As Kenya continues to strive against economic meltdowns, it has come to light that the national government hasn’t sent funds to county governments for the past two months. This delay has caused many county employees to miss their salary payments.
Speaking at the Intergovernmental Budget and Economic Council meeting which was chaired by DP Rigathi Gachagua, Kakamega Governor Fernandes Barasa noted that counties face a financial crisis with most operations being halted.
“With regard to the disbursement of the allocated amount for this financial year, we are in arrears for the months of July and August because of the lack of the Counties Allocation of Revenue Act (CARA) 2024, which has not yet been approved by the Senate,” Barasa noted.
Barasa who also serves as the Chair of the Finance Council of Governors stated that the Treasury, under orders from Treasury CS John Mbadi, will consider releasing the funds for the two months in September.
Currently, he revealed that most counties have been unable to pay bills with some forced to borrow loans to pay staff and suppliers.
“Most of the operations have come to a halt. They have been negatively affected because we are not able to pay suppliers. In Kakamega, we have borrowed money from banks for two months to pay salaries,” he added.
In June, Fernandes Barasa shared that the government had disbursed funds of up to Sh. 30.8 billion. These funds haven’t been accessed due to various challenges relating to approvals by the Controller of Budget.
The governor further argued that IBEC should instruct the Kenya Revenue Authority (KRA) to stop demanding VAT on county revenue sources, stating that there is no legal basis for such demands.
“It was resolved that we need to have a meeting convened by Treasury CS because it is unacceptable that KRA continuously charges levies on counties which have not been able to raise money because of VAT being charged,” he said.
The CoG challenged the reduction of counties’ equitable share for the 2024/25 financial year by Sh. 20.18 billion, lowering it from Sh. 400.18 billion to Sh. 380 billion.
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The governors urged CS Mbadi to ensure the funds remain at the amount specified in the Division of Revenue Act of 2024.
“IBEC should put in place mechanisms to initiate the process of disbursing the equitable share to counties, pending the determination of the ongoing legislative process, to ensure uninterrupted service delivery,” CoG demanded.
They also called on IBEC to push the National Assembly to expedite the approval and appropriation of the full Sh. 62.4 billion Equalisation Fund for counties. It has been allocated for 14 years since devolution started in Kenya.
Barasa pointed out that despite Sh. 26.29 billion being approved by Parliament with only Sh. 12.4 billion being disbursed so far.