How counties are hiding expenditure from oversight agencies

County governments are on the spot following revelations that some devolved units are concealing questionable expenditures from oversight agencies.

Some county governments are deliberately lumping expenditures under vague budget lines, undermining transparency and accountability in the use of public funds.

A new expenditure report by Controller of Budget Margaret Nyakang’o shows some spending is classified under the broad category of “other operating expenses,” making it difficult for oversight bodies to trace, verify and properly interrogate how public money is being used.

According to the County Governments Budget Implementation Review Report for the first quarter of the 2025–26 financial year, at least 18 devolved units reported more than Sh300 million in expenditures recorded under this opaque category.

The practice, the report notes, distorts the true cost structure of county operations and weakens accountability mechanisms.

“The review revealed that this category was misused to record items with specific budget item codes, distorting the cost structure, reducing financial transparency and weakening accountability in public fund management,” Nyakang’o said in the report.

She added that many submitted expenditure lines with generic descriptions, making it difficult to determine the exact nature of the spending or map it to the appropriate budget codes.

Counties flagged in the report include Bomet, Bungoma, Busia, Embu, Kajiado, Kakamega, Kericho, Kiambu, Kirinyaga, Machakos, Makueni and Nairobi. Others are Nakuru, Nyeri, Tharaka Nithi, Samburu, Uasin Gishu and West Pokot.

In Bomet, expenses amounting to Sh5.28 million were declared as “other operating expenses,” representing about two per cent of the county’s cumulative operations and maintenance expenditure of Sh272.19 million.

Bungoma reported Sh3.19 million under the same category, while Busia and Embu each declared over Sh12 million.

In Busia, Nyakang’o noted that the Sh12.28 million classified as other operating expenses accounted for nine per cent of the county’s total operations and maintenance expenditure of Sh136.69 million.

Kajiado county reported Sh1.6 million under the category, while Kakamega declared Sh31.84 million, Kericho Sh3.01 million and Kiambu Sh18.72 million. Kirinyaga reported Sh7.54 million, Machakos Sh13.71 million and Makueni Sh35.45 million.

Nairobi county had the highest figure among those flagged, declaring Sh79.42 million as other operating expenses, while Nakuru reported Sh15.89 million.

“A review of the other expense items in the table revealed that some expenditures with clear, unique budget codes were erroneously aggregated under the ‘Other Operating Expenses’ category,” the report states, citing Kajiado as an example.

Such expenditures include clean-up exercises in towns, verification and validation of staff documents and restructuring activities at water service entities such as Kicosca, undertaken in line with Section 77(2) of the Water Act, 2016.

Nyakang’o said these activities should have been recorded under specific budget codes rather than concealed under a general heading.

In Nakuru, the CoB noted that the Sh15.89 million recorded as other operating expenses represented nine per cent of the county’s cumulative operations and maintenance expenditure of Sh176.29 million.

Nyeri reported Sh2.18 million under other expenses, Samburu Sh29.20 million and Tharaka Nithi Sh3.29 million. Uasin Gishu declared Sh4.19 million, while West Pokot reported Sh30.74 million.

The Controller of Budget warned that unless counties improve their reporting practices, misuse of vague budget categories will continue to frustrate effective oversight and erode public confidence in devolved governance.

INSTANT ANALYSIS

For FY 2025/26, the combined budgets of County Governments total Sh603.72 billion. This amount includes Sh217.80 billion (36 per cent) allocated to development expenditure and Sh385.92 billion (64 per cent) to recurrent expenditure. During the reporting period, County Governments collected Sh13.94 billion in own-source revenue, which represents 15 per cent of the annual target of Sh93.89 billion. This marks an increase compared to the Sh12.68 billion collected during the same period in FY 2023/24.