Treasury rules out Sh20 billion more for counties
Treasury Cabinet Secretary John Mbadi at the Treasury building, Nairobi, on October 16, 2024.
As counties continue to face a cash crisis, National Treasury Cabinet Secretary John Mbadi has urged governors to accept Sh380 billion as sharable revenue proposed by the National Assembly.
Mr Mbadi said while the demand for more money to counties is justified, the country's current economy is strained and cannot support the Sh400 billion demanded by the devolved units and supported by senators.
"Governors should just accept Sh380 billion this financial year only as we work ways out of enhancing the figure next year," Mr Mbadi told the Nation.
"I would love to give counties more money but I'm strained, our economy can't just support it for now," the treasury CS added.
He pointed out that it would be needless to commit the Sh400 billion on paper and then fail to remit funds to counties leading to piling of arrears that the national government will owe counties.
"This financial year is already in a mess, let's be realistic. There is no point in promising something that the economy cannot support for now," Mr Mbadi said.
Mr Mbadi found it interesting that everyone wants more money from the government but nobody wants to pay taxes.
"I'm the treasury CS and no longer a politician, I speak from a point of knowledge about our financial situation. For now, we cannot afford Sh400 billion," Mbadi said.
He said there's no need to borrow in order to satisfy the appetite of governors, while it's Kenyans who will be left with the debt to handle.
On Friday, ODM leader Raila Odinga sided with the Senate in pushing for Sh400 billion for counties as he accused the National Assembly of frustrating devolution.
Mr Odinga said the Sh380 billion being pushed by the National Assembly is lower than the prescribed amount in law which provides that counties should get at least Sh15 percent of the national government revenue.
“The standoff and attempts to tamper with allocations are a dangerous backward march. I urge MPs to be enablers of devolution and refuse to be in partnership with those determined to frustrate and kill it,” Mr Odinga said.
Kitui Central MP Makali Mulu who is a member of the mediation committee dismissed Mr Odinga’s remarks saying the committee cannot give an amount the country does not have.
“Raila can say what he wants, but he is not telling us where the money he wants us to give counties will come from,” Dr Mulu said.
Nothing to give
The lawmaker said the committee will not be coerced to give money on paper when in actual sense, there is nothing counties will receive.
“We all agree that counties need more money but where do we get it? Do we borrow to give counties? If we borrow, it is still Kenyans who will suffer while repaying the loans,” Dr Mulu said.
“Let counties accept the Sh380 billion just for this financial year, then should the current tax proposals by the treasury sail through, they will be given more money next year,” he added.
The National Assembly and Senate are embroiled in a standoff over shareable revenue for counties. While senators want the devolved units to be given Sh400 billion, their counterparts in the National Assembly passed Sh380 billion for the counties.
Members of the National Assembly have argued that the Sh20 billion reduction is due to the rejection of the Finance Bill, 2024 that left a financial gap in the projected revenue collection of Sh346 billion.
The committee has so far held two meetings which ended with no solution as legislators from both Houses maintained their hardline stance.
The co-chairs Ndindi Nyoro (Kiharu) and Mandera Senator Ali Roba are expected to convene a third meeting to try and get a solution as governors have warned that they will shut down operations in their respective counties in 30 days.
The Nation has learned that there has been consultation between the co-chairs with the Treasury and Council of Governors in a bid to unlock the deadlock before convening a third meeting.
The governors said any attempt to reduce the sharable revenue by 20 billion as proposed by the National Assembly will have a major impact on the service delivery in counties.
With the lack of a County Allocation Act, counties have been receiving up to 50 percent of the equitable share based on the 2023/24 financial year
To this end, Mr Mbadi said he has dutifully given counties money and there is no reason why they should shut down.
“Counties have money in their accounts. Wajir County where the chairman of Council of Governors comes from has Sh4 billion in the account. Let them pay salaries, suppliers and contractors,” Mr Mbadi said.
