Counties in long wait for Sh40bn conditional grants

Counties could be faced with a cash crisis in a looming long wait for the National Treasury to develop a legal framework for disbursing Sh39.9 billion conditional grants.

Parliament on Wednesday voted to remove the grants from the Division of Revenue Bill, 2021, thereby reducing the revenue share for the devolved units to Sh370 billion.

The National Assembly made the move in concurrence with the Senate that the grants cannot be included in the bill setting revenue share between the two levels of government.

However, the problem is that presently, there is no legal instrument for disbursing the funds to the County Revenue Fund.

MPs hold that conditional grants cannot be contained in the Division of Revenue Bill, not even as an item in the bill’s memorandum.

Affected in the decision is the allocation of Sh7.5 billion for leasing of medical equipment and supplement for construction of county headquarters.

Also locked up is Sh4.6 billion World Bank cash for the Kenya Devolution Support Program and Sh2.2 billion from the bank for Universal Healthcare Coverage.

Another Sh6.4 billion by the World Bank to support agriculture in rural areas as well as Danida grants for healthcare support to the tune of Sh701 million is affected.

Treasury may also be stuck with Sh230 million EU cash; another Sh7.8 billion from the World Bank for smart agriculture project; and Sh2.8 billion for informal settlement projects.

Some Sh5 billion for water may also have to wait for the instrument; so is Sh1.3 billion from Sweden for agriculture support as well as drought resilience, locust response, and UNFPA funds.

The budget committee chaired by Kieni MP Kanini Kega, though, allayed the fears saying the “monies are already set aside in the national budget and will be appropriated accordingly.”

The court order that the Senate considered in its review of the bill provided that funds christened conditional grants cannot just be disbursed through the County Revenue Fund.

It noted that the grants are not items to be provided for under the Division of Revenue Act, and require an agreement between the two levels of government.

To avert delays caused by lengthy mediation processes, the National Assembly concurred with senators.

Without the Division of Revenue Act, county governments and the National Treasury cannot develop their budget estimates.

Kega said, “There is a need to establish a legal framework for transfer of the conditional grants to the CRF. Not many people know about these funds as there is no legal framework of how they are disbursed.”

Minority leader John Mbadi said timeliness is an important factor in the budget process.

“The court has directed that the grants be disbursed through the County Revenue Fund, but how they will be disbursed is the question,” the Suba South MP said.

“If the funds are not included in the Appropriations Act, Division of Revenue Act, and the County Allocation of Revenue Act, how then would it be taken to the County Revenue Fund?” he asked.

Mbadi said it was disappointing that the National Treasury has continued to violate the constitutional provisions for timely disbursement of county cash.

“When we hear that some county staff endure months without salary, I wonder whether Treasury staff also miss salary.”

He said there was no reason for county employees to go for months without salary, even if revenue has underperformed.

Garissa Township MP Aden Duale said there has been a challenge providing oversight to the grants and agreed with the Senate.

“Providing oversight to this money, the donors’ particularly, has been a problem. Counties have just become a conveyor belt. We have a problem of inviting governors to the National Assembly to answer to queries arising from the usage of these funds.

“It is better this House makes a decision and agrees with the Senate that this money be returned to ministries, state departments and agencies,” Duale said.