Nyakang’o exposes mess in counties cash management

Controller of Budget Margaret Nyakang’o has exposed the deep-rooted rot and impunity with which county governments are managing public finances.

In the revelation that lifts the lid on how taxpayers could be losing billions in the devolved units, Nyakang’o laid bare how counties are blatantly ignoring institutions established to safeguard public funds.

For instance, some counties are spending millions without seeking approval from CoB, while others deliberately overshoot their spending beyond the approved limit.

Still, others are diverting funds approved for specific programmes and budget lines to other uses in total disregard of the law and institutions.

“The county reported that expenditures in some departments exceeded the amounts released by the exchequer. This situation arose due to the diversion of funds from the exchequer workplans submitted to the OCoB,” the report states about Kakamega county.

Some counties seek funds only to keep it idle in their accounts, thus being unable to implement their planned programmes and projects.

The revelations are contained in the CoB’s report on county expenditure for the first half of the financial year, released on Wednesday.

“While the approved requests for withdrawals from the relevant county revenue funds are well supported, the Controller of Budget has noted frequent non-adherence to the exchequer workplans by county governments,” Nyakang’o said.

The CoB revealed that the counties are exploiting the manual exchequer process (process of managing and controlling finances) to divert funds approved for some budget lines to other uses.

“Given that the exchequer process is mainly manual, it is challenging to tie approved requests and supporting workplans to actual expenditures,” the report states.

According to the report, 16 counties spent beyond their approved expenditures, clearly defying the OCoB, which is mandated to approve spending limits by the counties.

They are Bungoma, which spent Sh5.12 billion against Sh4.72 billion approved, translating to 109 per cent of its approved spending. 

Homa Bay spent Sh4.37 billion against Sh4.25 billion (103 per cent), Kilifi spent Sh6.13 billion instead of Sh5.11 billion (120 per cent), Kwale spent Sh4.65 billion instead of Sh4.08 billion (114 per cent) and Machakos used Sh5.97 billion instead of Sh4.77 billion (125 per cent).

“Analysis of expenditure against exchequer issues shows that the county does not adhere to the exchequer requisitions workplans during expenditure, leading to the diversion of funds across departments,” the report says with regards to Kilifi.

Makueni (138 per cent), Meru (104 per cent), Migori (108 per cent) and Nandi (120 per cent), Narok (105 per cent), Nyandarua (122 per cent) and Nyeri (108 per cent). Others are Samburu, which spent Sh2.36 billion instead of Sh2.34 billion (101 per cent), Turkana used Sh6.62 billion out of approved Sh5.37 billion (123 per cent), Uasin Gishu used Sh4.74 billion instead of Sh4.22 billion (112 per cent) and Wajir spent Sh4.76 billion instead of Sh4.10 billion (116 per cent).

“The county had over-expenditure above the exchequer releases in the departments of water, environment and natural resources, health services, agriculture, crop production and irrigation, education, culture and social services and youth and sports.”

“… as a result of diverting funds meant for payments in one depart ment to the other,” report says about Kiambu. Nyakang’o, in an explanation to the Star, said the overspending by the counties implies that the devolved units did not bank all their revenues (spent at source) before seeking requisitions in her office.

The move, she said, is illegal and dangerous as far as the management of public funds is concerned.

“The law requires the counties to bank all the monies they receive. After that, they are supposed to make requisitions to my office for the withdrawal of that money,” Nyakang’o said.

“It is a legal requirement for accountability because we know what has come in and what has gone out and for what reasons,” she added.

In what is emerging as a clear trend, most counties are diverting funds meant for payment of pending bills, leading to massive accumulation of debts.

“Several county governments did not adhere to their submitted plans while paying pending bills,” Nyakang’o said.

As at December 31, last year, the counties had accumulated pending bills amounting to Sh182.13 billion.

The report shows only seven adhered to the law as they spent strictly 100 per cent of their approved requests by CoB.

They are West Pokot, Taita Taveta, Nairobi, Mandera, Lamu, Kitui and Embu. The rest of the counties had billions lying in their accounts that they had spent less than the approved for withdrawal by the CoB.