Planning, Budgeting and Budget Execution in WASH – General Introduction and Examples from Kenya

Lotte Feuerstein

At CABRI Peer learning meeting, Cape Town 08.06.2018

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Structural Particularities in Water and Sanitation Sector Financing

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Sector Fragmentation

• There is no agreed definition what belongs to sector, mandates are distributed over various ministries

• Important roles of state owned enterprises, local government bodies, NGOs, informal or community managed service providers

• Diversity of financing streams

…Making coherent planning and monitoring of financed, cross-country comparisons very tedious

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Water Sector Investment Needs4

Water and Sanitation Sector Actors

Type presentation title here08/06/2018

Public health

ministry/ departmentMinistry of finance

Sub-national

government (local-

municipal-regional)

WRM/

environmental

protection

authority

Water users / consumers /

citizens

Ministry responsible for

water

Water and

wastewater

utility

regulator

Water and

wastewater

utilitiesWater user

associationsetc. etc.

NGOs,

CSOs

River Basin

Orgs

Ministry responsible

for irrigation,

agriculture

Informal

providers

Donors/

development

partners

Hygiene

promotion

entities

Irrigation

schemes/

cooperatives

WASH SWAP/

Trust FundNational

irrigation

Board Authority for

water

harvesting

Sources of Finance

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Challenges across the budget cycle

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Poor project supervision and contract management

Lots of small projects – economies of scale,

monitoring challenges

Time windows for implementation

Political interference

Projects allocated to areas of

ruling party, political leaders

Poor follow up on audit

recommendations

Poor absorptive capacity (<75% in 40% of countries)

Procurement challenges

Donors concerned about corruption risks

Breakdowns from Infrastructure to Services

• Tendency to neglect O&M costs for new infrastructure, resulting in poor sustainability

• Appropriate solutions for serving low income urban areas and remote rural settlements aren’t easy

• Lack of focus on the underserved

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Kenya Case Study: Public Finance Management in WASH at County

LevelCurrent systems, challenges and reforms

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No Comprehensive Overview of Water and Sanitation Sector Budgets & Expenditure

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Water Supply and Sanitation Expenditure by Financing Unit

But…

• Only Water Supply and Sanitation

• County Government Expenditure not comprehensively captures

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2014-2015 2015-2016

KSh

million

US$

million

KSh

million

US$

million

Users 16,951 193 20,002 202

National and County

Governments 12,168 138 9,400 95

Bilateral and

multilateral partners 13,685 156 12,297 124

NGOs and CBOs 1,069 12 1,543 16

Total 43,874 499 43,242 437

Source: TrackFIN Study 2017

National MDA Expenditure in the Water Sector

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KSh million

Sum of 2014-15 Actual Sum of 2015-16 Actual Sum of 2016-17 Actual

National National National

Domestic

Resouces

External

Resources

Total Domestic

Resources

External

Resources

Total Domestic

Resources

External

Resources

Total

Catchment

Rehabilitation and

Conservation

380.42 - 380.42 - - - - - -

Integrated basin-based

Development3 025.82 387.93 3 413.75 2 368.54 168.77 2 537.31 3 796.16 15.30 3 811.46

Land Reclamation - - - - - - 35.74 - 35.74

Promotion of

Irrigation&Drainage

Development and

Management

- - - - - - 4 408.82 2 152.76 6 561.58

Water policy

Management834.72 - 834.72 645.86 - 645.86 875.79 - 875.79

Water Resources

Conservation and

Protection

1 067.82 501.76 1 569.58 954.15 547.52 1 501.67 1 672.90 996.16 2 669.06

Water Storage and Flood

Control3 681.25 - 3 681.25 1 272.12 - 1 272.12 4 468.00 59.02 4 527.03

Water Supply

Infrastructure4 746.06 12 326.01 17 072.07 5 767.39 6 416.58 12 183.97 10 784.13 19 123.93 29 908.05

Grand Total 13 736.09 13 215.71 26 951.80 11 008.06 7 132.88 18 140.94 26 041.54 22 347.18 48 388.73

Source: World Bank Group 2018

County expenditure on water programmes (BOOST Data)

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County 2014-15 Actual 2015-16 Actual 2016-17 Actual

Kwale County - 437.70 419.78

Kilifi County - - 958.13

Tana River County - - -

Garissa County 814.75 15.57 33.90

Wajir County 156.55 - (0.01)

