Finance, Resource Allocation, and Use
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BOX 4.5
Participatory planning in public financial management Participation processes can be problematic and ineffective. The constitution sets out public participation as one of the principles guiding public financial management (PFM). Although officials in all the counties visited during the Making Devolution Work for Service Delivery (MDWSD) study talked about their participatory processes, there was widespread feeling that these processes were not working as effectively as they should and were open to abuse. County C, for example, struggled with inconsistent preferences being expressed at different stages of the budget cycle and when convened by different actors (for example, when the executive calls for participation in drawing up plans and when the County Assembly calls for input from the public as part of its scrutiny of documents). This was interpreted as the county having “three publics” and that the processes
may be leading to arbitrary outcomes or be vulnerable to manipulation or capture by certain groups. Even where participation processes work effectively, they still pose challenges to counties. Makueni County provided evidence of an impressive level of ward-level engagement to select projects for the annual development plan. However, some interviewees felt that an annual consultation on ward projects may be excessive. Hundreds of projects are recorded for a single subward, yet only five projects are then selected for consideration in each subward and even fewer funded: “County officials struggle between upholding the constitutional right for participation and the necessity to impose some strategic selection on the overall portfolio of investments” (Moon and Chege 2018).
Source: World Bank 2020a.
Ultimately, asset management is about ensuring provision of adequate and sustainable public services. International experience has shown that good asset management can be a vital catalyst for accelerating urban development and for expanding assets and services in response to increased demand for public services from a rapidly growing population. As shown in Kopanyi and Muwonge (2020), modern asset and liability management (ALM) is not only an urgent need in Kenya; it is also feasible (box 4.6).
County expenditure management The allocation of resources, however much it may (or may not) support service delivery, needs to be matched by actual spending. Signs of progress
To that end, it is a significant achievement that the National Treasury’s IFMIS has been rolled out to, and is used by, all 47 counties. It is also an achievement that issues with the operating system continue to be identified and resolved. Overall, county management of public finances appears to be improving over time. The annual audit reports for each county, drawn up by the Office of the Auditor General, indicate a gradual improvement across counties in that the audit opinions are increasingly favorable (figure 4.12). Most county audit reports expressed in FY2013/14 (at the start of devolution) were either adverse or disclaimers. By FY2018/19, however, the majority of county audit reports provided either a qualified or unqualified opinion, indicating that county financial statements are more and more likely to accurately describe county finances.
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