Counties turn to banks after Treasury cash delays

Governors say they have been forced to seek commercial bank loans to meet their needs, including workers’ salaries, following delays in release of funds from the Treasury.

The Council of Governors on Sunday reckoned they are yet to receive a shilling for the fourth quota disbursement set for release from April.
Counties were to receive Sh74.7 billion covering the three months to June.

“The National Treasury has disbursed funds to counties as late as 12th May 2017, but these are March allocations, being released in May,” Wycliffe Oparanya, the chairman of the council’s finance committee, said in a statement.

“Such delays have continued to recur thereby compelling county governments to borrow from local banks to mitigate effects of the shortages.”

More than 20 per cent of government funds, or a quarter trillion shillings, are now allocated every year to the 47 Kenyan counties created from scratch in 2013. 

But the governors have accused the Treasury of sabotage through funds delays and pushing for inadequate allocation to the counties.

“The National Treasury has no mandate whatsoever to delay or withhold monies already earmarked for counties except in accordance with the provisions of Article 225(3) of the Constitution and currently, there is no County which has been found to be in violation of this Article,” said Mr Oparanya, who is the Kakamega governor.

The governors took issue with MPs for reintroducing a Bill that dictates the sharing of billions between the national and county governments despite the Senate and National Assembly failing to agree on the amount of money to be transferred to the 47 devolved units.

The Division of Revenue Bill was reintroduced last week after a mediation committee comprising members of the Senate and National Assembly failed to agree on the amount of money to be sent to the counties.

The National Assembly has maintained the equitable share to counties at Sh291 billion, an amount Senators rejected and set the amount at Sh314 billion.

The new Bill has the figures prompted by the National Assembly of Sh291 billion, suggesting a fresh attempt at mediation.  Failure to have it on time would cause a budget crisis in the counties.

“What is more catastrophic is that the National Assembly has gone ahead to republish the disputed Bill, which had allocated Sh291 billion to counties,” said Mr Oparanya.