% of the respondents. Improved infrastructure standards and an increased number of teachers employed by Parents’ Teachers Association and Board of Governors was cited by 30% of the respondents. See figure 4.7 below. Figure 4.7: Impacts of Education Funds

10%

30% Low quality of education Improved infrastructure standards 50% Improved pupil teacher ratio Higher enrollment in schools

10%

Source: Analysis from key respondents’ views

Budget impact on Health, Agriculture and Education sectors Figure 4.8 shows the opinions of respondents of the impact of budgets on Health, Agriculture and Education. All sectors recorded a positive impact.

Figure 4.8: Opinions of budget impacts on Health, Agriculture and Education PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009)

51 100

0 HEALTH/MED AGRIC EDUCATION ICAL very positive 22.2 30.8 11.1 positive 66.7 61.5 88.9 no impact at all 11.1 7.7 0

Source: Analysis from key respondents’ views CHAPTER 5

CONCLUSIONS AND POLICY RECOMMENDATIONS

5.0 Introduction This study assessed the allocative rationality and absorptive capacities in regard to line ministry budgets and devolved funds. It also examined the impacts of the funds on the livelihoods of communities at the sub-national level. This was possible through literature and PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) primary data obtained from key informants and focus group discussions in the respective districts. 52 The findings indicate that poverty in the sampled districts is increasing despite significant increase in the allocations of decentralized funds. This can be attributed to persistent challenges such as lack of effective participation at the local levels in selecting, prioritizing and implementing development projects, the low capacity at National and sub-national levels in public finance management, lack of institutional monitoring and evaluation mechanisms that involve Civil Society Organizations and the fact that budget monitoring remains a bureaucratic process. These are challenges that can be addressed through capacity building at all levels of government, community empowerment in budget monitoring and evaluation, stipulation of adequate safeguards for local government funds, rigorous implementation of fiscal responsibility, public procurement and other strategic policies to strengthen economic management.

5.1 Allocative rationality/efficiency The study examined allocative efficiency as the extent to which allocation of decentralized funds is consistent with economic, social and political policy priorities of the Vision 2030, . It can, therefore, be said that on average, budgetary allocations and spending have been in accordance with national priorities over the review period.

The study indicates that the Government increased CDF allocations by 677% from 2003 to 2008, while LATF allocations increased by 60.6% from 1999 to 2009. On the other hand recurrent allocations in the ministries of education, health and agriculture increased by 46%, 40% and 97% respectively while development expenditure allocations increased by 209%, 153% and 380% the respective ministries. This shows that the government is committed to achieving its development objectives through these funds.

At the sub-national level budgetary allocations made during the review period were consistent with national priorities in terms of allocative efficiency. The allocation criterion is designed to ensure that funds are allocated in a predictable, transparent and fair manner as defined in the rules and regulations contained in the CDF Act and LATF Act. The line ministries allocation criterion relies on district committees comprising of all stakeholders in respective sectors, that generate Annual District Work plans, which outline the priority areas and the budgets that are sent to ministry headquarters for funding. This study has established that there is unequal sectoral allocation. For example, key sectors like agriculture, water, health, roads and environment had low attention in terms of prioritization in CDF allocation with 2.9%, 10.4%, 10.3%, 6.4% and 0.3% respectively while education was allocated 44% of the total CDF funds in the sampled districts. A balance between health, education, and food security is vital for development. For a child to perform better in school he/she should be in good health, and have proper nutrition.

In the line ministries, sectoral allocations are erratic in the sense that some sectoral programmes such as agricultural extension services are allocated 100% for instance, while the management of food security is given no funds. This raises questions on prioritization of projects at the sub-national level and project initiation. Poor prioritization has serious implications on food security, poor health services, and unequal sectoral development which subsequently reduce the pace towards achievement of the Vision 2030 and MDGs objectives.

From the study 63%, 22.2% and 14.8% of the respondents felt that CDF projects are PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) initiated by the community members, local Members of Parliament and local councilors respectively, While 45.4%, 31.8%, 18.2% and 4.5% of respondents said that projects in 53 LATF are initiated by Community members, Local councilors, Local authority officials and District officials respectively. Further still, 38.5%, 7.7%, 7.7%, 7.7%, 30.8% and 7.7% of the key informants stated that educational projects are initiated by community members, MPs, local councilors, LA officials, district officials and the government respectively.

Also, 61.5% and 38.5% of the respondents cited community members and district officials respectively, as initiators of projects in the agriculture/livestock and fisheries sector. In the Education sector, 44.4% of the respondents said that community members initiate the projects, while 11.1%, 11.1%, s 22.2% and 11.1% said that the MPs, local councilors, district officials and the Government, respectively, initiate the projects. This indicates low levels of community involvement (bottom-up approach) in project prioritization. CDF scores higher in terms of allocative efficiency due to this approach in its project cycle management (identification, prioritization, implementation and community ownership). These components are absent in the line ministry projects in which there is a top-down approach, hence affecting utilization.

Policy Recommendations 1. To improve allocation efficiency in the line ministries, the adoption of the Medium Term Expenditure Framework (MTEF) that links policy, planning and budgeting and the adoption of Programme-Based Budgeting (PBB) is recommended. Community awareness and participation in the line ministry projects at the sub-national level should be encouraged, (bottom-up approach instead of top-down approach). 2. Continuous capacity building for fund managers and the community social audit groups on planning and priority setting, budgeting, administration and effective supervision, monitoring and evaluation should be set up at the district level to equip the fund managers and community social audit groups, and train communities in fundraising to supplement Government budgets. 3. Standardization of designs, technical and financial parameters, and cost indicators for the most frequently requested projects should be done to encourage efficiency in identification, financial reporting, project planning, evaluation and supervision. Documentation requirements in line ministries and LAs should be simplified to reduce bureaucratic procedures. Annual work plans for infrastructure and procurement procedures should be standardized. For example, standard model plans for hospitals built by CDF funds should be used country-wide for efficient control of budgets, absorption, and monitoring to curb fraudulent project costing. 4. The criteria for selecting funds committee members should be transparent and merit-based. Minimum qualifications should be some level of university education or equivalent. Committee members should demonstrate competencies, integrity and ethics, governance and accountability skills and strategic leadership skills. There should also be increase transparency in the management of project funds through frequent audits, in liaison with community social audit teams, and audit findings made public. 5. Devolved funds and decentralized line ministry funds to the districts/constituencies should be consolidated to facilitate consistency and harmonization of the project implementation to avoid duplication and double funding. 6. Increased budgetary allocations should be proportionate with the poverty levels, population size and geographical location considerations. This will ensure availability of PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) critical inputs like materials and equipment at the district level. The delays in disbursing 54 funds and AIEs to the districts should also be addressed to ensure that operational expenses and maintenance are timely for service delivery at the district level. Allocations should be pegged to district prepared budgets, work plans must be generated from the grassroots level, and provisional project plans should be validated before their implementation to curb inflated budgets. 7. Simple performance indicators should be developed for monitoring and evaluation to define and measure progress towards achieving their goals in development. Performance indicators should be developed to facilitate assessment of the performance of the decentralized funds. The indicators could include among others public awareness and participation, frequency of public board committee meetings, supervisory and monitoring meetings, collection and banking as a percentage of collection. These should be published and reviewed periodically to compare inter-district and sectoral performance.

