Governors threaten to shut down operations in counties over funding impasse
Wajir Governor and CoG chairperson Ahmed Abdullahi.
Governors have threatened to shut down all operations in the counties in 30 days should the two houses of Parliament fail to agree on the amount of money to be disbursed to devolved units.
Speaking after chairing an extra-ordinary council meeting Nairobi, Council of Governors (CoG) Chairperson Ahmed Abdullahi said they were displeased with the National Assembly’s insistence that only Sh380 billion should be wired to counties, and not Sh400 billion proposed by the Senate.
Whereas both houses passed the County Allocation of Revenue Bill, five months later into the 2024/25 financial year, the law is yet to be assented to resulting in counties not receiving their equitable revenue allocation for the current financial year.
Mr Abdullahi noted that whereas the devolved units were bearing the brunt of dry coffers, the national government continues receiving its shareable revenue after the National Assembly passed the Supplementary Appropriations Act, 2024.
“The council takes great exception to the National Assembly’s decision to reduce the county equitable share by Sh20billion,” Mr Abdullahi said.
“We affirm and support the Senate’s decision to retain county allocation at Sh400 billion…Any reduction to county equitable share will negatively affect service delivery and grind the counties to a halt,” he said after the meeting at the CoG headquarters.
The governors faulted the National Assembly for basing the Supplementary budget on Dora Bill, saying the budget is not based on the Division of Revenue Act, 2024.
Also, the fact that the Division of Revenue Act is based on figures contained in a Bill that is currently before the mediation committee of Parliament already makes the Supplementary Appropriations Act, 2024, the county bosses said.
They cited an advisory issued by the Supreme Court in 2019 which stipulated that Parliament cannot pass an appropriation Bill before finalisation of the Division of Revenue Bill.
The county bosses said the actions of the National Assembly are not only an affront to devolution but an overt attempt to weaken and undermine the devolved governance structure enshrined in the Constitution.
With the lack of a County Allocation Act, the counties have been receiving up to 50 percent of the equitable share based on the 2023/24 financial year.
By December, this 50 percent allocation will have been exhausted thus leaving the counties direly cash-strapped come January 2025.
Dire situation
Treasury’s failure to disburse Sh63.6 billion to counties for October and November allocations only exacerbates the dire situation in the counties, the governors said.
The dire situation has seen some counties fail to pay their workers for three months, with the governors noting that borrowing money from commercial banks to offset their bills is a very expensive venture.
This reality has forced many of them to default in meeting their financial obligations, including staff salaries and settling debts.
They also expressed their concern over the delay of the Controller of Budgets, Margaret Nyakang’o, in approving requisitions for the withdrawal of funds and asked her to “stop being a bottleneck to this process and ensure the counties access their funds in a timely manner.”
The CoG has called on the Senate to expeditiously pass the County Allocation of Revenue Act to resolve the delay.
They also want the Treasury to immediately release funds owed to counties, “failure to which, county governments will have no choice but shut down operations completely”.
Mr Abdullahi then revealed that the 18-member Mediation Committee with equal membership from the two Houses is yet to unlock the stalemate over the Sh20 billion difference.
“So far, no headway has been made by the Mediation Committee. The date of returning to negotiations has not been announced. Should there not be a solution by the end of the given days, we will shut down all operations in the counties,” Mr Abdullahi said.
The council then urged the Social Health Authority (SHA) to expedite the payment of pending claims under the now defunct National Health Insurance Fund (NHIF) which owes the counties Sh9.1 billion after remitting some Sh3.8 billion of the total Sh12.9 billion debt it had as of May 2024.
CoG Vice Chairperson Mutahi Kahiga said the debt has seen several hospitals managed by counties lack critical drugs thus hampering the quality of treatment offered to patients.
“We have debts then add on to the lack of cash to even buy drugs. We owe Kenya Medical Supplies Authority over 3billion. This is a problem because we cannot only pay them their debt but also make fresh orders. SHA should expedite the payment of these amounts owed,” he said.
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Tharaka Nithi Governor Muthomi Njuki, who is also the council’s health committee chairperson said the timely payment of the money owed will enable counties to pay their vendors in a timely manner as well as ensure effective provision of service to patients.
On its part, the National Treasury has insisted that it does not owe the counties saying that it has diligently paid the monthly allocations on time with the last payment of Sh30.8billion for the month of October being made on October 18, 2024.
A document shared by the Treasury showed that in the months of June, July, August and September counties received Sh30.8billion, 32.7billion, 30.8 and 32.7billion respectively bringing a total of Sh158.02billion disbursed in the current financial year.
“As of October 18, 2024, the National Treasury has fully disbursed funds to county governments up to date with all payments except for the current month of November,” a statement shared on the Ministry’s official X account stated.
The governors' resolve to shut down counties' operations come barely two days after Opposition chief, Raila Odinga, criticised the National Assembly for denying the counties the Sh400 billion describing the move as "slow but steady strangulation and killing of devolution".
Governor Njuki also urged SHA to onboard all the 48,000 health facilities, both private and public, that were previously enrolled under the NHIF in their system to ensure all Kenyans have access to medical care and treatment.
“Only a paltry 7,800 facilities have so far been onboarded to SHA. We want all health facilities to be enrolled speedily. I also urge Kenyans to actively register to SHA, only 14.8 million Kenyans out of the 60 million have registered.
“Out of this figure, 6.2 million were transferred from NHIF to SHA meaning only 8.6 million have registered themselves with SHA. This number should go up,” he said.
The governors' resolve to shut down counties' operations come barely two days after Opposition chief Raila Odinga criticised the National Assembly for denying the counties the Sh400 billion describing it as "slow but steady strangulation and killing of devolution".
