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Treasury releases Sh25b to cash-starved counties

By People Team
Friday, January 22nd, 2021
Treasury Cabinet secretary Ukur Yattani. Photo/File
In summary

Hillary Mageka and John Otini

National Treasury has released Sh24.6 billion to cash-strapped county governments as part of their equitable share and warned governors on failure to collect idle funds at the Central Bank of Kenya (CBK).

The latest tranche puts total disbursements to counties at Sh157 billion out of the expected Sh370 billion for the full financial year 2020/21.

“National Treasury wishes to confirm that it has released Sh24.6 billion to county governments as part of their equitable share,” Treasury CS Ukur Yatani said in a statement.

This increased the total balances at the central bank from Sh34.6 billion to Sh64 billion even as counties complain over lack of funds despite funds lying at CBK.

“We once again appeal to them to make full use of these funds in the meantime as further disbursements from the Exchequer are made in due course,” said Yatani.

Shutdown counties

County governors had earlier threatened to shutdown counties over delayed national government disbursements accusing central government of sabotage.

Yatani asked counties to prioritise payment of suppliers and settlement of other pending bills as well statutory dues to enable proper functioning of various entities.

In an earlier communique, the Treasury said that funding for counties was behind by two months due to poor tax revenues, occasioned by the Covid-19 containment measures.

Yatani’s move now leaves a balance of Sh61.4 billion which the national government still owes the devolved units for the months of November and December last year and this month.

Lack of funding at the devolved units has seen workers, especially in the health sector, go on strike leaving Kenyans with no medical services..

The government secured debt suspension from the Paris Club and China, helping to ease pressure on State coffers.

However, after six months, the government will be under pressure to balance debt payment and other needs as debt suspensions are lifted.

The Treasury expects the economy to recover by 6.4 per cent in 2021 putting people back to their jobs while reopening shut businesses.

With the re-opening of the economy and scrapping of the Covid-19 tax reliefs, the CS expects revenues to rally and ease the cash crunch that has disrupted flow of money to the county governments.

While welcoming the release of the funds, the Council of Governors (CoG) chair Wycliffe Oparanya asked Treasury to move with speed and clear the outstanding disbursements to county government to enable them run their operations.

“As we speak, Treasury is already in arrears, while it has managed to clear the disbursements for October last year, it is yet to disburse money for November, December and we are now in January.

As a result, counties are finding it very difficult to pay pending bills owed to contractors,’ said the Kakamega governor.

“Going forward, we need to have a very serious discussion on the timely disbursement of money to counties,” he added.

The delayed release of funds, coupled with poor own-revenue collections, have resulted in a cash crunch that has seen counties threaten to shut down services in order for lack of money. 

Last week, Oparanya had written to Treasury protesting the delay in disbursing the money to enable counties meet their obligations to the electorate.

Total balance

“Some of the counties have not even received the September disbursement bringing the total balance to Sh94-7 billion,” Oparanya added.

He lamented that the delayed disbursements had hindered service delivery in the counties at a time the country is reeling from the effects of the Covid-19 pandemic.

Among those hardest hit, Oparanya noted, were health services, resulting in healthworkers working at the county level resorting to strikes for lack of payment of salaries, allowances and the provision of protective gear.