Sustainable Development Goals (SDGs) is a shared responsibility of all governments of the World – both at the national and local level. To deliver on these goals, governments must transform the delivery of public services by combining timely access to accurate and updated data and full implementation of planning and budgeting instruments such as Program-Based Budgeting (PBB). This means governments must have access to accurate and updated data to formulate public policies and budgets that address specific service delivery and development goals whose impact is measurable against public expenditure.
Kenya’s Public Finance Management (PFM) laws and regulations required a shift from line item (itemized budgets) to a Program-Based Budget (PBB) format in 2012 for National Government and 2014 for County Government. This shift in how the budgets are prepared and presented was expected to transform how governments plan and budget with the ultimate goal of obtaining value for every shilling spent by public institutions. At the heart of PBB is the link between resources and outcomes where every shilling spent, must yield or support the delivery of outputs e.g. change in quality, quantity, accessibility, behavior, and such concepts in the service delivery and development ecosystem. Outcomes can be both qualitative and quantitative and are measurable within a given timeframe.
The outcome-resource linkage relies on performance indicators to measure the achievement of the set targets and outputs within the set time period. Performance indicators contain baselines that showing current state of the outcome and targets for the particular financial. They also must be based on accurate and updated data and information and deliverable within a specified time period. When this linkage is inadequate, there is the possibility that public expenditure will create little or zero impact on communities.
Evidently, therefore, a combination of access to accurate and updatable relevant data and capacity to implement a PBB is necessary for effective policymaking, efficient planning, and budgeting that create impact. In order to put this into context, we will use an example from Uasin Gishu County’s budget.
In 2021, one of the county’s programmatic outcomes is to increase access to clean and potable water under Program One (P1) found on PDF page 26 of the 2020/21 PBB budget. The outcome of this program targets to achieve SDG 6.1 which aims to achieve universal and equitable access to safe and affordable drinking water for all by 2030. This outcome area is a continuation from a similar Program Two (P2) in the previous financial year’s budget found on PDF page 52 of the PB supplementary-2 of the 2018/19 FY budget. Considering the outcome area is qualitative, it should be measured using relevant qualitative and quantitative indicators and targets.
Our analysis of the budget documents for the two financial years shows that to increase access to clean and potable water, Uasin Gishu county targets to construct 108 community water projects in 2020/21 from a baseline of an actual 18 community water projects constructed in 2018/19. This builds on similar projects (119) targeted to be achieved in 2019/2020. A quick review of the 2018/19 budget (base year) shows that the county had targeted to construct 90 community water projects from a baseline of 234 community water projects in the previous financial year 2017/18. Similarly, the county targeted to drill 42 boreholes in 2020/21 from a baseline of actual 24 boreholes constructed in 2018/19. In the baseline year’s budget (2018/19), the county targeted to drill 48 boreholes from a baseline of 49 in the previous year.
Strengths and weaknesses
Uasin Gishu county has done well to present baselines for each of the financial years including actual non-financial information. However, we note several weaknesses with the budget information presented in the two financial year’s budget documents.
The outcome area is qualitative; thus, the performance measurements should be equally qualitative. While the targets and indicators measure change, they are basically the activities or the interventions whose implementation will produce the outputs (change) that collectively deliver the outcome and thus do not directly measure the outcome in their present state, unless if the county’s target outcome was to increase the volume of water available for supply. Therefore, the eventual state of the outcome (current access to clean and safe water) presently, and the target to which to increase this access, are not established.
The outcome area is also infinite (unable to measure within a set timeframe). When a target outcome has no timelines within which it is to be delivered, public resources will be spent on such outcomes for eternity without realizing the desired impact. It also means oversight institutions such as county assembly, citizens, Controller of Budget, and Auditor General lack the basis to ensure efficiency and cost-effectiveness of the resources allocated for the delivery of such outcomes.
The variation between targets and actual performance should be minimal. Regardless of the structure of the performance measurement information, the performance indicators and the targets for 2020/21 do not follow the achievements of 2019/20 and 2018/19. To begin with, there is a huge variation between the targets for 2018/19 and the actual achievements for that particular year as presented in 2020/21. While a variation can be seen between targets and actual achievements because changes occur to the assumptions and risks from which the budget is prepared in the course of budget implementation, it is very unideal to see 100% variation as is the case for the actual achievements and targets for drilled boreholes as presented in 2020/21. Equally, while there is a small chance that unforeseen circumstances may force such variations, at the minimum, the budget should provide a narrative explanation for underperformance and how this affects public spending.
