EXCHEQUER DELAYS

Broke in a pandemic: Counties in fresh cash crisis

Governors yet to receive monies from Treasury for three consecutive months, threaten drastic actions

In Summary

• Governors have given the National Treasury an April 15 ultimatum to disburse the outstanding amounts owed to the 47 counties.

• If it isn't released, they promised unspecified "drastic actions".

Council of Governors chairman Wycliffe Oparanya with colleagues address the press in Naivasha on November 10, 2020.
CASH CRISIS: Council of Governors chairman Wycliffe Oparanya with colleagues address the press in Naivasha on November 10, 2020.
Image: GEORGE MURAGE

The cash crunch in the 47 counties has deepened during the Covid-19 pandemic as governors said allocations are at least three months behind schedule.

Governors say the crisis deals a blow to their efforts to battle the pandemic.

In a statement to newsrooms, the county chiefs said counties  are yet to get Sh85.2 billion, two months to the end of the financial year.

Of the stated amounts, Sh7.2 billion is owed to 12 counties for the month of December.

However, Sh78 billion is owed to the 47 counties for the months of January, February, and March – each month at Sh26 billion for all the devolved units.

The Council of Governors, in a statement by its health committee chairman Anyang’ Nyong’o (Kisumu), said the crisis is crippling counties, and Covid-19 preparedness and response is among the first casualties.

The governors disclosed, for instance, only 259 ICU beds are available for patients in 41 counties. (See sidebar.)

"This delay has continued to slow down timely response to Covid-19  and other county operations have been impacted negatively," he stated.

The COG gave the National Treasury an ultimatum: Disburse the outstanding amounts or face "drastic actions". The actions were not specified.

"The Council now strongly notifies the National Treasury that this inordinate four months' delay may lead to other drastic actions since negotiations seem not to be heeded," the COG warned.

Governors also said they are feeling the cash crisis as they respond to food shortages, largely in the ASAL counties.

Although confident that there is an adequate food supply in the country, the county bosses say they need massive resources to counter the effects of delayed long rains.

ASAL areas are thus constrained as they engage in trucking water, providing relief food and cash transfers to support the needy families.

“These counties are doing this in very difficult circumstances since the equitable share from the National Treasury has been delayed for over four consecutive months," the governors said.

The county bosses are appealing to the national government, development partners and the private sector to step in so citizens can get basic needs.

County governments have for most of this financial year complained about the crisis, excruciating conditions and operations about to grind to a halt.

Some counties have not paid salaries for months – a trend they say is becoming common — while some have shelved development projects to meet the cost of operations.

In January, Treasury released Sh24 billion to the 47 counties on account of improved revenue collection.

This was at the height of public exchanges with governors who were later accused of letting funds lie idle in Central Bank of Kenya vaults.

Treasury boss Ukur Yatani pledged that with the improved revenue flow, disbursements to county governments would be prioritised.

But that seems to have changed, and the situation could get worse in the face of the second Covid-19 lockdown of Nairobi, Machakos, Nakuru, Kajiado and Machakos counties.

Experts have projected that revenue would dwindle and the country's liquidity problems would worsen.

The latest Treasury data published in the Kenya Gazette showed county governments had received Sh179 billion as of February 26.

The amount was less than half of the Sh383 billion allocated for the current financial year, ending on June 30.

There are concerns the Exchequer is running low, hence, the recent concerted efforts by the Treasury to secure financing from the IMF.

Records show the government had only Sh4.6 billion in its accounts at the end of February, amid pressure to finance key operations.

The report by the Treasury revealed that the government has spent nearly all the income earned from taxes, domestic loans, and foreign borrowings.

Whereas the government collected Sh1.67 trillion, the expenditure stood at Sh1.66 trillion, signaling how much cash-strapped the Treasury is.

Revenue collection is equally low, considering that with three months to the end of the financial year, only 57 per cent of the targeted Sh2.8 trillion has been realised.

In terms of tax revenue, Treasury collected Sh906 billion yet it targeted Sh1.6 trillion. But it has nearly met its expectations for non-tax revenue — which was Sh1 billion shy of the targeted Sh66 billion.

At least Sh598 billion had been borrowed domestically as of February 26, while external loans and grants stood at Sh52 billion. Other domestic sources netted Sh3 billion.

Of the collected revenue, Sh632 billion went into recurrent expenses of ministries, state departments and agencies (MDAs), while Sh638 billion was consumed by public debt repayment.

Pensions and gratuities took up Sh53 billion of the revenue deposited in the Consolidated Fund, while Sh1.5 billion was paid salaries and allowances.

The ministry was, by press time, yet to respond to the latest outcry by governor as it is becoming ever clearer that Kenya is struggling.

(Edited by V. Graham)