Governors clash with Treasury on Sh33 billion idle cash

Governors have reacted with outrage to claims by the National Treasury that counties are unable to spend Sh33 billion, which is lying idle in their accounts even as wananchi are ravaged by drought.

The counties described as “erroneous” and “misleading” a statement by Treasury Principal Secretary Kamau Thugge that counties have been unable to spend billions of shillings and should be held responsible for their inability to absorb funds, which could also be used to fight drought affecting 23 of them.

In an advertisement on Sunday, Dr Thugge appeared to criticise the county governments, saying they “should even be able to deal with contingencies such as the on-going drought situation” by setting aside two per cent of their budgets to go into the Emergency Fund.

According to the Treasury, 11 counties have unspent reserves of more than Sh1 billion each. Makueni County leads these ranks, with Sh2.3 billion in its accounts at the Central Bank. Notably, drought-ravaged Baringo has Sh1 billion in its accounts.

Others are: Bungoma (Sh1.45 billion), Embu (Sh1.46 billion), Kakamega (Sh1.05 billion), Kisumu (Sh1.06 billion), Kitui (Sh1.75 billion), Mandera (Sh1.37 billion), Nakuru (Sh1.3 billion), Nyeri (Sh1.37 billion) and Wajir (Sh1.06 billion).

Other counties affected by the drought are Laikipia, which has Sh364 million in its accounts, Samburu (Sh310 million), Isiolo (Sh242 million), Turkana (Sh76 million) and West Pokot (Sh540 million).

HUGE IDLE CASH

Some of the devolved governments said to be holding onto huge idle cash reserves did not take the reports well.

Makueni Governor Kivutha Kibwana said the bulk of the money in the county’s accounts is earmarked for development projects. 

“When we lost two-and-a-half years because of budget issues, there was no development money. Right now we have most of our work going on, but we can’t pay until the work is finished,” said Prof Kibwana. 

He gave as an example a fruit-processing plant for which Sh400 million is to be spent. 

Kakamega Governor Wycliffe Oparanya, whose county was indicated as having Sh1.05 billion, said the county has been running on debt, contrary to the report suggesting most of its funds were lying idle.

The county, he said, only received funds after the published date, January 18, an amount he said was less than the amount said to be lying idle.

“We received Sh900 million for development and another Sh300 million conditional grant on January 19 and 20 respectively. This is not even enough to run the county,” said Mr Oparanya.

“The national government should stop maligning counties and spreading false information. The publication is a big lie which was made without consulting counties,” he added.

In Kisumu, Planning Chief Officer George Anyonga said the Sh1.06 billion in its accounts at the Central Bank will be spent soon.

PAY CONTRACTORS

“We have set aside Sh700 million approved by the county assembly to pay contractors for last year’s projects and an additional Sh300 million for projects running this financial year,” said Mr Anyonga.

In the North Rift, West Pokot Deputy Governor Titus Lotee said the Sh540 million in the accounts is for activities and projects that are budgeted for.

Mr Lotee also oversees disaster management in the county that is among several with reported food shortages as a result of the drought.

“There is no hanging money. All money that is given to us goes with the budget and the supplementary budget. The money is for the ongoing projects that are not complete and are known,” he said.

“If we use that money for other purposes, it will be against the agreement we made with the contractors. Five hundred million is very little money for any government.

"It can be gone in two days. How do we spend the money yet next week the contractors will need their pay?” he asked.

“We cannot divert the money just because there is hunger. We must go with the budget. All the money used is documented. We are depending on what we budgeted for. You cannot take money from one docket to another.

"You cannot for instance take money for the standard gauge railway to be used for fighting Al-Shabaab,” said Mr Lotee.

He said the county government will next week start distributing food to hunger-stricken areas.

“West Pokot is not the only county affected by hunger,” he added.

In Baringo County, Deputy Governor Mathew Tuitoek attributed the unspent cash balances at the Central Bank amounting to more than Sh1 billion to incomplete projects in the county.

“Most of the projects take longer than the stipulated time due to slow contractors, poor workmanship or substandard projects [and] thus the funds are transferred to the next financial year,” said Mr Tuitoek.

CURRENT DROUGHT
He said the unspent cash has nothing to do with the current drought in the county, adding that the county assembly reduced the emergency funds in the 2016/17 fiscal year.

“In fact the executive and the county assembly are meeting on Monday to review and increase the emergency funds, owing to the escalating drought in the area.

"The assembly allocated Sh20 million to emergency in the 2016/17 financial year, which is not enough to address the situation,” he said.

Dr Thugge said the unspent money could be more than the Sh33 billion as the counties also operate, albeit illegally, accounts at commercial banks.

He also sought to absolve the national government from accusations of under-funding regional governments.

“In view of the fact that the National Treasury has largely been on schedule with disbursements, failure by county governments to meet their financial obligations is clearly linked to other factors,” said Dr Thugge.

He added that some of the "other factors" were likely to be low budget absorption capacity, ballooning wage bills and shortfalls in revenue collection, leading to deficits.

Low budget absorption capacity refers to the inability to spend the money budgeted for and allocated. It is usually brought about by slow implementation of projects, procurement hiccups or lack of structures to get things done.

Reported by Oscar Kakai, Florah Koech, Silas Apollo and John Ngirachu