Treasury targets counties 'secret accounts' in expanded reform push

These operations span more than 5,476 accounts, which authorities fear are being used as conduits to siphon public funds.

The two independent offices have further warned that these illegal and undeclared commercial accounts bypass public finance laws, severely limiting expenditure tracking and creating loopholes for the misappropriation of public funds.

Also Read: Counties’ illegal bank accounts more than double to 3,431

However, National Treasury Cabinet Secretary John Mbadi has said these irregular practices will soon be eliminated.

According to CS Mbadi, the extension of the TSA framework to counties in the 2026/27 financial year is part of a broader public finance reform agenda that will be preceded by the automation of county exchequer requisition processes.

Following this automation, counties will progressively migrate to a TSA regime, mirroring the gains already recorded at the national government level.

“Building on this momentum, the government will operationalise, in collaboration with the Central Bank of Kenya, a granular data integration system to deliver real-time visibility of counties’ cash and liquidity positions,” said Mbadi.

The CS noted that the implemented TSA model directly links invoices to specific batches submitted by MDAs, among other enhanced features.

“The TSA reforms have substantially improved the efficiency of government exchequer operations, delivered transparency in exchequer and cash management, and ensured that public funds are released only against verified and approved obligations. This lays the foundation for managing pending bills,” he said.

This means the TSA will aggregate all balances in the public sector currently held in multiple commercial bank accounts, ensuring that, for instance, before any overdrafts are taken, available balances are considered.

Also Read: Nyakang'o gets access to counties’ commercial bank accounts

This is expected to reduce unnecessary overdraft interest costs.
In a circular dated February 15, 2026, National Treasury Principal Secretary Dr Chris Kiptoo announced the rollout of the TSA based at the Central Bank of Kenya and directed MDAs and counties to submit details of all bank accounts they operate.

Dr. Kiptoo said the rollout will provide government with a consolidated view of available cash balances across MDAs and county government entities.

Yesterday, CS Mbadi said these reforms represent a significant modernization of the country’s public cash management architecture.

“They are already delivering measurable savings, deepening fiscal transparency, and strengthening our capacity to deliver value for every shilling of public money,” he said.

While the introduction of TSA will enhance government visibility—unlike the current situation where county funds are scattered across unmonitored accounts—it is likely to affect commercial banks that currently hold significant government deposits and earn interest income from them.

This move is in line with Section 28(6) of the Public Finance Management (PFM) Act, which provides that “the National Treasury shall keep complete and current records of all bank accounts for which it is responsible under the Constitution, this Act, or any other legislation.”

Currently, the government lacks full visibility over funds deposited in numerous accounts held by its agencies. This is further complicated by the fact that government may be borrowing its own money spread across multiple unmonitored accounts while still paying interest on those funds.

Also Read: High Court freezes 'Mr Moneybags' Analo's accounts

During previous appearances before Parliament, Auditor-General Nancy Gathungu revealed that some counties operate more than 200 secret bank accounts, which she said are used to misappropriate public funds meant for development and service delivery.

“There are instances where you find a dormant account for more than three years, and suddenly money is channeled into it and disappears. When you follow up, you find it is a vehicle for transferring funds. When you find a county operating more than 10 bank accounts, it is already a concern. So operating more than 200 accounts does not make sense,” Ms Gathungu told the County Public Investments Committee (CPIC) of the Senate.

Section 28(2) of the PFM Act stipulates that the National Treasury shall establish a Treasury Single Account into which all revenues received by national government entities shall be deposited, and from which all payments on behalf of national government entities shall be made.

Further, Section 119(2) of the Act states that each County Treasury shall establish a Treasury Single Account at the Central Bank of Kenya or at a bank approved by the County Treasury, through which all payments to and from county government entities shall be made.

CS Mbadi noted that following the successful rollout of TSA across all MDAs, the government has reduced the cost of overdraft financing from the Central Bank of Kenya by 61 percent in the current financial year, translating into substantial savings.

Also Read: Audit exposes rampant corruption in counties

The hybrid TSA model allows state corporations, SAGAs, and certain public entities to retain accounts in commercial banks, while MDAs are required under the framework to hold accounts only at the Central Bank of Kenya.

“As part of the implementation process, the National Treasury is updating records of all bank accounts held by public entities at both national and county levels,” the PS said.

The operationalisation of TSA is expected to reduce interest income generated by commercial banks from government deposits, potentially impacting their profitability.

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