Fear of waste as counties given Sh31bn in final week

The National Treasury has put county governments under pressure after releasing Sh30.99 billion just five days before the end of the financial year, triggering a flurry of last-minute spending.

The funds were disbursed on Wednesday, prompting counties to submit urgent spending requests, known as requisitions, to the Controller of Budget before the Integrated Financial Management Information System is closed at midnight on June 30.

The sudden release has raised red flags among oversight institutions, with concerns that some counties may channel the funds into questionable or non-essential expenditure under the guise of end-of-year requisitions.

“Now we are waiting for the end-of-year requisitions, likely to be rushed and mostly fake,” a senior official at the Office of the Controller of Budget said.

With the June disbursement, the Treasury has cleared all outstanding exchequer releases owed to the counties, which have long complained about inconsistent and delayed funding.

The latest release means that, for the 2024-25 financial year, counties have received a cumulative Sh418 billion, covering 13 months’ worth of allocations.

This includes carryovers from the previous fiscal period.

Last year, the Treasury delayed the disbursement of Sh30 billion funds for June, which were only released in the subsequent financial year.

The timely release this year follows a commitment made by Deputy President Kithure Kindiki, who assured county governments during the 27th Ordinary Session of the Intergovernmental Budget and Economic Council meeting on Monday that the national government would settle all pending allocations before the fiscal year’s close.

“We don’t have any pending allocations apart from June’s, which will be released on time,” the Deputy President said during the meeting.

Earlier, there were indications that the Treasury would not be able to release the entire amount before the end of the financial year.

While the Treasury has technically fulfilled its obligation, the 11th-hour disbursement has put counties under pressure to spend quickly, raising accountability and absorption capacity concerns as the deadline looms.

Out of Sh30.99 billion released, Nairobi has received Sh1.61 billion, Nakuru got Sh1.09 billion, Turkana received Sh1.05 billion and Kakamega got Sh1.03 billion.

Other counties that received huge amounts are Kiambu (Sh983.49 million), Kilifi (Sh973.58 million), Mandera (Sh935.24 million), Bungoma (Sh893.65 million) and Kitui (Sh870.87 million).

Others are Wajir (Sh792.22 million), Narok (Sh739.68 million), Meru (Sh795.54 million), Machakos (Sh767.77 million), Kisii (Sh744.46 million), Kwale (Sh690.03 million) and Kisumu (Sh672.42 million).

Section 17 of the Public Finance Management (PFM) Act, 2012, mandates the Treasury to disburse the equitable share of national revenue to counties by the 15th of every month – a requirement rarely met in practice.

However, the Treasury has often released funds too late in the financial year, sometimes on the final day.

While the Treasury has repeatedly cited cash flow problems and competing national obligations, critics accuse the Exchequer of unfairly prioritising the national government over counties.

Counties have five legally recognised sources of revenue, namely the equitable share, own-source revenue, grants, loans and investments.

Despite this, most counties remain heavily reliant on Treasury disbursements to finance day-to-day operations, including payment of staff salaries.

The growing fiscal squeeze threatens to paralyse county functions and erode the gains made under devolution, unless urgent reforms are implemented to guarantee timely, transparent and fair disbursement of funds.

Despite being the counties’ only hope, Treasury has ignored the provision, as well as the cash disbursement schedule approved by the Senate every year to guide the monthly disbursements.