Utilization and Absorptive capacity This study understood absorption capacity to be the extent to which line ministries; CDF and LATF managers are able to utilize the financial resources allocated from decentralized funds, in an effective and efficient manner having two connotations: (a) Financial absorption capacity, defined as the ability to co-finance the programs and projects supported by Line Ministries, CDF and LATF, to plan and guarantee these national contributions in multi-annual budgets, and to collect contributions from the partners involved in various programs and projects. (b) Administrative capacity, defined as the ability and qualifications of central and local authorities to prepare programs, appropriate and timely projects, to decide on them, to ensure coordination of partners involved, to comply with administrative and reporting requirements, to funding and monitoring the implementation of programs and projects, to avoid irregularities.

The study shows that 81.2% of the fund managers were satisfied with the utilization of CDF, with 18.7% partially concurring, which is a good performance. Of those interviewed on LATF, only 23% felt the funds were utilized according to objectives, 38.5% failed to agree and 38.5% agreed partially, which is a poor performance. The managers identified the following challenges to be major hindrances to effective utilization of the funds: Inadequate technical capacity for managing the funds and their activities, inadequate funding and delays in disbursement of funds, political interference in committee setup, weak legal and institutional framework for accounting of funds and resources leading to misappropriation and embezzlement of funds, high levels of corruption in LA revenue collection , Conflicting policies, , flawed procurement procedures and over- dependency on CDF funding by communities.

The study established that on average 44.5% of the fund managers were satisfied with line ministries fund utilization. In health/medical services, 44.4% felt the utilization was partial and the other 11.1% did not agree on the manner in which the funds have been utilized. In Agriculture/Livestock/Fisheries, 50% felt the funds were utilized to their objectives, 14.3% did not agree and 35.7% partially agreed on how the funds have been operationalized. While in Education 50% agreed that the funds were utilized to their objectives and the other 50% partially agreed. This implies a below average utilization in the line ministries. PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009)

The fund managers, attributed the below average utilization to problems with budget 55 execution, cash flow bottlenecks , slow procurement procedures, under-staffing, inadequate technical capacity for managing the funds and their activities, weak institutional framework for accounting for the funds, lack of mechanisms to sanction decisions against the funds’ mandate and poor prioritization in allocation.

Policy Recommendations To improve on the absorption capacity of line Ministry budgets, LATF and CDF, the relevant authorities should: 1. Strengthen administrative capacity, including acquisition of qualified personnel in the line ministries and devolved fund agencies. 2. Ensure greater transparency in fund management by providing comprehensive information of public interest and elimination of excessive bureaucracy in awarding project contracts.. 3. Stabilize the rules governing the access to decentralized funds, particularly application requirements to avoid the project approval process. 4. Complete audit reports on the implementation of Operational Programs by the Sector Work Groups (SWG), for approval by the Exchequer by the end of each financial year as a condition for starting the reimbursements. 5. Contractual relations between the institutions at the national and local levels, and contracting firms should be regulated, to hasten funding approval, and thus increase the rate of decentralized funds absorption. 6. Central Government and fund management authorities should increase the speed of evaluation, selection and contracting of projects. .

Impact of the devolved funds All the funds show an increase in the amounts allocated to CDF, LATF and CBF over time which cumulatively should have a major impact in the fight against poverty and inequality. The findings indicate that education, infrastructure and health facilities have notably improved. Although in theory, allocation regulations have been followed, the implementation of these budgets is, however, not satisfactory. There are anomalies in procurement procedures, fraudulent costing, construction of sub-standard structures, briberyin procurement of materials and contracting, unequal sectoral percentage allocations, and poor prioritization. At the oversight level, legislative oversight on budgetary matters of government Ministry Development Agencies (MDAs) is weak. Similarly, the civil society is weak in researching and scrutinizing government fiscal operations and related budgetary matters. The capacity of the Government and Civil Society to monitor public expenditure and ensure financial accountability should be enhanced. The absorptive capacity at the sub-national level is low that the funds allocated do not impact positively in the short term.

Policy Recommendations The following interventions are recommended to improve ministry budgets, CDF, LATF and CBF: 1. Establishing efficient and adequate communication channels to enlighten local communities on the objectives of each budget. District and constituency information centers should be set-up where information on projects and finance can be disseminated and shared and District Project development websites should be established to enable the public follow up project developments online. PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) 2. Continuous capacity building for community social audit groups and other members 56 on planning and priority setting, budgeting, administration and effective supervision, monitoring and evaluation and fundraising should be done. 3. Ensuring equity in fund allocation and participation of stakeholders in identifying projects at the local level. This calls for restructuring the district fund committees to allow joint planning, budgeting, supervision, monitoring and evaluation of the district development projects. 4. There should be a transparent and merit-based criteria for selecting funds committee members.. 5. A single unit of development should be established at the local level to handle all the budgets. All devolved funds plus line ministry funds to the districts/constituencies should be consolidated to facilitate consistency and harmonization of the projects implementation to avoid duplication and double funding. 6. The district fund offices should be equipped and with adequate personnel to improve their capacity to deliver quality services. 7. The structuring of fund utilization should factor in cultural/ traditional practices such as nomadic lifestyles to ensure that men and women have equally participate in the project implementation. REFERENCES

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Kenya Republic, (2003) The Economic Recovery Strategy, Government Printers, Nairobi Kenya Republic (2008a), Local Authority Transfer Fund (LATF) Annual Report and Review of Local Authority Financial Performance FY 2007-2008.Ministry of Local Government, Nairobi.

Kenya Republic, (2007b) Vision 2030; A Globally Competitive and Prosperous Kenya, Government Printers, Nairobi

Mwangi S. Kimenyi (2005), Efficiency and Efficacy of Kenya’s Constituency Development Fund: theory and Evidence, pp.2.

