Ministerial expenditure on development projects more than doubled in the first quarter of the current fiscal year ending June 2025, in part boosted by the resumption of works on roads and infrastructure in schools.
State ministries, departments, and agencies (MDAs) spent Sh68.54 billion on development projects between July and September, fresh exchequer data shows, a jump of 116.57 percent over Sh31.65 billion in a similar period last year.
The spending covers what was directly funded from the government’s main account, the exchequer, and excludes that portion that is funded by the development partners.
This has come on the back of the increased relaunch of stalled projects by President William Ruto in the aftermath of deadly anti-government protests that prompted him to fire about half of Cabinet.
The numbers, released by Treasury Cabinet Secretary John Mbadi, show that expenditure on roads bumped more than one and a half folds (160.31 percent) in the three months to Sh16.65 billion compared with Sh6.40 billion a year ago.
Increased absorption of development funds was also notable in the Basic Education Ministry where expenditure surged 337.36 percent to nearly Sh7.15 billion from Sh1.63 billion in a similar period last year.
This came at a time when the junior schools are preparing to welcome an additional class, Grade 9, from next January. There was also a significant jump in cash released to the State Department for Economic Planning, which skyrocketed more than 12 folds to Sh7.84 billion from Sh597.97 million in the same period in the prior year.
Economists say increased spending on development projects such as roads, water, power plants, housing and electricity transmission lines, lifts economic activities in a country whose growth largely depends on public expenditure on infrastructure projects, helping create new job opportunities and government taxes.
Cement makers, steel manufacturers, contractors, and the thousands of workers employed in the infrastructure pipeline benefit from public spending and usually feel the pinch of a drop in public expenditure on development.
Since taking power in September 2022, the Ruto administration has come under sharp scrutiny for abandoning some of the projects initiated by the previous regime of Uhuru Kenyatta.
Development projects have been the main casualties of budget cuts as the Ruto administration seeks to realign expenditure through supplementary budgets, to cater for programmes that were not approved amidst perennial shortfall in revenue estimates.
This resulted in the spending on development falling below the legal threshold in the year ended June 2024 for the second time running.
Budget review documents showed that development projects made up a quarter of total expenditure for the national government last fiscal year, short of the provisions of the Public Finance Management (PFM) law.
The PFM Act requires the national and county governments to allocate at least 30 percent of their respective budgets to development projects over the medium term (about three to five years).
“The actual development spending for the National Government was 25.1 percent, falling short of the principles outlined in the PFM Act Cap. [Chapter] 412. However, the forecast had initially projected it to exceed 30 percent,” Mr Mbadi’s office wrote in the draft 2024 Budget Review and Outlook Paper (BROP).
“This discrepancy was a result of spending rationalization in the course of budget implementation. Therefore, in the fiscal year 2023/24, and the medium-term projections had been set above the 30 percent threshold” it added.
Despite a good start to the year, the full budget for development projects was slashed by Sh122.4 billion after deadly youth-led anti-government protests prompted Dr Ruto to drop a plan for new and higher taxes, and sack about half of his Cabinet.
“The reduction in development expenditure has been consistent over the last three years. Indeed, development expenditure as a share of GDP reduced from an annual average of 6.3 percent between 2010 and 2020 to 3.2 percent in the financial year 2024/25 revised estimates,” the Budget and Appropriations Committee of the National Assembly wrote in a report tabled in the House on July 23.
“The Sh122.4 billion expected reduction in development expenditure is targeted at projects that are financed through the exchequer. This is a departure from previous years, where fiscal consolidation mainly amounted to the postponement of donor-financed development projects.”
