HOW ARE OUR MONIES SPENT? the Public Expenditure Review in Eight Constituencies (2005/2006 – 2008/2009)
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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) IV 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 © 2010 ActionAid International Kenya (AAIK) All rights reserved. No part of this book may be reproduced or utilized in any form or by any means without permission from the publisher 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