The National Treasury has warned counties holding huge sums in their accounts at the Central Bank of Kenya (CBK) that they will miss out on funding when disbursing funds to devolved units in the future.
Cabinet Secretary Ukur Yatani said this will minimize pressure on the National Treasury, which has been criticized for late remittance of money to county governments.
“There are situations in which county governments do not utilize resources given to them. Others have more than Sh3 billion in their accounts but keep asking for additional resources. It is the responsibility of the National Treasury to enforce good financial management,” the minister said in Nairobi on Wednesday.
Treasury attributes the lengthy delays in disbursing funds to counties to the tough economic times caused by the Covid-19 pandemic.
Mr Yatani said Treasury released equitable share revenue to counties for the months leading to November.
He added that the December and January’s amounts will only be credited to the accounts of county governments that do not have huge, underutilized balances at the CBK.
Counties ordinarily draw funds from CBK, based on their approved budgets and detailed procurement programs that are scrutinized by the Controller of Budget.
They cannot, for example, interchange funds released to build a road for payment of salaries.
Mr Yatani’s directive could face legal challenges from county governments that cannot get the money due to procedural restrictions.
The CS accuses devolved units of holding more than Sh30 billion at the CBK, while pressuring the Treasury to release more.
“Let them move with speed and implement projects and pay for them in order to improve their absorption rates. The end of the financial year is approaching,” Mr Yatani said as he hosted his Devolution colleague Eugene Wamalwa and Council of Governors chairman Martin Wambora at the National Treasury offices.
Mr Wambora said reducing the period for the release of funds to counties would be among his priorities, adding that the delays deny devolved units the ability to perform key services. He said employees feeling exposed.
“We can cope with a one-month delay, but it hits us hard when it extends to two or three months,” Mr Wambora said.
The Embu governor added that he would be meeting top officials from the 15 counties to find out why the money mentioned by the CS is not being utilized.
The Treasury says government revenue collection has started picking up and expects to start disbursing the December funds to counties next week.
“2020 was a tough year because revenue fell behind our projections. But I am telling you confidently that revenue has picked up,” Mr Yatani said.
“We were able to meet our targets in December. From the look of things, all projections are good.”