Oyugi,L., 2008, Fiscal decentralization in Kenya; The case of Local Authority Transfer Fund. in Kibua N. T and Mwabu, G., ed. (2008), Decentralization and Devolution in Kenya New Approaches, UON press Nairobi. Chapter 7

Oyugi, L. and Kibua, T.N., 2008. Planning and Budgeting at the grassroots level; The case of Local Authority Service Delivery Action Plan. In Kibua N. T and Mwabu, G., ed. (2008), PUBLIC EXPENDITURE REVIEW (2005/2006 – 2008/2009) Decentralization and Devolution in Kenya New Approaches, UON press Nairobi. Chapter 58 8

SID, (2006) Readings, on Inequality in Kenya sectoral Dynamics and perspectives, Regal Press Kenya LTD Nairobi.

Republic of Kenya 2008b, Constituencies Development Fund Allocation Schedule for FY 2005/2006-FY 2007/2008 -http;/www.cdf.go.ke (Accessed on 23 January 2010)

The Constituencies Development Fund Act No.11, 2003, Nairobi; Government printer.

The Local Authority Transfer Fund Act No. 8, 1998. Nairobi; Government Printers APPENDIX I: SECTOR ALLOCATIONS PER CONSTITUENCY

Constituency Sector 2005/2006 2006/2007 2007/2008 2008/2009 TOTAL AVE.TT % Name

Malindi Administration 1,110,000.00 1,506.86 2,627,675.86 875891.9 1.69 1,516,169.00

Emergency 1,673,481.00 2,318,300 6,324,400.00 2,108,133 4.09 2,332,619.00

Bursary 3,700,000.00 5,200,000 16,830,738.00 5610246 10.88 7,930,738.00

M &E 1,000,000.00 1,000,000 3,000,000.00 1,000,000 1.94 1,000,000.00 Recurrenct Expenditure

Sports 368,000 368,000.00 122,666.70 0.24 -

Environment -

Education 10,360,000.00 20,600,000.00 38,510,000.00 12,836,666.70 24.91 7,550,000.00

