Kenyan counties yet to receive half of their allocation

National Treasury Cabinet Secretary Henry Rotich

NAIROBI: Counties have only received half of the funds allocated by the National Treasury, with three months to the close of the financial year.

By the end of February, the Treasury had only disbursed Sh130 billion to the 47 counties against a total of Sh264 billion for the 2015-16 financial year that ends in June.

Governors say the delay is frustrating implementation of projects as they are forced to divert resources to finance urgent services like the free maternity programme.

The disbursement figures were published by National Treasury Cabinet Secretary Henry Rotich through a notice dated March 16, 2016.

The total allocation to the devolved units this year as per County Allocation of Revenue Act is Sh273.2 billion. However, the balance of Sh9 billion relating to the fuel levy fund, maternity health care, user fees foregone and World Bank grant for Health Sector Services Fund will be disbursed directly to the counties by the responsible national government entities.

Lamu County, which has only received Sh872 million of its total allocation of Sh2 billion, has had the lowest disbursement. Nairobi has received Sh7 billion of its total share of Sh13 billion.

West Pokot Governor Simon Kachapin said delaying funds was undermining implementation of projects in the devolved units.

Mr Kachapin said his county only received the January allocation last week, three months after it had committed the money for various expenses.

“We are really constrained. The release has become unpredictable and this affects our operations. Sometimes we cannot even clear our small debts. We however understand that the Treasury is also having problems with revenue collection,” said Kachapin.

Bomet Governor Isaac Ruto said for two years, the Treasury had not released the balance of Sh9 billion relating to the fuel levy fund, maternity health care, user fees foregone and World Bank grant for health.

“We did not receive that allocation last year and we have not received it this year and the financial period is about to lapse,” said Ruto.

Kachapin said counties were forced to shoulder the responsibility of the national government without enough funds to, for instance, finance the free maternity.

He said counties are forced to divert resources to fund the healthcare programme.

But Mr Rotich said they had cleared the half-year transfers by December and a number of counties had received cash for January and some for February as well.

“We always try to disburse the funds on a monthly basis, but  there are counties that have so much cash in their accounts and we do not see the point of lumping the money in their accounts when other ministries are in need,” said Rotich.

The CS said the Treasury made sure the counties whose accounts had a balance of only Sh300 million immediately received more funds.

He, however, said that all the cash as allocated would be released to the counties before the close of the financial year in June.

Two weeks ago, the senators and the Commission on Revenue Allocation (CRA) agreed on a new revenue allocation formula that would guide the breakdown of funds to the 47 devolved units for the next five years.

The formula, which replaces another that was used for three years, retained population as the biggest parameter for revenue allocation.

Also, counties that demonstrate good fiscal discipline will be rewarded in a move that seeks to encourage devolved units to maintain good records.

They also kept 25 per cent to be shared equally among the 47 counties, but reduced the poverty index parameter from 20 per cent to 18 but introduced development as the new factor in the second-generation formula that will run for five years.

According to Finance, Commerce and Budget Committee chairman Billow Kerrow, the new formula was unanimously agreed with the CRA.

The Micah Cheserem-led CRA, which is constitutionally mandated to recommend to the Senate the formula for sharing of revenue, said the change will be implemented from July this year until end June 2021, when the country will review it for the third time.

Cheserem said counties that will increase their collected revenues will be rewarded based on the records of the past three years.

“What we are saying is that counties that increase their revenue collected will now benefit more,” Cheserem told The Standard.