Kakamega Governor Fernandes Barasa has revealed that the national government has not disbursed funds to the counties for the last two months.
Speaking after the Intergovernmental Budget and Economic Council (IBEC) meeting chaired by Deputy President Rigathi Gachagua, Barasa said the counties are in a financial crisis, with most operations 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,” he said.
Barasa, who is the Chair of the Finance Council of Governors (CoG), said that Treasury Cabinet Secretary John Mbadi agreed that the Treasury will consider releasing the disbursement for the two months in September.
He stated that the counties are unable to pay their 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,” Barasa said.
However, Barasa noted that the government disbursed Ksh30.8 billion to the counties for the month of June.
He mentioned that most counties haven’t accessed the funds due to various challenges relating to approvals by the Controller of Budget.
CoG Take on VAT Charged by KRA
In the submissions, the governor said IBEC should direct the Kenya Revenue Authority (KRA) to desist from making demands for VAT on counties’ revenue sources, as it lacks legal backing.
“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.
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Counties Oppose Equitable Share Deductions
The CoG also opposed the deduction of the counties’ equitable share for the financial year 2024/25 by Ksh20.117 billion, from Ksh400.117 billion to Ksh380 billion.
The governors said CS Mbadi should ensure the funds are retained as per the Division of Revenue Act, 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.
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Equalisation Fund
Additionally, CoG urged IBEC to cause the National Assembly to fast-track the approval and subsequent appropriation of the entire Ksh62.403 billion Equalisation Fund allocated to counties, 14 years since the inception of devolution in Kenya.
According to Barasa, only Ksh12.4 billion has been disbursed despite Ksh26.293 billion being appropriated by Parliament so far.
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