Treasury’s Sh5bn forestalls fallout with World Bank

The Treasury has forestalled a fallout with the World Bank over delay in releasing cash to help counties improve accounting, audit, and procurement systems.

Cabinet Secretary Ukur Yatani has allocated Sh4.99 billion towards the Kenya Devolution Support Programme days to the end of the financial year ahead of the September 2021 deadline, which would have seen the World Bank withdraw its portion of funds.

The multilateral lender had disbursed Sh4.6 billion to the second phase of the project a year ago at a time the country was facing Covid-induced cash flow challenges which affected the budget for the non-priority programme.

Devolution ministry recently told the Budget and Appropriation Committee that Kenya stands to lose the World Bank funding if the Treasury does not release its share of cash to the programme.

“The World Bank disbursed Sh4.6 billion for the Kenya Devolution Support Programme Level II in May 2020. By This time, the County Allocation of Revenue Act (CARA) had already been prepared and the amount was, therefore, not captured in the CARA,” the parliamentary committee, chaired by Kanini Kega (Kieni), wrote in its report on Budget for 2021/22 on Tuesday.

CARA is the legal framework that provides for the release of cash such as equitable shareable revenue, national government as well as other grants and loans.

The amount disbursed last year by World Bank was more than triple the Sh1.4 billion it released under Kenya Devolution Support Programme (KDSP Level I) in the fiscal year 2019/2020.

The programme, which started in April 2015 and is estimated to cost more than $200 million (Sh21.6 billion) on completion, is aimed at helping improve their capacity to plan, deliver and monitor the delivery of public services.

The strengthening of public financial management systems is partly seen as a way of improving service delivery at the counties by ensuring public money is spent properly and accounted for.