Health 4,800,000.00 6,356,000.00 14,748,063.00 4916021 10 3,592,063.00

Water 2,756,159.00 2,166,000.00 6,872,159.00 2,290,719.70 4.45 1,950,000.00

Agriculture 7,700,000.00 7,700,000.00 2566666.7 5 -

Roads/Bridges 8,000,000.00 14,600,000.00 4,866,666.70 9 6,600,000.00

Others 4,100,000.00 18,500,000.00 43,000,000.00 14333333 27.8 20,400,000.00 Security - 37,499,640.00 64,209,806.86 52,871,589.00 154,581,035.86 51527011.4 100 Galole Administration 608,474.00 1,150,601 1157708 2,916,783.00 972261 2.8 Emergency 1,333,333.00 2,318,300 2332619 5,984,252.00 1994750.7 5.8 Bursary 4,000,000 6168318 10,168,318.00 3389439.3 9.9 M &E 1,000,000 818457.76 1,818,457.76 606152.6 1.8 Recurrenct 714352.24 714,352.24 238117 0.7 Expenditure Sports 400000 400,000.00 133333.3 0.4 Environment 411009 411,009.00 137003 0.4 Education 5,704,971.00 17,322,364 14300000 37,327,335.00 12442445 36.2 Health 12,450,000.00 12,268,255 0 24,718,255.00 8239418 24 Water 2,612,158 3000000 5,612,158.00 1870719.3 5.4 Agriculture 0 0.00 0 0 Roads/Bridges 0 0.00 0 0 Others 1,420,000.00 11620424 13,040,424.00 4346808 12.6 Security 0 21,516,778.00 40,671,678 40922888 103,111,344.00 34370447.2 100 Ijara Administration 801,005.00 1158051 1,959,056.00 653018.7 2 Emergency 1,673,481.00 2332619 4,006,100.00 1335366.7 4.1 Bursary 2,837,365.00 6140146 8,977,511.00 2992503.7 9.1 M &E 818686 818686 272895.3 0.8 Recurrent 0 0.00 0 0 Expenditure Sports 618686 618,686.00 206228.7 0.6 Environment 818686 818,686.00 272895.3 0.8 Education 16,140,406.00 11,881,338.00 15450000 43,471,744.00 14,490,581.30 44.10 Health 1,200,000.00 1,860,000.00 3100000 6,160,000.00 2,053,333.30 6.20 Water 1,487,585.00 900,000.00 0 2,387,585.00 795,861.70 2.40 Agriculture 1,300,000.00 0 1,300,000.00 433,333.30 1.30 Roads/Bridges 1,983,809.00 14,887,000.00 6000000 22,870,809.00 7,623,603.00 23.20 Others 4497433 4,497,433.00 1,499,144.30 4.60 Security 800,000.00 0 800,000.00 266,666.70 0.80 26,123,651.00 31,628,338.00 40934307 98,686,296.00 32895432 100 Mandera Administration 883,076.00 883,076.00 1,231,871 1231870 4,229,893.00 1,057,473.30 2.80 West Emergency 1,673,481.00 1,673,481.00 2,332,619 2332619 8,012,200.00 2,003,050.00 5.40 Bursary 2,375,416.00 2,375,416.00 2,030,486 5000000 11,781,318.00 2,945,329.50 7.90 M &E 300,000.00 300,000.00 400,000 570000 1,570,000.00 392,500.00 1.10 Recurrent 0 0.00 0.00 0.00 Expenditure Sports 0 0.00 0.00 0.00 Environment 521347 521,347.00 130,336.80 0.40 Education 16,400,000.00 16,300,000.00 14,000,000.00 15100000 61,800,000.00 15,450,000.00 41.50 Health 800,000.00 800,000.00 2600000 4,200,000.00 1,050,000.00 2.80 Water 8,700,000.00 8,700,000.00 21,900,000.00 11850000 51,150,000.00 12,787,500.00 34.30 Agriculture 0 0.00 0.00 0.00 Roads/Bridges 1,500,000 1625000 3,125,000.00 781,250.00 2.10 Others 2564140 2,564,140.00 641,035.00 1.70 Security 0 0.00 0.00 0.00 31,131,973.00 31,031,973.00 43,394,976 43394976 148,953,898.00 37,238,474.60 100.00 Baringo East Administration 845,771.00 1,171,661.00 1178897 3,196,329.00 1,065,443.00 2.80 Emergency 1,673,481.00 2,318,300.00 2332619 6,324,400.00 2,108,133.30 5.60 Bursary 2,346,609.00 4,008,750.00 5000000 11,355,359.00 3,785,119.70 10.00 M &E 827,475.00 827475 1,654,950.00 551,650.00 1.50 Recurrent 0 0.00 0.00 0.00 Expenditure Sports 832584 832,584.00 277,528.00 0.70 Environment 0 0.00 0.00 0.00 Education 11,200,000.00 16,200,000.00 21450000 48,850,000.00 16,283,333.30 43.30 Health 1,700,000.00 3,500,000.00 2450000 7,650,000.00 2,550,000.00 6.80 Water 5,500,000.00 1,700,000.00 4371000 11,571,000.00 3,857,000.00 10.30 Agriculture 6,000,000.00 4,500,000.00 0 10,500,000.00 3,500,000.00 9.30 Roads/Bridges 4,000,000.00 800000 4,800,000.00 1,600,000.00 4.30 Others 400,000.00 2,000,000.00 2386627 4,786,627.00 1,595,542.30 4.20 Security 200,000.00 1,147,470.00 0 1,347,470.00 449,156.70 1.20 29,865,861.00 41,373,656.00 41629202 112,868,719.00 37,622,906.30 100.00 Narok South Administration 1,105,449.00 1,513,396.00 1540855 4,159,700.00 1,386,566.70 3.00 Emergency 1,673,481.00 2,318,300.00 2332619 6,324,400.00 2,108,133.30 4.30 Bursary 3,468,714.00 4327075 7,795,789.00 2,598,596.30 5.40 M &E 1073888 1,073,888.00 357,962.70 0.70 Recurrent 0 0.00 0.00 0 Expenditure Sports 0 0.00 0.00 0.00 Environment 0 0.00 0.00 0.00 Education 21,700,000.00 24,364,417.00 20350000 66,414,417.00 22,138,139.00 45.60 Health 4,300,000.00 7000000 11,300,000.00 3,766,666.70 7.80 Water 13,000,000.00 8,800,000.00 11170000 32,970,000.00 10,990,000.00 22.60 Agriculture 1200000 1,200,000.00 400,000.00 0.80 Roads/Bridges 1,042,841.00 3,600,000.00 4700000 9,342,841.00 3,114,280.30 6.40 Others 4,000,000.00 0 4,000,000.00 1,333,333.30 2.70 Security 1,000,000.00 0 1,000,000.00 333,333.30 0.70 38,521,771.00 53,364,827.00 53694437 145,581,035.00 48,527,011.60 100.00 Budalangi Administration 850,007.00 1,177,528.00 1184801 3,212,336.00 1,070,778.70 2.90 Emergency 1,673,481.00 2,318,300.00 2332619 6,324,400.00 2108133.3 5.7 Bursary 3185135 3,185,135.00 1,061,711.70 2.90 M &E 820000 820,000.00 273,333.30 0.70 Recurrent 173439 173,439.00 57,813.00 0.20 Expenditure Sports 0 0.00 0.00 0.00 Environment 0 200,000.00 250000 450,000.00 150,000 0.40 Education 16,972,992.00 24,078,583.10 19780000 60,831,575.10 20,277,191.70 55.10 Health 6,200,000.00 6,377,676.00 1000000 13,577,676.00 4,525,892.00 12.30 Water 850,000 1,270,000.00 1500000 3,620,000 1,206,666.70 3.30 Agriculture 2,787,000.00 1,247,154.00 3600000 7,634,154.00 2,544,718.00 6.90 Roads/Bridges 0.00 1,950,000.00 0 1,950,000.00 650,000.00 1.8 Others 7500000 7,500,000.00 2,500,000.00 6.8 Security 0.00 550,000.00 500000 1,050,000.00 350,000.00 1.00 29,333,480.00 39,169,241.10 41825994 110,328,715.10 36,776,238.40 100.00 Kuria Administration 1,159,890.00 1,616,697.00 1616696 4,393,283.00 1,464,427.70 3.00 Emergency 1,673,481.00 2,332,619.00 2332619 6,338,719.00 2,112,906.30 4.10 Bursary 3,702,140.00 2,000,000.00 4000000 9,702,140.00 3,234,046.70 6.40 M &E 1077800 1,077,800.00 359,266.70 0.70 Recurrent 1616696 1,616,696.00 538,898.70 1.10 Expenditure Sports 0 0.00 0.00 0.00 Environment 200000 200,000.00 66,666.70 0.10 Education 25,300,000.00 38,223,201.00 30189144 93,712,345.00 31,237,448.30 61.30 Health 8,500,000.00 5,700,000.00 4325805 18,525,805.00 6,175,268.30 12.10 Water 200,000.00 0 200,000.00 66,666.70 0.10 Agriculture 0 0.00 0.00 0.00 Roads/Bridges 2,150,000.00 4369031 6,519,031.00 2,173,010.30 4.30 Others 1,000,000.00 1200000 2,200,000.00 733,333.30 1.40 Security 3,000,000.00 5294726 8,294,726.00 2,764,908.70 5.40 40,335,511.00 56,222,517.00 56222517 152,780,545.00 50,926,848.40 100.00 APPENDIX II: SUMMARY PROFILE FOR THE FYS 2005 TO 2008 (AVERAGES)

LA N.o.E TYS A/E N.o.C T.C.C A/C Baringo County 83 23628515 284681 76 14021032 184487 Busia county 82 14663852 178827 33 8967915 271755 Ijara county 6 3276042 546007 0 2634094 0 Kehancha 110 15388801 139898 30 7776115 259204 Malindi county 45 11150594 247791 14 9499958 678568 Mandera county 42 8196412 195152 100 13482937 134829.37 Narok county 997 204358487 204973 56 29286023 522965 Tana River 37 10802362 291956 57 8261173 144933

KEY N.o.E - Number of Employees TYS- Total Yearly Salaries A/E- Average per Employee N.o.C - Number of councillors TCC-Total Civic Costs A/C - Average per councilor

SUMMARY FINANCIAL PERFORMANCE INDICATORS (%)

LA ADS ALPR ALCR ACR ALRPR AREPR Baringo County -2796956 52.5 32.6 31.1 90.2 75.1 Busia county 1243025.3 48.3 31.7 25.3 115 113.2 Ijara county -778598.66 38.2 39.5 24.1 207.6 120.6 Kehancha -571260 52 37.8 23.4 102.4 96.8 Malindi county 6834339.3 41.7 44.3 28.3 114.7 101.7 Mandera county -3482800.3 33.4 41.2 40.8 150 145.8 Narok county -3985154 51 72.2 5.2 154.5 159.4 Tana River 11475083 40 37.9 31.1 92.3 89.2

