Treasury fails to disburse 30 billion shillings in provincial funds

The failure to release Sh30.83 billion resulted in counties missing out on eight percent of their budgeted funds for fair distribution, which affected the implementation of planned programmes. Nairobi, Nakuru, Turkana and Kakamega each missed out on more than Sh1 billion.

“The County Allocation of Revenue Act (CARA) 2023 provided for an equitable distribution of Sh385,424,616,067 to the counties, to be disbursed directly by the Ministry of Finance,” the Ministry of Finance said in the statement of state treasury issuances by end-June 2024.

“The County Governments Additional Allocations Act, 2024, provided for additional allocations to county governments in FY2023/2024 amounting to Sh46,362,301,458.60, to be distributed through the respective ministries, departments and agencies,” Treasury said in its statement of treasury issuances as at end-June 2024.

The failure to release funds to the provinces at the end of the budget year is in violation of the Public Finance Management (PFM) Act of 2012, which requires the Ministry of Finance to send funds to the provinces by the 15th of every month.

“The National Treasury shall, at the beginning of each quarter, and in any case not later than the fifteenth day after the commencement of the quarter, disburse funds to the provincial governments,” the PFM Act of 2012 states.

The failure to transfer the Sh30.83 billion by the end of June left 35 counties short of Sh500 million each, with their budgets cut by eight percent due to the lack of fair distribution.

The Treasury has not released Sh1.6 billion to Nairobi, Sh1.08 billion to Nakuru, Sh1.05 billion to Turkana and Sh1.03 billion to Kakamega. Other badly affected counties in terms of absolute funds that have not been released as at end-June were Kiambu (Sh978 million), Kilifi (Sh968 million), Mandera (Sh930.6 million), Bungoma (Sh889 million) and Kitui (Sh866 million).

The Finance Ministry struggled to make fair share issuances all year. By the end of May 2024, the Finance Ministry had released less than Sh98.3 billion to the provinces and had to spend Sh67.4 billion in June alone, more than double the average monthly outlay of Sh29.5 billion from July 2023 to June 2024.

This is the first time in two years that the Ministry of Finance has failed to transfer the entire budgeted fair share of revenue to the provinces by the end of the financial year. This is after the Ministry of Finance also failed to release Sh29.6 billion in the 2021/22 financial year.