Headache for counties as cash standoff continues

The standoff between governors and the Treasury over the delayed release of funds to counties now threatens to stall provision of key services in the regions and the payment of salaries.

So bad is the situation that Controller of Budget Agnes Odhiambo, in her report on use of funds in counties during the 2016/17 financial year, criticised the Treasury for sending Sh25.5 billion (about nine per cent of the total allocation to counties) at the last minute.

While Treasury Cabinet Secretary Henry Rotich has said they have released funds to the devolved units for the first quarter of the 2017/18 financial year, governors have remained adamant that no disbursement has been made to the counties, further threatening to worsen the situation.

SERVICES
Some of the services that have stalled include payment of salaries to staff, projects and provision of services in the health sector, a situation also blamed on the five-month nurses’ strike.

And, with the onset of the second phase of devolution, a number of governors – particularly new office holders – have argued that the delays could have adverse effects on the implementation of projects and the assumption of office.

Mr Rotich had in an interview last week said they had released about Sh13 billion to the counties in October as part of the disbursement for the first quarter.

"We will continue to release the funds based on the availability of money to meet some of the critical issues in the counties like salaries," he said.

SENATE APPROVAL
The Treasury had earlier pegged its reluctance to release the money for the first quarter on an advisory issued by Attorney-General Githu Muigai, recommending that the schedule of cash disbursement approved by the Senate be synchronised with that in the law.

The approved schedule, Mr Muigai argued, failed to include grants from the World Bank and Danida for use in provision of universal health care, agricultural and rural inclusive growth project among others.

Council of Governors chairman Josphat Nanok attributed the stalemate to a deadlock between the Senate and Treasury on the schedule of disbursements contained in the County Revenue Allocation Act.

LOANS
He accused the Senate of sending to the Treasury a different schedule from the one contained in the law with the Treasury indicating it will not release any funds unless that anomaly is rectified.

But while the Senate on Thursday rectified the changes as proposed by the AG, the amendments will have to go through the National Assembly, which is currently on recess, further compounding the problem in counties.

The county bosses had earlier said they were forced to turn to locally collected revenue and bank loans to run services in the counties due to the late disbursement with only 19 out of the 47 regions having received part of their disbursements.