The Treasury did not allocate a single coin to the 47 county governments in July, hitting hard operations of the devolved units and their suppliers.
The latest Kenya Gazette notice indicates that none of the 47 counties received a cent of the Sh314 billion they are entitled to as equitable share of national government revenue one month into the new financial year.
The devolved units have been grappling with delayed Treasury disbursements and dwindling own-revenue collections, which have resulted to delays in suppliers’ payments and workers’ salaries as well as frozen projects.
Early this month governors accused the national government of withholding billions of shillings it owes counties that had not been released by June 30 in the past financial year.
“As of June 30, 2018, counties had still not received Sh76.7 billion disbursements representing about 26 per cent of the total allocations,” said Council of Governors chairman Josephat Nanok in a statement.
The Treasury has in the past blamed the country’s financial situation on failure by the Kenya Revenue Authority (KRA) to hit its projected tax collection targets.
In the four months to October in the previous financial year the Treasury failed to release funds to the counties following contradictions in the Senate’s approved disbursement schedule and the cash allocation law approved by President Uhuru Kenyatta.
None of the 47 devolved units had received their allocations at the close of the first quarter that ended in September, which compelled the Treasury to loan them Sh20.3 billion to pay workers’ salaries.
Delayed exchequer releases coupled with poor own-revenue collections have seen the devolved units struggle to meet their obligations in good time, leading to swelling pending bills.
Pending bills in the year ending June had hit Sh99.2 billion at the end of January, with some counties grappling with lawsuits from suppliers and contractors.
The Controller of Budget, Agnes Odhiambo, said the problem could be linked to counties overstating their revenues and over-committing to suppliers.
Cash flow challenges
She warned that the counties were likely to continue facing cash flow challenges as long as they kept spending on assumption of 100 per cent revenue collection.
Total allocation to the counties in the current financial year stands at Sh345.6 billion, which consists of the equitable share of national government revenue, conditional grants from the State and conditional loans and grants from development partners.