Kenya has spent more than Sh72.14 billion on projects that have since stalled and are unlikely to be completed.
The Parliamentary Budget Office (PBO), which advises MPs on budgetary, finance and economic matters, said the country had accumulated 545 stalled projects as of 2018 spread across 27 ministries and departments.
It said the nation stands to lose another Sh293.1 billion on outstanding amounts to be paid for the projects through capital commitments that have further shrunk the government’s spending envelop.
PBO, in a report to the World Bank, said Kenya lacks a proper framework for review of how the government has been spending money each year, which would inform how it would allocate funds for future projects.
The World Bank is Kenya’s largest multilateral lender.
“From a legislative perspective, there are some concerns with regard to public investment in Kenya, key among them (the) lack of a coherent Public Expenditure Review (PER) that is supposed to inform future budgets,” said PBO.
Pending bills
The office said the country does not have an elaborate mechanism to appraise projects, which has led to budgeting for multibillion-shilling projects that have no value to Kenyans. It urged the lender to work closely with lawmakers to identify projects that are valuable.
“The bank should continuously engage the elected representatives as a way of integrating citizens’ voices into its programmes, this will ultimately help to achieve a lasting and inclusive country outcomes,” said PBO.
It said in-year revision mostly relating to development budget has led to the accumulation of pending bills that have slowed down the growth of the private sector.
Pending bills have been a headache for suppliers to both county and national governments, with delays in settling dues owed to suppliers having run many cash-strapped traders out of business.
PBO added that there is poor absorption of the development budget that is caused by lack of proper implementation matrix between the National Treasury, ministries and donors.
At the same time, National Assembly Speaker Justin Muturi urged the World Bank to help Kenya to institute reforms in the management of public investments to ensure the projects the government undertakes have a real impact to the people that they are intended for.
Rapid surge
Mr Muturi said the rapid surge in the number of stalled projects in recent years underscores the importance of engaging citizens to actively be involved in the conception of the projects and properly assessing the cost and desired impact of the projects.
Mr Muturi was speaking after meeting a team from the World Bank Kenya Office led by the Country Director for Kenya Keith Hansen and International Finance Corporation (IFC) Regional Director Jumoke-Jagun Dokomnu.
“We must embrace the public’s input when initiating projects at both levels of government. Let the public say which projects they think will impact them best, and not dictate what we as leaders think they need,” said the Speaker.
Mr Hansen said World Bank is focused on developing Kenya’s capacity and support in proper public investment.
He the country has a duty to support the growth of the private sector so as to expand the economy and offer a life line to thousands of young graduates that are joining the labour market every year.
Reforms
“The government has a role to help the private sector to grow and absorb tens of thousands of young people graduating every year. We’re here to help Kenya Institute reforms and change of paradigm to realise private sector driven growth,” he said.
Last month, the National Treasury told the International Monetary Fund (IMF) it would cancel the 437 stalled projects by the end of March, pending Cabinet approval.
It analysed all projects and the amounts of money required to complete them, adding that hundreds of them would be cancelled.
“We have expanded to cover all sectors through a stocktaking exercise of projects and associated commitments. This was an extension of a similar exercise completed in March 2021 that specifically targeted the education, health, and infrastructure sectors,” the Treasury told IMF.
It said the chosen stalled projects had not received budget funding for several years but have nevertheless remained in the portfolio of projects even as others are held back by endless court battles.
“Based on this extended exercise, we have identified 437 stalled or underperforming projects that should be cancelled. A Cabinet decision to terminate these projects is expected by March 2022, as there are contractual issues to be addressed prior to executing that decision,” it said.
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