Pending bills, late disbursement claw back devolution 10 years later

High pending bills continue to draw back gains of devolution a decade later.

It emerged that this is due to the late disbursement of equitable share revenue by the National Government to counties.

‘‘As at the end of the third quarter of the financial year 2022-2023, Counties reported partial settlement of pending bills to a tune of Sh26.21 billion,’’ said Anne Waiguru, Council of Governors (CoG) chairperson.

Waiguru was speaking when she gave the State of Devolution address, which highlighted achievements in 13 sectors including finance, health, urban governance, roads and energy sector, agriculture, trade and investment, tourism and wildlife.

Waiguru said more achievements will be elaborated on in the upcoming devolution conference slated between August 15 to 19 in Uasin Gishu County.

The Kirinyaga County Governor said Elgeyo Marakwet County has since settled all their outstanding pending bills.

As of March 31, 2023, the outstanding pending bills for devolved amounted to Sh159.73 billion.

Nairobi City County accounts for 64.4 per cent of pending bills at Sh102.81 billion.

Counties had recently threatened to shut down operations due to delayed disbursement of the 2022-2023 equitable revenue share balance of Sh110 billion from the Sh370 billion.

In the just read 2023-2024 budget, the county governments will now receive Sh385.4 billion compared to the current Sh370 Billion following an increase of Sh15.4 billion in the equitable share.

"The negative impacts of delayed disbursements cannot be sufficiently underscored. On average, the National Treasury is usually three months behind in timely disbursement," said Waiguru.

She said this has often resulted to non-compliance with the timely payment of employees' salaries and statutory deductions, and incurred interests expenses from bank overdrafts due to the Kenya Revenue Authority (KRA) attaching County Governments’ bank accounts.

Other effects have been stalled development projects occasioned by the delayed settlement of payments to suppliers and contractors, exposure to litigation, and under-utilisation of budgets.

"Our call to the National Treasury is to ensure timely release of allocations to County Governments in order to guarantee Kenyans continuous access to public services," she said.

In the last 10 years, Waiguru said County Governments have received a total of Sh2.9 trillion of equitable share.

Waiguru said this translates on average to about 30 per cent of audited and approved revenues and 20 per cent of ordinary revenue.

Further, over the same period, they have received a total of Sh213 billion in conditional grants from development partners and Sh147 billion in conditional grants from the National Government.

Waiguru however, said there remains one question that has been asked on whether the allocations disbursed to County Governments are adequate to enable devolved units to effectively deliver services spelt out in the Fourth Schedule of the Constitution.

The total projected revenue for budget implementation in the financial year 2022-2023 amounted to Sh484.1 billion, which consists of equitable share allocation of Sh399.6 billion including the Sh29.6 billion being the June 2022 allocation carried forward from the financial year 2021-2022.

Additional allocations from both National Government and development partners amounting to Sh22.52 billion and projected Own Source Revenue (OSR) of Sh61.98 billion.

"Out of these allocations, a total of Sh399.9 billion has so far been disbursed to County Governments as equitable share, equivalent to 100 per cent and Sh14.52 billion of the Sh17.16 billion additional allocations from development partners representing 85 per cent of the total allocation," she added.

As of the first nine months of the financial year 2022-2023, County Governments, she said generated a total of Sh28.77 billion OSR, translating to 46.4 per cent of the annual target of Sh61.98 billion.

This , Waiguru said was an improvement by six per cent compared to Sh27.09 billion generated in a similar period of FY 2021-2022.

"Further, analysis of OSR as a proportion of the annual target indicates that Kitui, Kirinyaga and Samburu Counties achieved the highest performance of 84.6 per cent, 80 and 69.8 per cent, respectively," said Waiguru.

In agriculture, County Governments allocated an average of 7.3 percent of their budget that went into among others mechanisation, increased inputs access for farmers, distribution of irrigation kits, seeds and seedling distribution and extension services.

Wajir County Governor Abdulahi Mohammed and who is also vice chairman of CoG said devolution has both improved service delivery to citizens and intergovernmental relations between national and county governments and also seen development partners support.

State Department of Devolution Principal Secretary Teresia Mbaika, who reiterated her support devolution and of echoed Abdullahi on improved intergovernmental relations.

She acknowledged the role of devolved units have played in helping national government in delivering vital services like healthcare, early childhood education, agricultural extension services among others.

‘‘County government have also provided communities with opportunities to participate in local governance and development process through public participation,’’ she said.

Ms Henriette Geiger, ambassador of European Union to Kenya and who represented devolution working group that has all donors that support devolution said devolution is the most important process since independence.

“This is because it brings services and government closer to the people. There is need to build capacity at the county level since this goes along way in building trust in the population that the county governments can deliver for them,” said Ms Geiger.