Counties missed out on Sh1 billion in conditional grants in the financial year ended June 30, 2021, due to non-compliance with regulations on public finances, a new report by the National Treasury shows.
Counties only received Sh12.7 billion in conditional grants out of the total Sh13.7 billion that had been allocated for disbursement in the financial year.
‘’A number of county governments did not receive 100 percent of their conditional transfers. This has been attributed to their inability to adhere to requirements of specific conditions attached to both governments of Kenya and development partners’ grants, failure by ministries department and agencies (MDAs) to appropriately budget for the funds, and delay by MDAs to request for the funds,” Treasury stated.
Conditional grants included cash from the national government and donors to ensure the provision of basic services, achieve international commitments such as the UN’s Sustainable Development Goals (SDGs), fund under-resourced services or infrastructure, and hold counties financially and programmatically accountable.
These conditional grants can be disbursed to the counties through exchequer releases by the National Treasury or direct foreign assistance by development partners.
The conditional grants come with strings attached to avoid diverting spending on items not specified in their budgets. For example, if a county receives a conditional grant for level five hospitals, it should not divert the money for purposes other than these hospitals.
The national government currently issues conditional grants to counties in form of support for Level Five hospitals, roads, and the development of youth polytechnics.
However, not all counties benefit from these conditional grants because it is subject to a county meeting some specific requirements.
For example, a county would only receive a Level Five Hospital grant if it has such a hospital in its jurisdiction.
Devolved units are also required to meet certain conditions such as submission of financial reports to the funding agency to receive the conditional grants.
According to Treasury some of the conditional allocations affected by this non-compliance include Sh935 million for the water and sanitation development project and Sh405 million for the transforming health systems for universal care project.
Other under-resourced projects included the National Agriculture and Rural Inclusive Growth Project with Sh362 million not disbursed, Sh1.18 billion for the Kenya Climate-Smart Agriculture Project, Sh51 million for the Kenya Urban Support Programme, and Sh125 million for construction of county headquarters.
However, during the year, the devolved units received full Sh316.5 billion of the equitable share of revenue and an additional Sh29.7 billion accruing from the previous financial year.
Some Sh9.4 billion was also disbursed from roads maintenance fuel levy fund collected by the Kenya Roads Board (KRB) from motorists through fuel purchases.
They also received Sh26.1 billion proceeds from external loans and grants through the national government.