Marsabit County 424.46 48.23 176.79

Isiolo County - - 9.98

Meru County 52.08 16.51 27.77

Tharaka-Nithi County - 57.27 72.20

Kitui County 610.87 174.91 324.70

Machakos County - 46.89 283.17

Makueni County 1.59 28.89 93.28

Nyandarua County 192.20 280.59 263.50

Nyeri County 48.60 30.19 -

Muranga County - 20.75 -

Kiambu County 33.68 45.58 62.61

Turkana County 0.29 - -

West Pokot County 198.95 123.29 192.29

Samburu County - 405.88 605.94

Trans Nzoia County - 57.08 3.00

Uasin Gishu County - - -

Elgeyo/Marakwet County 98.00 - 37.65

Baringo County 49.20 74.68 76.35

Laikipia County 83.76 31.55 59.94

Kajiado County 13.84 - 3.92

Bomet County - - -

Kakamega County 7.90 14.74 9.38

Vihiga County 65.64 47.15 52.43

Busia County 238.52 216.42 46.74

Homa Bay County 5.42 - -

Migori County - 42.51 7.15

Kisii County 103.03 369.11 350.17

Nyamira County 149.49 99.46 -

Nairobi City County 4.58 168.44 -

Systemic Weaknesses and Integrity Risks

Water Sector Institutional & Legal Framework, Financing Arrangements, PFM in Counties

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Systemic Weaknesses & Integrity Risks

• Governance of state & county corporations “management at arm’s length”

• Gaps in coordination and reporting between counties, national government and CSOs

• Weak institutional arrangements and monitoring of small water schemes, esp. in rural and peri-urban areas

Water sector institutional & legal framework

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Systemic Weaknesses & Integrity Risks

• Partially unclear + sector expenditure roles and responsibilities

• Complex and fragmented financial flows (with various sources and spending entities)

• Significant deviation between sector budgets and actual expenditure, largely because of low absorption

• Budget and PFM practices and human resource gaps hinder growth in financing for the sector

• Donor funding partially off budget, limited medium-term predictability

Water Sector Financing

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Water Sector Financing Arrangements

Systemic Weaknesses & Integrity Risks in County PFM

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Inadequate systems for tracking county projects

Programmes in the appropriated budget do not match with the programmes in IFMIS

Poor IFMIS connectivity

Late disbursement of funds

Complicated procedure for donors to finance counties within the conditional grants framework

Weak links between strategic

plans and budgets

Limited effectiveness of public

participation in budgeting

Incoherent definition of water

programmes across counties –

comparison not possible

Reporting and review of

programmes and projects not

adequately implemented

Contradictory financial

reporting in IFMIS and

financial statements

Limited public availability of

budget data

Example: county treasury approach to budgeting for water projects and IFMIS limitations

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Rank HQ/Ward DepartmentCategory Ward Sub Ward Project Name Amount

1 Ward ProjectWater Priority Emali

Mulala

Emali Construction of Muooni

Sand dam across Ukia -

Muthelekana

2,500,000.00

• IFMIS record the budget fields in the green cells, not the red cells.

• In IFMIS, counties can only budget by department and ward, and all water projects in a ward

are all currently aggregated as a single budget line.

• For counties that have many small projects in water, IFMIS does not produce adequate data

for monitoring and reporting, and coordination of actors.

• As a consequence, county departments continue to use parallel tools such as excel to manage

the budget.

• Possible solutions: enhancing the fields in the IFMIS, through a modified use of the existing

fields or through Hyperion.

Systemic Weaknesses & Integrity Risks

• Interpretation and understanding of the procurement law is limited

• Payments made without completion or despite poor quality of works

• Issues in stock management: high prices, poor records of stock and flawed selection of vendors

• Collusion between vendors, inefficiencies in the procurement system and delays of payments may deter credible bidders

• Interference in the tendering and selection process

Public Procurement at County Level

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Recommendations

• Agree on roles for managing water related investments and develop capacities of the responsible institutions

• Ensure consistency/comparability of county water programmes and SCOA

• Enhance project monitoring functions in IFMIS

• Use participatory budgeting processes to make the case for water (incl. civil society)

…more comprehensive recommendations to be developed based on case studies

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Thank you

WIN General Assembly 2017 - November 30, 2017 Lessons Learned from Water Integrity Action

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