Cash crunch as counties get 5pc of funding

By Moses Michira | Monday, Sep 10th 2018 at 00:00
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Devolution Cabinet Secretary Eugene Wamalwa with other leaders during the first ASAL's conference held in Malindi, Kilifi County on Friday. [Mkamburi Mwawasi/Standard]

A vast majority of the 47 counties are yet to receive cash from the National Treasury three months into the financial year. This has been seen as an indication of worsening financial matters.

It was not until last week that 15 ‘broke’ counties were advanced disbursements cumulatively worth Sh4 billion, reportedly after pleas by their respective governors.

From the already approved budgets for all the counties, more than Sh75billion of allocations should have been passed over by today.

Among the reasons cited for the delay is a legal hurdle that involves a pending approval from the Senate.

This has hampered service delivery and payment of workers’ salaries in the devolved units.

Sources have confirmed the sad state of affairs, where governors have been left to device ways to survive, which often includes taking hefty and costly loans from commercial banks to meet urgent financial needs.

But even with the loan arrangements, most counties have not paid August salaries, with the funding crisis crippling planning, specifically on development projects.

“It is impossible to implement development when you are uncertain about the disbursement schedules,” said an affected county employee.

They spoke to The Standard amid complaints among the governors’ circle relating to the lack of a predictable sequence of receiving cash transfers, with many condemned for spending little or nothing on development.

“Governors are often faulted, but really, the blame lies elsewhere at the Treasury,” they said.

Senate is expected to sit and approve the disbursement due, but is currently on recess. Senators will resume tomorrow. Collectively, the allocations for counties in the current financial year is Sh314 billion, meaning Sh310 billion remains outstanding today.

Nairobi Governor Mike Sonko, through his spokesman, said the county had been operating on internally generated revenue, which includes charges from parking within the city.

He is, however, optimistic that the disbursement would come through within the week to enable the county meet its most pressing needs. Kirinyaga County’s Anne Waiguru said she did not know when the money would be released.

Previously, Josphat Nanok, the Turkana Governor, and who chairs the governors’ caucus, said the counties should not be blamed for the minimal development spending.

In many instances the development budgets are returned to Treasury at the end of the financial year on June 30. The difficulty the counties are dealing with come amid tough austerity measures planned by Treasury, which is seeking to cut back on major spending activities only within the first quarter of the financial year.

Likely, projects in the energy and infrastructure sectors would be shelved to create some breathing space for the country, which has a huge debt obligation falling due and an ever-soaring public wage bill.

 Spending plans

The two sectors have a cumulative budget of nearly Sh420 billion. Among the reasons for the impending review on spending plans is failure by Treasury to have its revenue raising avenues in form of stiff taxation measures blocked by the National Assembly.

Legislators have already rejected attempts to slap 16 per cent Value Added Tax on petroleum products in a bill that is awaiting President’s assent.


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