KEY ADS - average deficit or surplus (minus is a deficit) ALPR-average LATF personnel ratio= average total planned personnel expenditure/total expenditure ALCR-average LATF capital ratio= average total planned projects/LATF service delivery ACR-average civic ratio= average total actual civic expenditures/total recurrent expenditures ALRPR- average local revenue performance ratio= average total local revenues / planned local revenues. AREPR- average recurrent expenditure performance ratio= average total actual recurrent expenditures /planned recurrent expenditures. ACEPR-average capital expenditures performance ratio= average total actual capital expenditure / planned capital expenditures. ADRPR-average debt resolution performance ratio =average total resolution payments / planned resolution payments. ATR- Average Total Revenue AVTRE- average total recurrent expenditure. AVCE- average capital expenditure. ARETR- average recurrent expenditure percent total revenue. ACETR- average capital expenditure % of total revenue AESTR- average expenditure on salaries % of total revenue APPENDIX III: ANALYSIS OF LOCAL AUTHORITY ANNUAL REPORTS

2005/2006 2006/2007 2007/2008 2008/2009 LIGD 016 REVENUES BARINGO GOVERNMENT TRASFERS COUNTY LAFT 28,623,471 42,335,644 46,449,296 RMLF 0 0 3,386,852 SUB-TOTAL 28,623,471 42,335,644 49,836,148 LOCAL REVENUE CILOR 0 143,308 500,000 PROPERTY RATES 15,500.00 0 0 SINGLE BUSINESS PERMIT 2,689,686.00 3,633,080.00 3,297,858 MARKET FEES 653,840.00 1,074,908 914,431 OTHERS 12,022,337.00 16,474,959 11,541,286 TOTAL REVENUE 44,004,834.00 63,661,899 66,089,723 EXPENDITURE CIVIC 13,476,561 15,905,995 12,680,539 LA PERSONNEL 26,186,595 21,447,861 23,251,090 LA OPERATIONS 2,793,868 9,453,967 5,642,835 LA MAINTENANCE 1,049,671 1,994,228 1,298,261 TOTAL RECURENT EXPENDITURE 43,506,695 48,802,051 42,872,725 RECURENT SURPLUS/DEFICITS 498,139 14,859,848 23,216,998 CAPITAL EXPENDITURES 7,059,188 12,215,791 14,238,604 LOAN REPAYMENTS 0 0 0 NET SURPUS/DEFICIT -6,561,049 2,644,057 8,978,394 DEBT RESOLUTION REPAYMENTS 4,484,947 2,509,759 6,457,564 UNCOMMITTED SURPLUS/DEFICIT -11,045,996 134,298 2,520,830

2005/2006 2006/2007 2007/2008 2008/2009 LIGD 061 REVENUE BUSIA GOVERNMENT TRASFERS COUNTY LAFT 30,729,167 45,472,804 49,895,895 RMLF 753,766 1,430,775 1,892,818 SUB TOTAL 31,482,933 46,903,579 51,788,713 LOCAL REVENUE CILOR 0 0 0 PROPERTY RATES 0 0 0 SINGLE BUSINESS PERMIT 4,667,350 3,869,459 5,044,555 MARKET FEES 5,317,057 3,925,060 3,791,435 OTHERS 4,395,527 5,155,637 5,488,169 TOTAL REVENUE 45,862,867 59,853,735 66,112,872 EXPENDITURE CIVIC 7,663,585 8,820,976 10,419,184 LA PERSONNEL 11,284,802 16,592,624 16,114,131 LA OPERATIONS 7,359,172 10,102,348 13,022,868 LA MAINTENANCE 404,822 1,054,817 5,533,238 TOTAL RECURENT EXPENDITURE 26,712,381 36,570,765 45,089,421 RECURENT SURPLUS/DEFICIT 19,150,486 23,282,970 21,023,451 CAPITAL EXPENDITURE 7,325,672 9,980,004 19,714,617 LOAN REPAYMENTS 0 0 0 NET SURPUS/DEFICIT 11,824,814 13,302,966 1,308,834 DEBT RESOLUTION REPAYMENTS 5,898,335 9,844,048 6,965,155 UNCOMMITTED SURPLUS/DEFICIT 5,926,479 3,458,918 -5,656,321

2005/2006 2006/2007 2007/2008 2008/2009 LIGD 143 REVENUES IJARA GOVERNMENT TRANSFERS COUNTY LAFT 8,043,576 11,315,364 12,296,901 RMLF 1,507,532 1,288,200 1,358,612 SUB-TOTAL 9,551,108 12,603,564 13,655,513 LOCAL REVENUE CILOR 0 0 0 PROPERTY RATES 0 0 0 SINGLE BUSINESS PERMIT 339,525 260,850 553,129 MARKET FEES 0 628,625 1,025,176 OTHERS 1,890,170 626,150 3,270,177 TOTAL REVENUE 11,780,803 14,119,239 18,503,995 EXPENDITURE CIVIC 984,200 3,119,200 3,798,883 LA PERSONNEL 1,388,428 6,180,334 2,259,364 LA OPERATIONS 2,806,178 4,284,286 3,256,350 LA MAINTENANCE 1,151,178 792,541 1,539,500 TOTAL RECURENT EXPENDITURE 6,329,984 14,376,337 10,854,097 RECURENT SURPLUS/DEFICIT 5,450,819 -257,098 7,649,898 CAPITAL EXPENDITURES 2,721,894 2,840,000 1,978,088 LOAN REPAYMENTS 0 0 0 NET SURPUS/DEFICIT 2,728,925 -3,097,098 5,671,810 DEBT RESOLUTION REPAYMENTS 2,123,125 1,420,512 4,095,796 UNCOMMITTED SURPLUS/DEFICIT 605,800 -4,517,610 1,576,014