Lastly, a PBB presents both non-financial and financial information. However, none of the county’s programs for 2020/21 has a budgetary allocation for the delivery of the various stated outputs from reading the PPB. Other than the narrative explanation in part 2 on page 25 of the 2020/21 budget for the Department of Water and Environment, the PBB is a presentation of non-financial information. In a Program-Based Budget (PBB) format, resources are mapped to functions, and that trail is clearly demarcated. However, from reading the county’s PBB, it is not possible to tell the amount of money allocated and whether the allocation is right for the implementation of the target interventions to achieve the outcome area or rather for the drilling of 42 boreholes in 2020/21. This applies to the amount spent to drill the 24 boreholes in 2018/19 as presented in the 2020/21 budget.
Conclusions and recommendations
In light of the role played by the combination of data and utilization of PBB in the planning and budgeting process, Uasin Gishu County’s budget suffers several weaknesses as noted above. There are several factors that offer explanations for the occurrence of these types of inadequacies some of which may be interdependent and include capacity and legislative oversight-related demands as explained in more detail below.
To efficiently link planning and budgeting to results of spending, counties must collect their own data to complement and supplement KBNS data. The collection and dissemination of data in Kenya is a mandate assigned to the National Bureau of Statistics (KNBS) by the Statistics Act 2006 and county government statistical offices under the County Statistics Bill 2016. However, many county governments are yet to fully establish statistical data offices. Furthermore, the data collected by KNBS is segregated at a high level beyond the functions allocated to counties by part two of the fourth schedule e.g. GDP, labor, and poverty. These types of data may be relevant for the county’s planning, however, the release of this data is done after every decade and updated semi-decade (five years) through surveys while the planning and budgeting at the county level take place on an annual basis, with a requirement of projection for two outer years. Therefore, the majority of county governments have been and continue to use estimated data to design programmatic interventions, set baselines, and targets where relevant data is not available. This is true for most sectors except health and education where some data are available from administrative sources.
Strengthen the capacity of counties to plan and budget for better results: Uasin Gishu County’s intention to increase access to water is clear from reading the budget, however, the gaps in the presentation of the non-financial information and failure to attach a budgetary allocation can be explained as an inadequacy in the capacity to plan and budget well. This capacity challenge also includes the implementation of a PBB which Dr. Jason Lakin and Vivian Magero in their paper: Improving Program-Based Budgets argued that the requirement of Public Finance Management Act 2012 to shift from line item (itemized) budget to PBB occurred when fewer government officials had sufficient knowledge about how to prepare a PBB, and few citizens knew how to read a PBB.
Stimulate better plans and budgets through legislative oversight: Similarly, the capacity and knowledge of county assemblies to oversight the plans and budgets tabled in the house is also a factor that affects the design, planning, and budgeting, including full implementation of PBB). As argued by Dr. Lakin and Vivian Magero, the shift occurred with inadequate capacity to implement PBB. Consequently, many county assemblies required their respective county executives to accompany such budgets with versions of the budget in a line-item format. This is a continuing situation for most county governments and Uasin Gishu County’s situation could be a classic example. Considering that PBB is heavy on data that is accurate and updated, this capacity challenge is also fueled by inadequate access to relevant data by which the county assemblies’ responsibility to review and approve a PBB budget is based.
Overall, the challenges outlined in this paper are a trend across the majority of county governments. Uasin Gishu County is just an example. Poorly structured programmatic interventions by counties is an indicator that there are several institutions both at the national and county level that have the mandate to support county governments to develop the capacity to fully implement PBB and also produce quality budgets. These include the National treasury, Controller of Budget, and Commission on Revenue Allocation. Others include the Office of the Auditor General (OAG) whose audit mandate should unearth such systemic challenges and subsequently recommend appropriate action.
To address the data and related capacity challenges, and promptly achieve SDGs and other developmental targets, we recommend county governments collect their own data and establish statistical institutions with the capacity to host, facilitate access, and updating of data that is relevant to the functions assigned to counties. Elgeyo Marakwet County has pioneered this initiative under its OGP Local Action Plan II. This should serve as a reference point for county governments seeking to learn and initiate similar milestones. In 2019, Elgeyo Marakwet County, with the support of Open Institute, established a county data desk and is currently in the process of collecting household data. OGI Kenya is proud to be a part of this initiative and we will share the lessons in due course