Prioritize Efficiency in Public Expenditure in Kenya

Efficiency is a commonly used word in many spheres of life and the word has almost as many definitions as its uses. In many cases, though, it is one word that gets misunderstood, misused or is unused. The Longman’s dictionary of contemporary English defines efficiency as the quality of doing something well and effectively, without wasting time, money, or energy.  Efficiency should be measurable and in my field of engineering efficiency is a frequently calculated value and is commonly used as a strong selling point for machines and industrial solutions. The term efficiency has also found its way in many segments of management. Public finance is one area that the term efficiency ought to be used more due to fact that government expenditure affects all citizens of a given country.

In a report on efficiency on government spending by the world economic forum 2018, Kenya had a score of 3.3 in a scale of 1 to 7, with 1 being extremely inefficient while 7 was extremely efficient. This score ranked Kenya at position 70 out of 136 countries ranked globally. Rwanda was placed position 5 with a score of 5.6 while Tanzania was position 28 with a score of 4.2. Ethiopia and Uganda took positions 38 and 100, respectively.  The ranking also showed the efficiency trend which was flat for Kenya of the measured period. Efficiency is one measure that, if prioritized, would lead to short term and long term results that are best described in one of the holy books, as exceedingly and abundantly more than we could ever think or imagine.

Audit reports from Kenya’s Auditor General’s office point to wastage, misuse and disuse of funds, year after year within government ministries and also in the counties.  In his report published in December 2018 for the financial year 2016/17, the Auditor General noted huge expenses by the government for projects that had overshot their completion dates, and also for stalled projects. The report also revealed unexecuted work that been paid for by government.  The State Department for Correctional Services, for example, incurred a bill of KES 876 million for an incomplete Project for accommodating Prison Staff. The same was seen in the State Department of Natural Resources’ Construction of in-block irrigation infrastructure -Oluch and Kimira Project to the tune of KES 746 million.

Steven Goodrich, CEO of the Centre for Organizational Excellence Inc., in the USA says “Inefficient programs take away critical resources, reduce quality, cost more money, and reduce services to the American people. Efficiency is achievable, but only if it is strongly desired and addressed.” The same could be said of Kenya. The National Government recurrent expenditures, if drilled further, would yield many opportunities for reallocating and resizing some of the expenditure items. More work could be done using less resources by the National and County Governments.  Keeping track of efficiency immediately exposes wastage areas and also reveals funds that are likely to have been misappropriated or stolen.

What then should be done to improve efficiency? The low hanging fruits pointed out yearly by the Office of the Auditor General’s reports on the financial statements for Ministries, State Corporations and Counties are a perfect starting point. Addressing the issues raised in these reports would help to plug in the current gaps on government expenditure. Stolen or unaccounted for funds are clearly highlighted in these reports and the irresponsible accounting officers, County Governors or Cabinet Secretaries exposed. Executing actions to remedy the issues raised in these reports is one sure way of ensuring public expenditure efficiency. In the private sector, financial audit reports are respected since they show if all processes, systems and integrity are at work in ensuring company shareholders get value from their investments. It is unlikely to find an audit finding recurring year after year within the private sector. In the public sector, the converse is true. The Auditor General ought to be the one of the most respected and feared among government officers.

Another step would be to ensure that efficiency is incorporated when building up government budgets and that an efficiency score is worked out for each government program. A benchmark with countries that do well in this area, like Rwanda, would also help. What is Rwanda doing that Kenya cannot do. Thorough project cost and benefit analysis and benchmarking the same with similar projects in other countries would be very useful. An efficiency score should be incorporated public projects in addition to the technical and commercial evaluation scores.

Honesty, integrity and love for one’s country if placed above personal greed would go a long way in ensuring that public expenditure is very efficient. Of what benefit is it to live like a King who is surrounded by paupers? Kenya can work towards being in the top 10 countries with high efficiency on government spending score, and take pride in having a country where public expenditure isn’t wasted or stolen.