2005/2006 2006/2007 2007/2008 2008/2009 LIGD 401 REVENUE MALINDI GOVERNMENT TRANSFERS COUNTY LAFT 19,825,383 29,078,244 31,854,102 RMLF 0 0 0 SUB- TOTAL 19,825,383 29,078,244 31,854,102 LOCAL REVENUE CILOR 0 0 0 PROPERTY RATES 1,640,700 1,089,192 1,440,721 SINGLE BUSINESS PERMIT 1,384,920 1,549,650 1,585,930 MARKET FEES 335,710 323,400 539,580 OTHERS 25,038,421 24,697,920 33,974,183 TOTAL REVENUE 48,225,134 56,738,406 69,394,516 EXPENDITURE CIVIC 10,391,685 7,201,872 10,906,318 LA PERSONNEL 10,992,482 9,682,099 12,777,202 LA OPERATIONS 9,727,227 9,037,084 16,666,848 LA MAINTENANCE 862,677 872,271 2,258,390 TOTAL RECURENT EXPENDITURE 31,974,071 26,793,326 42,608,758 RECURENT SURPLUS/DEFICIT 16,251,063 29,945,080 26,785,758 CAPITAL EXPENDITURE 16,598,058 14,484,743 13,106,626 LOAN REPAYMENTS 0 0 0 NET SURPUS/DEFICIT 346,995 15,460,337 13,679,132 DEBT RESOLUTION REPAYMENTS 0 5,632,277 2,657,179 UNCOMMITTED SURPLUS/DEFICIT -346,995 9,828,060 11,021,953

2005/2006 2006/2007 2007/2008 2008/2009 LIGD 411 REVENUE MANDERA GOVERNMENT TRASFERS COUNTY LAFT 30,502,305 45,529,988 50,038,292 RMLF 0 0 0 SUB -TOTAL 30,502,305 45,529,988 50,038,292 LOCAL REVENUE CILOR 0 0 0 PROPERTY RATES 0 0 0 SINGLE BUSINESS PERMIT 279,380 574,000 751,290 MARKET FEES 494,140 749925 5,322,415 OTHERS 8,573,628 13,099,032 10,879,857 TOTAL REVENUE 39,849,453 59,952,945 66,991,854 EXPENDITURE CIVIC 6,364,209 16,508,660 17,575,942 LA PERSONNEL 6,867,115 8,393,930 9,328,192 LA OPERATIONS 8,322,697 8,018,543 9,525,220 LA MAINTENANCE 198,019 1,879,120 1,904,727 TOTAL RECURENT EXPENDITURE 21,752,040 34,800,253 38,334,081 RECURENT SURPLUS/DEFICIT 18,097,413 25,152,692 28,657,773 CAPITAL EXPENDITURE 10,387,000 15,670,000 21,714,729 LOAN REPAYMENTS 0 0 0 NET SURPUS/DEFICIT 7,710,413 9,482,690 6,943,044 DEBT RESOLUTION REPAYMENTS 7,921,776 16,673,027 9,989,747 UNCOMMITTED SURPLUS/DEFICIT -211,363 -7,190,335 -3,046,703

2005/2006 2006/2007 2007/2008 2008/2009 LIGD REVENUE NAROK GOVERNMENT TRANSFERS COUNTY LAFT 36,331,515 53,813,694 59,058,348 RMLF 0 0 0 SUB-TOTAL 36,331,515 53,813,694 59,058,348 LOCAL REVENUE CILOR 0 0 0 PROPERTY RATES 0 0 0 SINGLE BUSINESS PERMIT 811,980 2,200,000 1,324,905 MARKET FEES 2,707,168 4,282,708 2,813,072 OTHERS 469,615,254 685,326,684 646,586,984 TOTAL REVENUE 509,465,917 745,623,086 709,783,309 EXPENDITURE CIVIC 33,674,365 27,485,330 26,698,474 LA PERSONNEL 162,709,318 209,082,663 241,283,480 LA OPERATIONS 223,605,567 291,014,062 310,207,268 L A MAINTENANCE 65,367,192 54,550,816 85,253,790 TOTAL RECURENT EXPENDITURE 485,356,442 582,132,771 663,443,012 RECURENT SURPLUS/DEFICIT 24,109,475 163,490,315 46,340,297 CAPITAL EXPENDITURE 16,862,982 38,477,080 50,908,707 LOAN REPAYMENTS 0 0 0 NET SURPUS/DEFICIT 7,246,493 125,013,235 -4,568,410 DEBT RESOLUTION REPAYMENTS 30,351,042 67,453,010 41,842,729 UNCOMMITTED SURPLUS/DEFICITS -23,104,549 57,560,225 -46,411,139

2005/2006 2006/2007 2007/2008 2008/2009 LIGD786 REVENUE TANA RIVER GOVERNMENT TRASFERS COUNTY LAFT 25,186,479 37,389,902 41,050,928 RMLF 1,507,531 2,270,000 1,358,612 SUB- TOTAL 26,694,010 39,659,902 42,409,540 LOCAL REVENUE CILOR 1,986,728 1,028,041 1,500,000 PROPERTY RATES 1,512,504 6,462,778 713,830 SINGLE BUSINESS PERMIT 3,298,295 1,523,710 1,495,080 MARKET FEES 328,695 2,885,195 1,960,814 OTHERS 6,320,836 8,527,283 10,154,989 TOTAL REVENUE 40,141,108 60,086,909 58,234,253 EXPENDITURE CIVIC 6,408,099 9,978,411 8,397,010 LA PERSONNEL 10,838,915 10,381,617 11,186,555 LA OPERATIONS 4,040,363 7,603,576 7,332,677 LA MAINTENANCE 461,694 1,077,355 1,738,261 TOTAL RECURENT EXPENDITURE 21,749,071 29,040,959 28,654,503 RECURENT SURPLUS/DEFICIT 18,392,037 31,045,950 29,579,750 CAPITAL EXPENDITURE 4,350,993 15,345,625 11,942,232 LOAN REPAYMENTS 69,336 63,336 0 NET SURPUS/DEFICIT 13,971,708 15,636,989 17,637,518 DEBT RESOLUTION REPAYMENTS 0 4,091,645 8,729,321 UNCOMMITTED SURPLUS/DEFICIT 13,971,708 11,545,344 8,908,197

