The Controller of Budget has lost a bid to monitor counties' bank accounts in real time, derailing efforts to tame the irregularities that have clouded how the devolved units pay contractors and other bills.
A top official privy to the matter said that the matter, which saw the Office of the Controller of Budget pitted against the Treasury, the Central Bank of Kenya and county governors, had died a ‘natural death’.
Legislators also failed to adopt a Bill that sought to change the law to allow the Controller of Budget, Margaret Nyakang'o, access the bank accounts.
The failed attempt allows counties to escape scrutiny amid growing concerns over massive corruption in the payment of pending bills and other expenditures.
Unpaid bills by the counties stood at Sh156.3 billion as at the end of last year, highlighting the magnitude of the delays that have led to business closures and loss of jobs as firms grapple with strained cash flows.
“The attempt (getting real-time access to the bank accounts) died a natural death,” a source privy to the matter and who sought anonymity said without giving details.
It is unclear why the CBK and the Treasury refused to grant the budget controller real-time access to the bank accounts.
Key accounts that the budget controller sought real-time access to include the Consolidated Fund, Equalisation Fund, and County Revenue Fund.
Granting CoB access to the bank accounts of the 47 units was key in ensuring that counties would only pay contractors whose payment had been approved by the budget controller besides cutting down on fictitious claims.
Besides the delays, scores of contractors have decried demands for bribes by rogue officials at some of the counties to be paid.
Some of the counties have been cited for paying fictitious claims at the expense of genuine ones after the CoB approved billions of shillings for the payments.
The fixing of fictitious claims has been blamed on the inability of the CoB to track in real-time if the payments by counties match the list of contractors presented to her office for approval.
Besides fictitious claims and discriminative payment of contractors, counties have also been flagged for breaching the law on the number of active bank accounts.
For example, in the latest review on expenditure by the counties, Dr Nyakang'o called out the devolved units for operating more than 1,400 accounts at commercial banks.
Notable counties flagged were Bungoma with 321 accounts, followed by Migori at 208 and Kwale with 165 accounts.
“The Office of the Controller of Budget) notes that the County government uses commercial bank accounts to operate the above-established public funds contrary to Regulations 82(1)(b) of the PFM (County Governments) Regulations, 2015 which require that County government bank accounts must be opened and maintained at the Central Bank of Kenya,” Dr Nyakang’o said in the latest report.
The law requires that the accounts be domiciled at the CBK to ensure visibility on how taxpayer funds and money from other sources like grants and loans move in and out of the county accounts.
Other counties with many accounts at the commercial banks included Nyandarua with 88, Kiambu (65), Embu and Murang’a with 37 a-piece.
The CoB had started pushing the CBK and the Treasury to grant her office real-time access to the bank accounts of the counties in 2022.
But the talks fell through early last year even after indications that the two offices were bowing to pressure to allow the CoB the access.
Public finance management
The CBK, the Treasury and CoB are the three offices at the centre of public finance management under the law.
Additionally, the CoB had also drafted a Bill that sought to compel the Treasury and the CBK to give the budget controller real-time access to monitor cash movements into and out of the bank accounts of the devolved units.
The Controller of Budget Regulations of 2021 did not however sail through in the Senate and National Assembly.
Governors had also protested CoB’s attempts and pleaded with the CBK not to grant real-time access to the bank accounts, saying it was unconstitutional, unacceptable and without due regard to procedures.
The budget controller is mandated by the Constitution under Article 228 (4) to oversee the implementation of the budgets by authorising withdrawals but growing concerns about how counties spend the billions prompted the push for real-time access to the bank accounts.
