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Treasury to Deal with Stalled Projects

by biasharadigest

Treasury’s public investment management (PIM) unit at the National Treasury plans to deal with the increasing number of stalled public projects, estimated at over 500.

According
to a Fiscal Transparency Evaluation Update by the International Monetary Fund (IMF),
the human capacity, IT systems and analytical tools used by the unit are still
being developed, and the staffing structure, and the location of the unit
within the National Treasury is under consideration by senior bureaucrats.

The
2018 Public Investment Management Assessment (PIMA) carried out by the IMF found
that many project appraisals do not include neither a cost-benefit analysis nor
a standard methodology for project appraisal and selection.

In
addition, several large government-to government (G2G) contractual
arrangements, such as the Nairobi-Mombasa SGR project, operate outside the
standard procurement process.

Since
2018, the authorities have been taking active steps to address these weaknesses
through the establishment of the public investment management unit and the
production of draft PIM regulations, which include standardized templates for
preparing a project’s conceptual design, and pre-feasibility and feasibility
studies.

The IMF notes that these reforms and any changes to procurement arrangements, however, have yet to be fully implemented.

The
Fund says that lack of an effective gatekeeping function has allowed many new
projects to enter the budget, which has created challenges to finance ongoing
projects.

It adds that rapid increase in public investment since 2010 occurred without enough screening for project viability and readiness. The stock of projects under implementation is now estimated at approximately 1,000.

There
has been a subsequent squeeze on ongoing projects in the absence of fiscal
space, which is now accruing large costs to the government.

Stalled projects contribute significantly to pending bills that have been accumulating, particularly for the State Department of Infrastructure.

Figures indicate that the number of stalled projects is increasing, and is currently estimated at approximately 500 (half of all ongoing projects), because of non-payment to contractors, insufficient allocation of funds to projects, and litigation cases in court.

The
IMF said expenditure estimated at KSh.1 trillion (12 percent of GDP) is
required to finalize all stalled public projects.

On
the list of some of the stalled public projects, according to a report to the
National Assembly made on November 15, 2018 and Treasury’s circular of August
31, 2018, is indeed mind boggling.

They include dams for irrigation, roads, learning institutions, crop research, and courts. Treasury mandarins have in the past blamed the mess on realignment of the budget to finance the Big 4 projects and fuel county governments.

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