2005/2006 2006/2007 2007/2008 2008/2009 LIGD 211 REVENUE Kehancha GOVERNMENT TRASFERS LATF 21,044,682 30,720,418 31,038,462 RMLF 1,475,200 1,653,164 989,431 SUB- TOTAL 22,519,882 32,373,582 32,027,893 LOCAL REVENUE CILOR 0 0 0 PROPERTY RATES 0 0 0 SINGLE BUSINESS PERMIT 2,144,620 3,037,118 4,583,549 MARKET FEES 2,627,172 3,341,140 4,269,251 OTHERS 18,892,109 18,745,851 15,500,063 TOTAL REVENUE 46,183,783 57,497,691 56,380,756 EXPENDITURE CIVIC 8,120,338 8,699,000 6,509,008 LA PERSONNEL 14,041,681 16,769,060 15,355,662 LA OPERATIONS 8,377,230 5,456,227 8,302,458 LA MAINTENANCE 1,657,887 4,028,164 2,086,857 TOTAL RECURENT EXPENDITURE 32,197,136 34,952,451 32,253,985 RECURENT SURPLUS/DEFICIT 13,986,647 22,545,240 24,126,771 CAPITAL EXPENDITURE 9,689,671 21,084,284 16,765,588 LOAN REPAYMENTS 0 0 0 NET SURPUS/DEFICIT 4,296,976 1,460,956 7,361,183 DEBT RESOLUTION REPAYMENTS 0 6,933,862 7,899,033 UNCOMMITTED SURPLUS/DEFICIT 4,296,976 -5,472,906 -537,850

Definition of variables

Revenue refers to the resource envelope of all LAs, the analysis used the level of revenue realization over the years (2005/06 to 2008/09). The revenue is split between central transfers and local revenues. The combined total is equal to total revenue. The Central Government Transfers, LATF to local Authorities: this is the amount of monies that is transferred to the LAs through the LATF mechanism. Road Maintenance Levy Fund (RMLF) is the amount that the LAs expect to receive or actually received from the Road Maintenance Levy Fund – a portion of which is allocated to maintain local authority roads. CILOR: Contribution in Lieu of Rates (CILOR) is the amount which each LA is to receive from the central government on Central Government owned land within the LA. It should be noted that the CILOR is an own source revenue but is collected by the Central Government and remitted to the LA. LAs cannot therefore directly influence the amount of CILOR remitted to the LAs. LAs cannot therefore directly influence the amount of CILOR remitted to the LAs but rely on central government for the remittance. Property Rates: This is the amount from the property rates as collected in accordance with the rating Act and the Valuation for Rating Act. Single Business Permit: This is the amount from the Single Business Permit as collected in accordance with the local Government Act (Cap 265) and MLA Circular 11/98. Market fees: This is the amount collected from the various markets located within a LA in accordance with the local Government Act (Cap 265) and related by-laws which are approved by the Minister for local government. Other: This is amount collected from all other sources of local fees and charge – such as cess, bus parks, game park fee, house and plot rents, garbage fees, water etc. Remuneration; salaries of all LAs employees and allowances paid to councilors. Service delivery: Services and facilities provided by various LAs. The study uses the level of capital investments by LAs as measures of service delivery. Debt Reduction: is the level of outstanding debt of all LA over the years 2005/06 to 2008/09. TOOLS AND INSTRUMENTS FOR THE STUDY

1. Key informant Survey

DISTRICT (Tick) CONSTITUENCY (Tick) Kuria Kuria Busia Budalangi Mandera Madera West Ijara Ijara East Baringo Baringo East Malindi Malindi Tana River Galole

DESIGNATION OF KEY INFORMANTS (Tick as appropriate)

District Fund Official District children’s Officer

District civil society official District Medical Officer

District fund Official District HIV/Aids Officer

District commissioner District Water Officer

District Accountant District Information Officer

District Roads Engineer District Environment Officer

District Works Officer Constituency Funds Official

District Physical Planner Mayor/Chair person Local Authority

District Development Officer Council Committee chairperson

District Education Officer District agricultural/livestock/fisheries officer

District Youth official District Women Official

District Procurement Officer Other (please specify)

Please list what you consider to be key objectives of the various decentralized funds that come to this District

Constituency Development Fund

Local Authority Transfer Fund

Road Maintenance Levy Funds

HIV/Aids Fund

Bursary funds

Women Funds

Free Primary Education Funds

Youth Enterprise Funds

What is your role with respect to each of the decentralized fund?

Constituency Development Fund

Local Authority Transfer Fund

Road Maintenance Levy Funds

HIV/Aids Fund

Bursary funds Women Fund

Free Primary Education Funds

Youth Enterprise Funds

Kazi Kwa Vijana Funds

Please explain how you carry out that role paying attention to how the fund managers interact with your office.

Constituency Development Fund

Local Authority Transfer Fund

Road Maintenance Levy Funds

HIV/Aids Fund

Bursary funds

Women Funds

Free Primary Education Funds

Youth Enterprise Funds

Kazi Kwa Vijana Funds

Do you feel the fund has been true to its objectives in the manner in which it has been operationalized? (Tick one option in respect to each fund)

Yes Partially No Sure No opinion

Constituency Development

Local Authority Transfer Fund

Roads Maintenance Fund

HIV/Aids Fund

Bursary Funds

Women Funds

Free primary Education

Youth Enterprise Fund

Kazi Kwa Vijana

What have been the key impacts of various funds in the district?

Constituency Development Fund

Local Authority Transfer Fund

Road Maintenance Levy Funds

HIV/Aids Fund

Bursary funds

Women Funds

Free Primary Education Funds

Youth Enterprise Funds

Kazi kwa Vijana Rate the nature of the effect (very positive, positive, No impact at all, Negative, very Negative)

CDF LATF YF KKV RMLF HIV/ CBF WF FPE AIDS

1=Very positive

2=Positive

3=No impact at all

4=Negative

5=Very negative

6=Do not know

What do you see as the main challenges that have arisen in operational sing these funds? (pay attention to legal and institutional framework for running the fund, timeliness and adequacy of resources , capacity for managing the funds and their activities, frame work for accounting for the fund resources.) Arrange them in order of importance. – Most important to least important

Constituency Development Fund

Local Authority Transfer Fund

Road Maintenance Levy Funds

HIV/Aids Fund

Bursary funds

Women Funds

Free Primary Education Funds

Youth Enterprise Funds

Kazi Kwa Vijana Funds

Who initiated the projects initiated and financed through these funds? (tick one or more options)

CDF LATF YF KKV RMLF HIV/ CBF WF FPE AIDS

Community members

Local members of parliament

Local Councilor

Local authority officials

District officials

Others (please specify)

For these projects are you satisfied that the process of initiating the project was satisfactory? (Tick only one answer per fund)

CDF LATF RMLF HIV/AIDS Bursary REF FPE

Very satisfied

No opinion

Dissatisfied

Very Dissatisfied Please indicate your agreement with the statement below using the scale provided

1=Strongly agree CDF LATF YF KKV RMLF HIV/ CBF WF FPE 2=Agree AIDS 3=No opinion 4=Disagree 5=Strongly disagree 6=Do not know

The decisions in respect of these funds are taken openly

We get sufficient information about these funds

Projects on which these funds are spent are relevant to their mandate

People are able to get explanations when things are not clear from the responsible bodies at the district or constituency level

Decision taken in respect of this fund are sufficiently justified in public to their satisfaction

Decision in respect of this funds are within their respective mandates

We are able to sanction or decisions taken that tare against the mandates of the funds

Mechanisms exist to sanction actions or decisions against the mandate of the fund

Is there public education on the funds i.e. Do the public know the existence of a fund and how to apply for assistance?

