National Treasury yet to release money to counties

Devolution continues to face challenges as the National Treasury is yet to release money to counties a month after governors were sworn in.

This has put county governments in a tight spot, as it emerges they are not only owed by former officials, but they also owe suppliers and national government agencies billions of shillings.

The situation is so dire that some counties are even finding it hard to ensure cars have fuel.

Moreover, governors are yet to go for induction workshops, where they are supposed to learn the mechanisms of a county government. The most affected are those who have never held a government job.

The transition bureaucratic process, Cabinet’s decision to divert money to cater for the repeat presidential election and political brinkmanship by Jubilee have denied counties the much-needed cash.

EXECUTIVE MEMBERS

As per the law, newly elected governors have to appoint new county executive members for finance so that they can access county accounts at the Central Bank of Kenya.

The Central Bank has written a memo exempting finance county executives not to be replaced until new ones are sworn in to ensure there is smooth transition. Most governors sacked the county executive members who were in office before the elections.

Last week, the Cabinet met and decided to divert a significant amount of money to election-related matters.

“The Supreme Court, in its September 1 decision, directed that a repeat presidential election be held within 60 days. Cabinet today approved an allocation of Sh10 billion to cover this repeat presidential election. This allocation was based on a proposed budget submitted by the electoral agency, the IEBC (Independent Electoral and Boundaries Commission),” says a Cabinet memo from State House.

REVENUE BILL

There was no mention of money allocated to counties despite Parliament having passed crucial legislation instrumental to devolution — the Division of Revenue Bill and the County Allocation of Revenue Bill.

Jubilee insiders, however, said it is unlikely for counties to receive cash before the election is over.

“The earliest money can be released is after the election. This is meant to ensure governors do not divert cash meant for development to fund the presidential campaigns,” said a source.

One of the national government agencies that have borne the brunt of the cash crisis is the Kenya Medical Supplies Authority, which falls under the Health ministry and was established to supply public hospitals with drugs.

The Nation established that the parastatal is owed over Sh2.4 billion by county governments and is already experiencing cash flow problems.

Counties that owe it large amounts include Nairobi (Sh268 million), Murang’a (Sh64 million), Kisumu (Sh40 million), Kiambu (Sh40 million), Nakuru (Sh157 million), Kajiado (Sh40 million) and Baringo (Sh40 million).

Acting CEO Philip Omondi downplayed the huge debt, saying that counties are committed to paying.

PAY BILLS

“It is not as high as you put it (Sh2.4 billion). Counties owe us slightly less than a billion. These are government-to government transactions, and governors have committed to paying us once they get the money. The new governors are asking for due diligence so that they pay accurate bills,” he said.

Tharaka-Nithi Governor Muthomi Njuki, who is among the newly elected county bosses, said he found empty coffers and had to plead with the Treasury to release money meant for salaries.

“Two weeks to the election, the county received Sh275 million. Salaries alone require Sh190 million and what was left, Sh85 million, was used in unclear circumstances,” he said.

He said nurses, who receive Sh30 million every month, had not been paid for three months.

“I am already in debt and it’s something wananchi do not understand because they want development as soon as possible. We had to plead with Kenya Power not to cut electricity at our markets and hospitals,” he said.

Governor Njuki said the situation is made worse since governors are yet to learn about the workings of county laws.

INDUCTION SEMINAR

“The presidential election has resulted in the deferment of our induction seminar. We are just reading the laws but there are some things not captured in the legislation,” he said.

Marsabit Governor Muhamud Ali said he had to negotiate with banks so that county workers can have their salaries.

“The previous county government had not even passed our budget. This task was done on Wednesday. The transition is ongoing and it’s our hope that it will be completed soon, before we go to the banks again,” he said.

READ: Counties at risk of cash crunch

Newly elected governors are also facing the daunting task of recovering millions in unpaid loans advanced to ward reps and executives.

Some of the devolved units have initiated efforts to establish the exact amount they owe suppliers to ensure they settle authentic outstanding bills.

They have described some of the pending bills as massive and are contemplating legal action against some officers over the matter.

In Nandi County, for instance, Governor Stephen Sang has constituted a task force to audit what the county government owes its creditors.

DEBTS

“The audit will ensure only genuine and justified debts are settled after systematic verification,” said Mr Sang.

Acting county secretary Francis Sang has, consequently, issued a notice to individuals and firms that offered services or supplied goods during the former regime’s tenure and are yet to be paid to come forward.

“They should present memorandum detailing what service they offered or which goods they supplied with supporting evidence,” Mr Sang says in the notice.

This comes as a row between the county government and contractors over pending bills amounting to over Sh460 million continues to escalate.

The contractors have threatened to move to court to have the money paid in the next one week for the work done in the 2015/2016 financial year.

They argue that banks have threatened to auction their property to recover loans they secured to fund the projects.

Construction of the governor’s office and the Kipchoge Keino Stadium are some of the pending projects in the region.

AUDITOR GENERAL

According to a report by Auditor- General Edward Ouko’s office, the initial cost of the governor’s office, a two-storey building, was estimated at Sh103,383,420 but an additional floor was later approved at a cost of Sh21,191,200.

The construction started on February 10, 2014, and it was to be completed on February 6, 2015, but it remains unfinished.

According to Mr Sang, the construction of the stadium had taken long to be completed and the project should be taken over by the Sports ministry because it requires a lot of funding.

The devolved unit allocated Sh52,899,163 for the construction of the county stadium in April 2014, which was later revised to Sh118,995,012, but the project is still incomplete.

The contractor was paid Sh91,400,163 as at November 2015, five months when the project was supposed to be complete.

The audit report indicates that the county government was unlikely to get value for the project due to the delay in its completion.

MORTGAGES

Counties that are at risk of losing millions of shillings include Elgeyo- Marakwet and Uasin Gishu, with the office of the Auditor-General expressing concern on how the money will be recovered.

The latest report by Mr Ouko indicates that members of the Elgeyo- Marakwet County Assembly and the Executive defaulted in the payment of about Sh53 million advanced to them in mortgages and car loans.

Mr Ouko expressed concern over the slow repayment of the loans at the rate of between Sh38,878 to Sh145,416 monthly and improper valuation of the land and motor vehicles to act as security.

The report questions how the county government will recover outstanding imprest of about Sh12.2 million it issued to its officers.

In Uasin Gishu County, imprest of Sh11.5 million had not been recovered from the salaries of the defaulting officers.

Some of the MCAs lost during party primaries and others during the August 8 General Election.

 Additional reporting by Philip Bwayo and Barnabas Bii