More than Sh20 billion remains idle in the bank accounts of county governments at the Central Bank of Kenya, two weeks after the Treasury released allocations for July.
The Treasury had disbursed over Sh32 billion to ease financial pressures on the devolved units, but most counties are yet to put the money into use.
Sources reveal that the rollout of an integrated financial system by the Treasury, coupled with the delayed submission of county budgets for approval, has slowed the absorption of funds.
Controller of Budget Margaret Nyakang’o said most counties are still struggling to adopt the new system, especially when making requisitions.
“There is a new system which I think is giving most of them challenges. None of the counties has made any requisition for development. What they are requisitioning is for payment of salaries,” she told the Star.
Recently, Treasury CS John Mbadi told the Senate County Public Accounts Committee that the dual-function system—combining approvals and payments—will be operational by the end of this month.
The move comes amid mounting concerns over illegal and irregular payments in counties, as well as failure to remit deductions to statutory bodies like the Kenya Revenue Authority, Saccos and pension schemes.
“We will start deducting all these statutory payments at source,” Mbadi said.
Further, several counties submitted their 2025-26 spending plans late, delaying clearance by the Controller of Budget.
“Even as we speak today, one county is yet to submit its budget, and that is Wajir. They cannot access any money. Others have submitted, but we have yet to clear them. I have asked them to fix a few issues,” Nyakang’o said.
The situation is further complicated in counties such as Isiolo, where court cases have blocked the implementation of budgets, leaving the allocations untouched.
By law, county governments must submit approved budgets to the CoB by June 30 each year to enable fund requisitions.
“They should submit immediately after June 30. They are already breaking the law if the assembly does not pass the budget by that date,” Nyakang’o said.
She noted that, in contrast, her office received the national government’s signed budget from the President immediately after the June 30 deadline.
Sources say the budget submission delays stem from wrangles between county executives and assemblies, laxity by executives in forwarding budgets for approval and slow processing by assemblies.
In several counties, political infighting has paralysed key operations, including the passage of financial plans.
Nyakang’o described the relationship between some county executives and assemblies as “dysfunctional” and “convoluted,” with political rivalry often overshadowing service delivery.
“In some cases, assemblies engage in what can only be described as political blackmail—deliberately delaying, rewriting, or rejecting proposals to extract concessions from governors, assert power, or settle scores,” she said.
Bungoma county is a case in point. A bitter power struggle between Governor Kenneth Lusaka’s administration and the county assembly has escalated into a legal battle.
The assembly is accused of disbanding the legally constituted budget committee, replacing it with an ad hoc team that significantly altered the executive’s proposal.
“There is a serious case in Bungoma. The assembly disbanded the budget committee and formed an ad hoc one, which then mutilated the proposed budget. They passed their own version using coercive tactics,” Nyakang’o said.
INSTANT ANALYSIS
The Office of the Controller of Budget, established under Article 228 of the Constitution, is an independent institution mandated to oversee the implementation of both national and county budgets by authorising withdrawals from public funds.
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