HIV/ CDF LATF YF KKV CBF REF FPE AIDS

Yes

No opinion

Do not know

If you answered yes, to 11 above are you satisfied with the level of public education

HIV/ CDF LATF YF KKV CBF WF FPE AIDS

Very satisfied

Satisfied

No opinion

Dissatisfied

Very dissatisfied Please make proposals on measures aimed at resolving these bottlenecks. (Rank them in order of priority from most important to least important.

Are there any other issues that you would like to discuss concerning the funds? (List them in order importance to least important)

What do you see as the future of existing funds?

What do you see as the future of the decentralized funds?

How much money was allocated, expended and remained unused and returned to treasury? (Please enter exact amount)

FUND ACTIVITY 2005/06 2006/07 2007/08 2008/09 Total

Total CDF Allocation

Expense

Balance

Total LATF Allocation

Expense

Balance

Total Women Fund Allocation

Expense

Balance

Total Youth Fund Allocation

Expense

Balance

Total HIV/AIDS Fund Allocation

Expense

Balance

Total RMLF Allocation

Expense

Balance Total CBF Allocation

Expense

Balance

Total KKV Allocation

Expense

Balance

Total FPE Allocation

Expense

Balance

2. FRAMEWORK FOR FOCUS GROUP DISCUSSIONS

DISTRICT CONSTITUENCY

Kuria Kuria

Busia Budalangi

Mandera Madera West

Ijara Ijara

East Baringo Baringo East

Malindi Malindi

Tana River Galole

INTRODUCTION

For the Crosinox Kenya Facilitator

The purpose of the introduction is to enable you to establish rapport with the participants by getting a sense of their concerns about the nature and structure of the discussion; establish an environment that allows the participants to be comfortable about disclosing opinions and feelings and to provide information on what to expect during the session.

Self Introduction  Get members of the FG to introduce themselves and what they do.

State the Focus Group Objectives  This focus group is designed to help us understand how you feel about decentralized funds and their application in pursuit of development in your area.

State the Purpose Statement for the Focus Group We are going to talk about the decentralized funds that our Government distributes across the country. The Funds are decentralized in the sense that the Government releases them to be spent through officers or committees that reside with you here in the district. Our discussion will focus on a number of issues related to decentralized funds namely:  Awareness of funds  Public participation in funds  Accountability and transparency issues  Operationalization of the funds  Visible impacts of the funds  Challenges in implementation of the funds  Your suggestions on the way forward

It is expected that the results of this discussion will facilitate interventions aimed at enhancing the performance of these funds in facilitating development in your areas.

TRANSITION

For the Crosinox Kenya Facilitator

• To obtain a snapshot of the participants’ overall perceptions or views about decentralized funds • To set the stage for an in–depth discussion. These questions move the discussion into the next stage, which is the in–depth investigation.

1. Can any one name some of these funds? Work through the list, guiding respondents to identify the funds by themselves. This is useful because it will place each of the funds in a local context, doing away with the difficult task of translating each of them into the local language or Kiswahili. Obviously, if they do not get to the end of the list, then provide leads.

2. How do you feel about decentralized funds?  Why do you think these funds were set up?  What is your opinion about the adequacy of the funds?  What do people in this constituency that you talk to say about these funds?

3. How do you participate in decisions about decentralized funds?  Do you provide any input in the implementation of the decentralized funds?  What type of input do you provide?

4. What are your feelings about being involved in decisions about decentralized funds?  Are you involved in decisions related to the decentralized funds?  If so, what type of decisions are you involved in?  Are you satisfied with your level of involvement?  What are the reasons for your answer?  Do you think that not everyone needs to participate in decisions?

5. What do you think of the staff managing the funds in your constituency or district?  Do you think that staffs managing the funds are doing so well?  Why do you say what you say?  Do they manage the funds in a transparent and accountable manner?

IN-DEPTH DISCUSSIONS Taking each of the funds in turn and work through it along the following lines

1. What do you think was the purpose for setting up the XXXXX Fund and when was it operationalized in your locality?  Do you feel that the way the Fund is run is true to the original objectives for which it was established?  In what ways is the running of the Fund true to its original objectives?  In what ways has its running not been faithful to its original objectives?

2. Do you know who are the officers and citizens responsible for the XXXXX Fund? (Ask for names.)  How were these officers appointed?  Are they the best people to run the Fund?  Do you know where their offices are where you could go and ask questions or give information if you wished to? 3. What challenges has the running of the Fund encountered and what solutions would you propose for them?

4. When do the various agencies seek your input, if at all? [Focus on input during project identification, preparation, implementation, monitoring and evaluation]

5. What role have any of you played in this Fund since it was launched?

6. What do you think about your participation in the fund?  How far do the Fund officers involve wananchi in its running?  Do they hold meetings at which you plan what to do with the Fund?  Do they discuss the budgets for their activities with wananchi?  Do they allow wananchi to look at the records in their offices?

7. What impacts has the Fund had in the community? Classify these impacts as positive or negative, based on their perceptions and understanding

8. Are there people/regions you know that should be benefiting from the Fund but are currently not doing so? (Provide specific examples.)

9. What measures should be taken to improve management of the Fund?

10. Overall, how do you feel about what is going on with respect to the funds?

11. Do you think that the wananchi are better of with decentralized funds or were they better off before the funds were developed and implemented?

12. Are there any other issues related to the Fund that you would like to raise? For example, where do you think the Government should go with respect to decentralized funds?

CLOSURE For the Crosinox Kenya Facilitator

• To create an opportunity for participants to alter or clarify positions they have made in earlier discussions. • To verify conclusions drawn across topics. • To thank participants for attending the session; to acknowledge the experiences and views of participants as valid and enlightening; and to remind participants why their advice was important • To handle final logistical matters.

In closing the FGD, the group should focus on the following themes, namely:  Awareness/Public Involvement  Accountability/Transparency  Operationalization & Impacts  Challenges  Suggestions for Improvement