Economy

Counties yet to get Sh109bn in Treasury funds

treasury

Treasury building in Nairobi on June 11, 2020. PHOTO | SILA KIPLAGAT | NMG

lynetigadwah_img

Summary

  • The latest data from the Treasury shows counties had received Sh261 billion out of the Sh370 billion in equitable share by end of April, resulting in cash-flow challenges.
  • Governors have repeatedly expressed disappointment over delays in the release of funds from Treasury, which they blame for the financial problems dogging their counties.
  • The data shows Nairobi County is owed the most at Sh6.4 billion, followed by Nakuru’s Sh4.4 billion, Turkana’s Sh4.3billion and Kakamega’s Sh4.1 billion.

Counties are yet to receive Sh109 billion in dues from the Exchequer two months before the close of the current financial year, deepening a cash crunch in the devolved units.

The latest data from the Treasury shows counties had received Sh261 billion out of the Sh370 billion in equitable share by end of April, resulting in cash-flow challenges.

Governors have repeatedly expressed disappointment over delays in the release of funds from Treasury, which they blame for the financial problems dogging their counties that have resulted in industrial action by workers and stalled projects.

The data shows Nairobi County is owed the most at Sh6.4 billion, followed by Nakuru’s Sh4.4 billion, Turkana’s Sh4.3billion and Kakamega’s Sh4.1 billion.

In February Nairobi County workers issued a strike notice demanding Sh560 million in pending salaries and statutory deduction remittances.

Their union — Kenya County Government Workers Union — said the county's failure to remit deductions had subjected workers to untold suffering with banks penalising those with loans.

Over the past two financial years, several counties risked total paralysis in operations after employees threatened to go on strike after delays in the payment of their salary.

The law compels the Treasury to release funds to the 47 devolved units every 15th day of the month but this rule has been breached repeatedly in the past decade.

The lack of sufficient funds for development means that counties cannot spend on infrastructure projects like roads and sewerage, denying them an opportunity to put money in private hands through demand for raw materials, which ultimately creates new jobs.

In the previous financial year, governors threatened to shut down county services and send home staff following a cash crunch due to a stalemate at the senate.

Senators had failed to strike a deal on the formula for sharing Sh316.5 billion among the 47 devolved units resulting in a three-month delay.

Counties are required to prioritise settlement of pending bills to suppliers as well as other statutory dues to enable the concerned institutions to discharge their mandates effectively.

[email protected]