Budget mechanisms and public expenditure tracking in Kenya
Discussion Paper No. 37
Abstract
Public expenditures are faced with numerous problems of wastage and leakages of resources mainly due to weak procurement procedures, corruption and weak monitoring systems. Nevertheless, in most developing countries, central government budget allocations are used as indicators of supply of public services. Public expenditure tracking surveys assess the leakage of public funds or resources prior to reaching the intended beneficiary. The overall objective of this study was to provide information useful for improving the effectiveness of public expenditure and service delivery. The survey targeted three sectors: education, health and agriculture. The education sector looked at school bursaries, textbook allocations, enrolments, teachers and sources of school funds, while the health sector addressed issues such as cost-sharing, medical personnel, medical supplies and government allocations to health facilities. Extension services to farmers, agricultural personnel, public allocations to extension services were the key issues addressed in the agricultural sector.
The study identified constraints in service delivery and leakages of public resources at various levels. Poor record keeping was prominent in most of the institutions visited, especially at the district and facility levels. Most rural health facilities are understaffed. The study findings show that about 85 per cent of the health facilities have inadequate medical supplies. About 83 per cent of all the health facilities purchase their own drugs. During the 2001/2002 financial year, only 69.7 per cent of the drugs released by the districts reached the health facilities. Analysis of drug leakage across types of health facilities show that only 59.1 per cent and 88.0 per cent of the drug supplies reached dispensaries and health centres respectively. The survey shows that facilities with regular annual audit have a drug leakage of 25 per cent compared to 34.2 per cent for non-audited facilities. There was a leakage of 22.2 per cent of the user charges revenue generated by health facilities. Health facilities with regular annual audit have user-charge leakages of 19.7 compared with 28.5 per cent for non-audited health facilities.
The main finding from the schools is that there are almost zero chances of leakage of non-wage funds since school funds are either transferred directly to schools’ bank accounts or payable to the schools by cheque or in-kind. However, we could not rule out the possibility of leakages at facility level especially when making purchases such as textbooks, when allocating bursaries and when distributing what was supplied in kind. It was also noted that there is very minimal management of schools by the school committees.
In agriculture, it was noted that very little funds are allocated to provision of extension service provision. About 68 per cent of farmers–in the focal areas– report that they receive extension services. However, the frequency of visits is irregular. Out of 68 per cent, 48 per cent of farmers get extension services when they call upon extension officers, 17.9 per cent seldom get extension services and only 4.7 per cent receive extension services on a more frequent basis. Farmers training institutions are also under-utilised; in some cases they remain completely idle.
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