Adopt private sector ethos to end splurge

The government’s continued austerity talk amid its increased expenditure is hard to justify. Keen watchers of the public sector know that delivery of services gets disrupted in May and June as virtually every department is engaged in outdoor activities — team building, seminars and sports days — meant to exhaust the annual recurrent budget before it’s surrendered to The National Treasury, a vice known as spend it or lose it.

The taxpayer is, hence, progressively charged more for revenue that is eventually wasted in ‘happy hours’, if not inflated white elephants, whose overriding rationale is to provide a conduit for lining the pockets of government operatives and wheeler-dealers.

To blame for the binge is our budget making process, its pretensions of public participation notwithstanding. Kenya pursues incremental budgeting, where it’s presumed that more will be spent in the current cycle than in the previous one. When the Medium Term Expenditure Framework (MTEF) was conceived about two decades ago, it was hoped that three-year cycle budgets would make spending predictable and manageable. That has not been realised because additional resources continue being allocated annually even where ministries and departments have not absorbed the little that they had been allocated.

The result is diversion of money to non-priority areas in the early stages of projects, in the comfort that more would be disbursed the following year. Projects like the Greenfield terminal and the Kimwarer and Arror dams — where substantial amounts have been paid out with no work done — demonstrate the imprudence.

Later, more money has to be allocated for completion, explaining the many stalled projects, growing pile of pending bills and general indebtedness. These impede private sector growth, especially among the job creators — small and medium enterprises.

Adoption of private sector ethos would bring government budgeting into line. Progressive companies operate on zero-based budgeting, where votes are made on a priority basis without reference to previous allocations. No new money is considered without proof the earlier allocations were appropriately spent. This makes the budgets more objective, inculcates discipline among implementing agencies and prevents unjustifiable cost overruns.

Another solution is right in our Constitution, where money meant for counties remains in their accounts at the turn of the financial year, ensuring funds are ring-fenced for designated uses even when there are implementation delays.

Prudent budgeting has fallen prey to mischievous forces that frustrate sound public policy. Treasury Cabinet Secretary Henry Rotich should not continue indulging them.