THE FAKE CASH CRISIS: How counties failed to spend Sh85.6 billion, report shows



County governments failed to spend Sh85.6 billion out of Sh314 billion allocated to them in the last financial year.

The huge unspent balance has been revealed even as a standoff over governors’ demands for an extra Sh19 billion this year escalates.

The 47 counties had only spent Sh228.4 billion by the end of 2018/19 financial year, according to a document prepared by Treasury.

At least Sh51.6 billion was cash float in the accounts of the devolved units while another Sh34 billion was being held by Treasury because of slow absorption by the county governments.

Nakuru County leads the pack with Sh3.9 billion unspent cash followed by Nairobi which failed to absorb Sh3.5 billion.

Other counties with huge cash balances in their accounts as at July 12, 2019, include Kwale Sh2.5 billion, Turkana (Sh2.4 billion), Machakos (Sh1.8 billion), Kilifi (Sh1.8 billion), Bungoma (Sh1.7 billion), Nyandarua (Sh1.7 billion), Siaya (Sh1.7) and Baringo (Sh1.7 billion).

Tharaka-Nithi, Mombasa and Taita-Taveta were the best spenders, having a balance less than Sh100 million each in their accounts.

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Cash crisis

This revelation raises queries on the current stalemate occasioned by push for at least Sh335 billion to the counties in the current financial year.

National Assembly and the Senate are currently at loggerheads over the contentious Division of Revenue Bill, 2019, with the former insisting on Sh316.5 billion it had proposed during the previous mediation, while senators want nothing less than Sh335 billion for the devolved units.

The impasse has plunged counties into a cash crisis that has sparked strikes by county workers.

Yesterday, National Assembly Minority Leader John Mbadi, a member of the mediation team, said senators should shift their focus to ensuring counties can absorb what is allocated to them before they can push for additional monies.

Mr Mbadi said issues of late disbursement by Treasury, counties’ capacity to implement projects as well as challenges in transacting through the Integrated Financial Management Information System (Ifmis) should be priority concerns for the Senate.

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“The question the Senate should be asking is why the counties failed to absorb what was allocated to them,” said Mbadi.

He said it would be inconsequential to allocate the counties Sh335 billion when they actually utilised less than Sh230 billion in the last fiscal year.

Nairobi Senator Johnson Sakaja, however, dismissed the argument as defeatist, stating that even Government ministries do not have 100 per cent absorption rate.

He said some of the reasons for poor absorption were occasioned by deliberate delays by Treasury to release funds.

“Why don’t they apply the same standard to the national government? What’s good for the goose must be good for the gander. Also, among the challenges county governments have is the slow and delayed disbursement of their allocated revenues throughout the year,” said Mr Sakaja.

Stifle devolution

Council of Governors Chairman Wycliffe Oparanya told The Standard that there was a deliberate effort to stifle devolution through late disbursement.

The Kakamega governor disclosed that counties received their final installments on the last day of June, hence the reason they could not spend the allocations.

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He said Ifmis was also to blame as it was slow. “It is practically impossible for counties to follow all the procedure after receiving money on the last day of June,” said Oparanya.

“Ifmis system is also a problem. It is one of the obstacles to devolution. When everybody logs in, it becomes slow,” he added.

He defended the push for more money, saying low absorption notwithstanding, the counties will still get their allocations even if it is late.

The mediation team meets tomorrow after the first engagement last week collapsed.

Oparanya said operations in the counties risk stalling if the stalemate is not resolved and asked Treasury to release some funds to the devolved units as talks continue.

During the collapsed talks, Majority Leader in the National Assembly Aden Duale said the allocations can only be altered through a Supplementary Budget since the monies have been appropriated.