Relief as Treasury resolves to release Sh155b to counties

Wednesday, August 14th, 2019 00:00 |
Acting Treasury Cabinet secretary Ukur Yattani

Eric Wainaina and Anthony Mwangi

Counties are set to receive half of the allocated funds from the National government after Treasury agreed to release the money subject to an advisory from the Attorney General.

The announcement followed a meeting called by the Senate Finance Committee and attended by senators, Council of Governors and acting Treasury Cabinet Secretary Ukur Yattani to unlock the funds impasse which saw county employees threaten to go on strike over delayed salaries. 

During the meeting, Yattani said he was ready to release 50 per cent of Sh310 billion, which amounts to Sh155 billion for counties to address pressing needs, including paying salaries and other essentials.

However, the committee, senators and the CoG differed with the Acting CS, insisting the disbursement should be 50 per cent of Sh314 billion, being the allocation as per last year’s Division of Revenue Allocations (DORA).

“The law, as stated in the Public Finance Management Act, allows the National Treasury to allocate 50 per cent of the last financial year’s DORA which in this case was Sh314 billion,” said Makueni Senator Mutula Kilonzo Jr.

Yattani, however, told the committee that Treasury could not release funds without a legal advisory and asked the AG to advise on the implications of disbursing allocated funds.

“We need the AG to advise on this otherwise we will end in courts and will not help the current situation, “he said.

Asked by committee chairman Mohammed Mohamud how soon the advisory might come through, an official in the AG’s office, Jinette Mwangi, said the AG would issue a document on the way forward as early as today.

“The AG is ready to offer the advisory as sought by the Treasury, we can do so as early as tomorrow (today),” she told the committee.

In his presentation, Yattani told the committee that Treasury was ready to withdraw from the Consolidated Fund an amount not exceeding 50 per cent of allocated funds to the counties.   

He challenged senators to come up with legislation that could address a situation where MPs and senators disagree.

“Counties need to be allocated funds even with the existence of disputes. We need to get away from such a crisis where counties are likely to collapse due to lack of funding,” he said.

He said such arrangement has succeeded in other jurisdictions like South Africa where they disburse 45 per cent of the allocations.

The CoG represented by Laikipia Deputy governor John Mwaniki, opposed the Treasury proposal, maintaining that only fair allocation of cash awaiting the determination of the suit filed in the Supreme Court will be 50 per cent of Sh314 billion representing the DORA of the last audited accounts as law requires.

Unlock stalemate

“We will be committing another illegality by allowing Treasury to allocate funds using the Sh310 billion arrangement,” said Mwaniki, adding that the situation at the counties was so dire that every function had stalled.

The Controller of Budget, according to a representative, is not opposed to the proposals by the Treasury.

According to Senate Deputy Speaker Kithure Kindiki, a meeting to be held on Thursday must provide the necessary resolutions to protect any officer or public office that may be required to use administrative measures to unlock the funds stalemate and ensure counties start receiving money before end of the month.

Even as the senators and governors pushed for disbursement, People Daily has established that some governors have already committed their entire equitable share on recurrent expenditure, which mostly benefits county executive employees and MCAs, in terms of salaries and allowances. Most county chiefs have given only a small fraction of the amount to the development kitty.

This means that regional governments must up their game in revenue collection in order to fund development projects. This has, however, not been the case in most counties because of wastage, failed systems or theft, denying   counties opportunity to access more cash under the fiscal responsibility parameter.

Kiambu senator Kimani Wamatangi, a member of the Public Accounts Committee (PAC), and who has been pushing for an increase on the equitable share, lays the blame squarely on governors.

“The easiest channel where money is looted in counties is through recurrent expenditure, mostly on trips and workshops,” said Wamatangi.

Analysis of separate county budgets reveals that governors have been increasing expenditure annually, raising questions on what leads to increased consumption. 

Analysis of most of the 2019-2020 county budgets shows that governors will spend nearly all of what they will receive from the Treasury on recurrent expenditure.

Critics say the recurrent expenditure is used to milk county treasuries through suspect allowances, unnecessary trips, workshops and “hiring” of ghost workers, a fact exposed by the Auditor General and Controller of Budget reports.

Targeted revenue

For instance, in Nairobi County which has been allocated Sh16.5 billion equitable share, the highest among all counties, Governor Mike Sonko will spend Sh24.3 billion on recurrent expenditure, which is Sh7.8 billion more than what it will get from Treasury.

With a budget of Sh35.2 billion, the City has allocated Sh10.9 billion to development, which will come from the surplus of a targeted revenue source and Sh797 million grant.

Kiambu County has been allocated Sh9.2 billion, but Governor Ferdinand Waititu’s administration is set to spend Sh10.1 billion on recurrent expenditure, which is Sh900 million above the equitable share.

This means the recurrent expenditure, which plans to locally raise Sh2.967 million to supplement its ambitious Sh15.6 billion budget, rose by about Sh300 million from Sh9.59b last year.  

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