Cabinet okays merger of State bank accounts

Treasury CS Njuguna Ndung'u. [Elvis Ogina, Standard]

The National Treasury will start implementation of the Treasury Single Account (TSA) in the government’s bid to consolidate and improve oversight of its cash resources.

The implementation of the TSA for the national and county governments, which has been in the making for more than a decade now, got Cabinet approval yesterday, noting that this would simplify banking by different government agencies. 

The move is expected to significantly reduce the amount of cash that Ministries, Departments and Agencies deposit in commercial banks as the agencies are supposed to process and pay suppliers and contractors within 24 hours of receiving money from the Treasury. 

Local bank deposits could take a hit as government agencies may close some of their accounts. The move will however not affect State-run commercial enterprises. 

During the cabinet meeting chaired by President William Ruto at State House Nairobi, on Monday, the Cabinet underscored the importance of the TSA in simplifying government banking, creating visibility of government cash resources and increasing transparency in government cash management.

“Government funds are banked in commercial bank accounts and individuals keep earning interest. This must stop. All the benefits of public funds must only accrue to the people of Kenya and no one else,” said President Ruto.

The new system is also expected to help control expenditure and minimise the fragmentation of government accounts in commercial banks.

The structure of the TSA will include the National Exchequer Account, the TSA Sub-Account and the County Revenue Fund.

At the meeting, the Cabinet also approved the implementation of the Electronic Government Procurement (e-GP) in both the National and county governments. 

“This move aims to enhance fairness, equity, transparency, competitiveness and cost-effective public procurement, potentially reducing costs by between 10 and 15 per cent, saving the government Sh90 billion yearly in public procurement expenditure,” said State House in a statement. 

The government said the e-GP system will drive the Bottom-Up Economic Transformation Agenda, promoting sustainable and inclusive economic growth through the digitisation and automation of public procurement and asset disposal processes.

“The Cabinet’s decision to implement electronic procurement is rooted in the understanding that digital transformation is essential for transparency, accountability and the establishment of an open marketplace for procurement agencies,” said State House. 

“Electronic procurement will benefit the government, suppliers and the public through transparent information flow on expenditure.”

Also given the go-ahead at the Cabinet meeting are Public-Private Partnership (PPP) Regulations that aim at improving the structure and performance of PPP projects. 

The State hopes that the regulations will create a stable environment for public and private entities involved in PPPs and foster a robust investment environment.

“The regulations provide clear guidelines for planning, procurement, management and monitoring PPP projects, aligning with the Bottom-Up Economic Transformation agenda and incorporating environmental and climate change principles. The regulations will now be taken to Parliament for approval,” said the statement. 

The Cabinet also approved the Railway Amendment Bill 2024 which could radically change how the country runs the railways through the separation of the business of freight, commuter and land development.

It noted that this would fortify Kenya as a regional logistics hub. “Kenya Railways is a big landowner in Kenya and most of the land is lying idle. This will be used to develop railway cities as is happening in Nairobi and will be extended to other major towns,” said the statement. 

“The Bill proposes that the private sector, investors and even county governments run the railway cities. In such cases, Kenya Railways will become a regulator.”

The Cabinet also approved Kenya's Sovereign Green Bond Framework which seeks to secure alternative funding options for green and resilient investments, which it noted is amid rising climate change costs.

The Cabinet also approved the draft Kenya Social Protection Policy 2023 which aims at cushioning the poor and vulnerable from socio-economic challenges.