Management Magazine
Hands on Management

Intelligent budgeting key in leadership

Understanding the dynamics of good budgeting and budgetary control and technical knowledge of public sector budgeting is paramount in effective management of finances in devolved governance systems.


The recently concluded public review of the Kiambu County budget plan by the Senate was received with a lot of public concern. The reactions were provoked by the significant presence of irrelevant allocation of devolved funds on expenditures that don’t fall within the financial jurisdiction of the County Government. The conventional media presented the news about the event with a lot of political bias. But those concerned with public policy and good governance saw an opportunity to give advise on public policy rather than politicking. 

The simplest definition of a budget plan is that of Pandey (2006). He defines a budget as ”a written plan showing future sources of money and the respective uses of the sourced money within an organisation or in a project.” The budget plan can also be defined as a quantitative financial plan showing justified sources of resources and justified areas of expenditure on which the resources will be committed. Budgeting works well when there is a mutually accepted mechanism for budgetary control, which can be a pre-implementation control, concurrent control or post implementation control. 

Pre-implementation control helps the budgeting organisation to establish budget revenues, budget committees, budget areas, budget manuals, fund-allocation, budget constraints and budget year commonly known as fiscal or financial year. Pre-implementation controls are supposed to be inclusive and consultative in order to avoid conflict, sub-optimality, and feelings of betrayal and also compel stakeholders to support the budgeting process.

Intelligent budgeting

Budget revenues are the sources of money to be used in the budget plan. For the case of devolved governments, revenues are; the devolved fund from the central government, municipal rates, licenses, permits, county government business incomes and County court fines collected. However, it is so unfortunate that in Kenya, the devolved fund is the only stressed budget revenue often used in the county government budgeting processes. Thus, its budgeting calls for accountability, responsibility, open governance and political honesty. The resource commitment or expenditure areas on which the county government puts the devolved fund must reflect constitutional obligation, development needs, prevailing statutes in respect of the County Government Act and other budget centres that are lawfully within the jurisdiction of the County Government. 

The areas of expenditure are also known as budget centres, which must range from revenue centres, profit centres, investment centres, service centres and cost centres. The service centres and cost centres consume financial resources, but they do not generate any income in return. Thus, prudent or intelligent budgeting practices must minimise the number of cost and service centres but maximises the number of revenue and profit centres. It is sad to note that there are more cost and service centres than other centres in budgeting culture of Kenya’s devolved government units. 

For the budgeting process to meet its targets, there are key conditions that need to be met. They include good team culture, presence of competent budget committee, good use of budgeting technology, proper budget timing, inspiring budget leadership, pertinent objectives, commitment to ethics and regular budget variance analysis.

Budgeting best practices

Joseph Stiglitz in Public Sector Economics (2010) points out that budgeting is a moment for collective decision making which comes along with politics and group dynamics. This observation rhymes well with County Government budgets where there is need to observe the role of the County Assembly before finalising development of the County budget plan. Kenya has constitutional provisions and statutory bindings as well as public policy obligations that affect the County Government budgeting processes. But the basic idea is that popular politics always come with irrationality, and hence populist politics must not be allowed to undermine budgeting best practices.

Budgeting technology can be customised to a County Government. The most common computerised budgeting technologies are project management information systems (PMIS), public programming budget systems (PPBS), Microsoft project (Ms Project) and several other computerised financial management systems that can be accessed on order. Bernard Herber in his book Modern Public Finance (2006) points out that communication skills, communication culture and working knowledge of the budget at hand are compulsory ingredients of any good budgeting technology. Budget plans vary from time to time and from one organisation to another. However, the best budgeting typology for County Governments is the Zero-Based Budgeting (ZBB), which targets to have zero variance.

What entails a good budget? 

A good budget can only be achieved if it addresses relevant or pertinent objectives, expressed numerically in form of money. A budget must be within the prevailing law, it must be supported by good expertise, it must be realistic in the sense that its revenues and expenditures must be calculated on cash basis not accrual basis. Similarly, discipline, ethics and team work are the perspectives of the human side of good budgeting practices. Good leadership cannot run away from good budgeting. Organisational and institutional budgeting is not an internal affair; it is a moment for external communication about integrity, social responsibility, self-leadership, manpower evaluation, results-based governance and institutional focus on the service to humanity.

Alexander Opicho is an essayist and freelance writer based in Lodwar, Kenya. Email:

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