Total shutdown looms as Council of Governors pushes for disbursement of funds to Counties

COUNCIL OF GOVERNORS

14th June, 2021

PRESS STATEMENT ON THE DELAYED DISBURSEMENTS OF

FUNDS TO COUNTIES BY NATIONAL TREASURY

The Council of Governors is concerned by the continued violation of the law by the National Treasury regarding disbursement of funds to counties.

The Division of Revenue Act 2020 allocated to County

Governments equitable share amounting to Kshs.316.5 Billion and Ksh. 1.5 Trillion to the National Government.

It is imperative for Kenyans to understand that financing counties by the National Treasury is NOT a favor but constitutional obligation. The Tax payer at the counties is also entitled to tamely service delivery.

Article 219 of the constitution stipulates for timely disbursements of the equitable share of revenue. The County

Allocation of Revenue Act 2020 provides a clear structure of the horizontal sharing of resources as guided by the Division of Revenue Act. The County Governments Cash Disbursement

Schedule for the Financial Year 2020/21 generated by Treasury and approved by Senate in line with the Public Finance

Management (PFM) act stipulates that those resources should be disbursed to devolved units 15th day of every month in a Financial Year.

It is with dismay that we report that Treasury is yet to disburse resources to County Governments amounting to Kshs.102.6 billion 2 weeks to the end of the financial year as follows;

3. Kshs.3.5 Billion owed to Nairobi County Government as arrears for FY 2019/2020;
4. Kshs.2.6 Billion owed to Nairobi County Government for the month of January;

iii. Kshs.1.4 Billion owed to Nairobi County Government for the month of February;

14. Kshs.14.4 Billion owed to 25 County Governments for the month of March;
15. Kshs.28.5 Billion owed to 47 County Governments for the month of April;
16. Kshs.25.3 Billion owed to 47 County Governments for the month of May and;

vii. Kshs.26.9 Billion owed to 47 County Governments for the month of June.

Counties are unable to meet statutory obligations and fiscal responsibilities that include: –

1. Timely payment of employees’ salaries;
2. Remittance of employees’ statutory deductions;
3. Payment of suppliers’ eligible pending bills;
4. Implementation of development projects and;
5. Derailed response in the fight against COVID-19 pandemic

The continued delay in disbursement is eroding gains made in devolved governance and affecting the economic growth in the Counties.

Treasury has not only failed to comply with the constitution but also with its own document- the cash disbursement schedule,

2020. This has seen counties stigmatized for failing to offer critical services especially now in the face of the Covid-19 pandemic, for what is beyond them.

While Kenyans continue to demand services from the County

Governments, Operations at the National Government continue uninterrupted owing to timely financing from the

National Treasury, while those operations in the Counties are slowly grinding to a halt. This should NOT be tolerated by those who support the success of devolution in Kenya.

The CS National Treasury while delivering his budget speech gave a directive to County Governments to clear all eligible pending bills by 30th June 2021. Out of the verified pending bills by Office of the Auditor General, County Governments have outstanding eligible pending bills amounting to Ksh.11.5 Billion.

If National Treasury released the resources outstanding,

County Governments will be able to clear most of the eligible pending bills, pay salaries on time and remit statutory deductions. Otherwise, Counties cannot comply with this directive.

We appeal to the Senate, the custodian of devolution, to support counties in this call for timely disbursement as the law provides for efficient service delivery. Operations across

Counties are currently paralyzed.

Today is the 14th June 2021, 16 days remaining to the closure of this Financial Year. In this regard, The National Treasury SHOULD release these funds by 18th June 2021. This will offer Counties the remaining 8 working day to satisfy the stringent requirements by the Controller of Budget in accessing and spending the funds.

Unfortunately, if the National Treasury fails to release the required funds, counties will not be able to offer basic service thereby forcing suspension of services or a total shut down by 24th June 2021.

Download statement here; PRESS STATEMENT- TRANSFER OF FUNDS TO COUNTY GOVERMENTS

 E. Hon. Martin Nyaga Wambora, EGH

Chairman, Council of Governors