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Economy

Why counties have not received a cent from the Treasury

Treasury secretary Henry Rotich. FILE PHOTO | NMG
Treasury secretary Henry Rotich. FILE PHOTO | NMG 

A cash hitch has forced the Treasury to advance some county governments Sh20.3 billion in the three months to September for workers’ salaries after the Senate failed to agree with a cash allocation law approved by President Uhuru Kenyatta.

Treasury secretary Henry Rotich said he had failed to disburse the counties’ cash because the County Allocation of Revenue Act (CARA) 2017 assented to by the President is different from the one the Senate approved.

Mr Rotich is awaiting clarification from the Senate before disbursing the billions, a pointer that counties will wait longer for the cash.  

“The schedule of disbursement approved by the Senate was at variance with the CARA. The National Treasury is awaiting clarifications from the Senate on the same,” said Mr Rotich

“In the meantime, the National Treasury advanced a total of Sh20,434,075,558 to some county governments to enable them to pay salaries and provide essential services.”

A schedule in the latest Kenya Gazette notice indicates that none of the 47 counties had received their allocations from the government’s main account in the first quarter that ended in September.

Instead, the counties were loaned Sh20.3 billion by the Treasury, an amount that is less than a third of the Sh75 billion the devolved units were expecting in the three months to September.

This has stalled projects in the counties, delayed workers’ salaries and frozen payments to suppliers, slowing down operations in the devolved governments.

In Nairobi for example, City Hall says it was unable to pay September salaries. Governor Mike Sonko is seeking a Sh3.32 bailout from the Treasury to pay City Hall workers, weeks after he revealed that he had doubled revenues after sealing leakages.

Counties received Sh2.4 billion advance from the Treasury in September, which is less than 10 per cent of their monthly cash requirement — highlighting the struggles the devolved units are going through to meet their obligations.

CARA law specifies what each county will get on the basis of the revenue sharing formula approved by Parliament.

Total allocation to the counties in the current financial year stands at Sh329.96 billion, which consists of the equitable share of national government revenue of Sh306.2 billion and conditional grants of Sh23.3 billion from the State and development partners.

The Constitution requires the National Treasury to disburse counties’ share of revenue by the 15th date of every month.

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