The National Treasury building pictured on June 15, 2023.
A fresh standoff is brewing between county governments and the cash-strapped National Treasury, which has failed to release more than Sh30 billion earmarked for the devolved units in the financial year ended June 30.
The unremitted cash is the culmination of lengthy delays in scheduled disbursements for the 2023/24 fiscal year, despite the Council of Governors’ (CoG) sustained complaints that the delays were hampering services in counties and contravened a legal requirement to release the equitable share of revenue by the 15th of every month.,
By the end of June, Treasury had released Sh354.59 billion out of the budgeted Sh385.42 billion for the equitable share of revenue to counties, the latest data shows.
“The County Allocation of Revenue Act (CARA) 2023 provided for equitable share allocation to counties of Sh385,424,616,067 to be disbursed directly by the National Treasury. The County Governments Additional Allocations Act, 2024 provided for additional allocations to county governments in FY2023/2024 amounting to Sh46,362,301,458.60 to be disbursed through the respective Ministries, Departments, and Agencies,” Treasury notes in the statement of exchequer issues by end of June.
This was even as Treasury released Sh67.4 billion (19 per cent of the released funds) in June, leaving counties under pressure to put the money into use before the end of the fiscal year, exposing billions of shillings to risk of wastage and misuse.
By the end of May, Treasury had not released Sh98.3 billion to the counties and had to fork out Sh67.4 billion in June alone, more than double the Sh29.5 billion average monthly releases from July 2023 to June 2024.
The failure to release the funds to counties at the end of the financial year contravenes the Public Finance Management (PFM) Act, 2012, which requires Treasury to send money to counties by the 15th of every month.
“The National Treasury shall, at the beginning of every quarter, and in any event not later than the fifteenth day from the commencement of the quarter, disburse monies to county governments,” the PFM Act, 2012, states.
Failure to send the Sh30.83 billion by the end of June saw a total of 35 counties fail to receive more than Sh500 million each.
This saw the counties miss 8 per cent of their budgeted equitable share funds, affecting the implementation of county programmes, with Nairobi, Nakuru, Turkana and Kakamega missing out on more than Sh1 billion each.
Treasury did not release Sh1.6 billion to Nairobi, Sh1.08 billion to Nakuru, Sh1.05 billion to Turkana, and Sh1.03 billion to Kakamega.
Other heavily hit counties in terms of absolute monies not released by the end of June were Kiambu (Sh978 million), Kilifi (Sh968 million), Mandera (Sh930.6 million), Bungoma (Sh889 million) and Kitui (Sh866 million).
The failure to send all budgeted equitable shares of revenues to counties by the end of the fiscal year comes after Treasury also failed to release Sh29.6 billion in the 2021/22 financial year.
Governors have throughout this year been complaining of delays by the Treasury to release the equitable share of revenues to counties, warning that the delays have been crippling services and forcing counties to take expensive bank overdrafts for survival.
They started in January when the CoG indicated that a three-month delay in the release of the cash had put counties in financial crises, with CoG Chair Anne Waiguru noting that some counties had fallen behind in paying their employees.
“As of 19th January 2024, the National Treasury is yet to disburse Sh81.08 billion to devolved units. Twenty-four counties are owed Sh17.48 billion for November 2023 allocation while 47 counties are owed Sh30.83 billion and Sh32.76 billion for December 2023 and January 2024 allocation, respectively,” Ms Waiguru said in late January.
The counties have been complaining of the delays almost every month and blame the Treasury and Controller of Budget (CoB), noting that the delays have incapacitated them from implementing projects and delivering services.
The CoG’s financial committee chairperson Fernandes Barasa this month noted that delays by the CoB to approve requisitions from counties were subjecting them to even more challenges.
“Counties are struggling to access the funds because the CoB is taking too long to approve the requisitions made by finance ministers from the 47 counties,” Mr Barasa, who is also the Kakamega governor, said.
This came on the back of a stern warning from the CoG last month that Treasury delays had left health services offered by counties almost crippled, with governors complaining that Treasury was three months behind schedule on releases.
