The National Treasury has rejected a Sh443 million agreement signed last year between the Isiolo County government and a non-governmental organisation for the provision of community health services, arguing that it contravenes the law.
The agreement between Governor Mohamed Kuti's administration and Living Goods Limited is aimed at strengthening community health workers operating within Isiolo, Merti and Garbatulla sub-counties by equipping them with skills on technology use.
The deal involves situational analysis of existing healthcare infrastructure, training community health extension workers on key health interventions, supporting the county government with forecasting for procurement of essential medicines and supplies and providing support through restocking essential medicines and supplies.
As a result of the deal, the county executive, with the approval of the assembly, developed regulations creating Isiolo County Community Health Services Fund.
However, Cabinet Secretary Henry Rotich says the deal, which has been a source of conflict between Governor Kuti and Senator Fatuma Dullo, contravenes the provisions of the Public Finance Management Act and should be stopped forthwith until all the gaps are addressed.
Ms Dullo says the deal was negotiated without the requisite public participation as well as the necessary clearance from Ministry of Health and the Senate, which is a custodian of counties' interests.
Ms Dullo raised the matter in the Senate and wrote to the National Treasury seeking a clarification on whether the deal is in line with the law.
Other residents went to court, arguing that no public participation was conducted and that the deal purports to bypass the constitutional budgeting process by binding the county government to factor the cost of the implementation of the project in the budget.
Mr Rotich takes issue with the definition in the Fund agreement, which he says contain anomalies.
“The regulations imply that monies from the donor do not form part of the annual budget, which is against the Public Finance Management Act,” Mr Rotich writes in a letter to Ms Dullo.
He further notes that the regulations are not clear on the type of donor funding, whether it is a grant or a loan.
“Section 138 (3) outlines conditions for receiving grants and donations by a county government or its entities. In relations to a loan, section 140 sets out conditions for borrowing by a county government," Mr Rotich says, noting that the regulations should state how donor funding of the project has adhered to the constitution and legal provisions.
While the regulation provides that the fund management committee shall approve expenditure, the CS rejects this, saying that the mandate to approve use of all public funds is vested in the County Assembly.