WPS 72/2023 Agriculture Public Expenditure Review at the County Level

Abstract

An analysis of the Agricultural Sector Expenditures (AgSER) at County level was carried for the period between 2014/15 -2016/17. The analysis focusses on three broad areas (i) budget allocation, and composition in the agricultural sector, (ii)constraints and opportunities for agricultural expenditure, and (iii) enhancing private sector investments and the role played by the public sector in catalysing these investments. The aim was to understand the nature of constraints experienced by the County governments that may explain the funding gaps or underspending of public funds, and then identify actions that the government could undertake to strengthen public policy-expenditure linkages for greater sectoral impact, in addition to how to reorient policy towards the attainment of food security, which is one of the 'Big Four' development objectives that the National government has prioritised. The following are the key highlights expounded in the report; Budgets and Expenditures: Agricultural expenditures levels at the have averaged at 6.5 per cent for the last three years. County governments oversee their budgetary allocations and therefore, the budgetary allocations suggests the prioritisation of the sector by county governments. We recommend the increase in funds for the sector at the county level; this could be through the provision of conditional grants to the county governments to ensure that their utilisation is in the agricultural sector. The budget-making process: The process is usually a negotiation between the county executive and legislature, with the latter offering weak oversight due to capacity issues. Besides, county government undertakes the participatory process; the participatory process that adheres to the laid out guidelines according to the PFM Act. We recommend capacity building, especially for the county legislature to effectively discharge the oversight role. Further, lessons on participatory mechanisms, that can help improve the participatory budget process. Absorption of funds, especially for development budget is low for counties. This is affected by funds flow from the exchequer to counties and the procurement process at the county level. The government accounting system, IFMIS, was cited in many interviews as a challenge for county governments, with many still having the manual systems in place. We recommend that the domestication of the IFMIS system should be prioritised. County governments x should decentralise the procurement process from the county treasuries while tightening budget implementation controls to ensure proper utilisation of funds. Planning and budget effectiveness: County governments developed the CIDPs to guide the implementation of programs. Each year as part of the budget cycle, county governments prepare the annual development plans. However, analysis of these plans shows a variance from the CIDPs. Further, the budget after approval undergoes a number of iterations through the supplementary budgets, some of which are done post-expenditures. We recommend strengthening of the oversight function of county assemblies to ensure that variance of budget and expenditures from the plan are within acceptable levels. Governance: The M&E function for the agricultural sector departments is lacking. Staffing continues to be a key constraint for the sector, especially for departments of livestock, fisheries, and veterinary. Capacity building of county government to establish M&E frameworks and institute reporting mechanisms is recommended. Further, it is critical to undertake a needs assessment for the sector to establish the staffing levels and skills available to county governments as a basis for developing a plan on how to bridge the gaps. Partnerships with national government and development partners: We found good practices on how county government can provide incentives for private sector investments in the sector. In this instance, county government signed agreements with the private sector and development partners detailing the roles and responsibilities of each partner and how they contribute to shared objectives and goals. However, a key challenge to this remains the low availability of public goods and self-interests among actors at the county level. Proper planning and targeting of programs contribute greatly to developing partnerships with the private sector and development partners. This allows each partner to undertake roles where they are most effective.