Nairobi runs 174 bank accounts against the law

Nairobi County Governor Johnson Sakaja. (Elvis Ogina, Standard)

Nairobi City County is running at least 174 bank accounts against Public Finance Management Act regulations, the Controller of Budget has revealed.

The damning details are captured in the county governments budget implementation review report for first quarter of 2025-26 financial year.

Controller of Budget Margaret Nyakang’o raises questions about the accounts, pointing out that the county did not seek authorisation to open the accounts.

The audit report explains that as per Public Finance Management Act 2015, county government bank accounts must be opened and maintained at the Central Bank of Kenya.

However, the report says as per the period in review, the county government operated 174 accounts with commercial banks (County Assembly -8 and County Executive- 166), including 123 accounts for Health Facilities, 11 accounts for Vocational Training Centres.

Others were five accounts for Established Funds, five revenue accounts, 16 special purpose accounts, 2 Early Childhood Development Accounts (ECDs), two imprest accounts, one recurrent operational account and one development operational accounts.

Legally, account officers ought to obtain written authorisation from the County Treasury before opening a commercial bank account.

At the same time, the law requires the County Treasury to submit a copy of the letter authorising an accounting officer to open a commercial bank account to the Controller of Budget.

“The County Treasury did not submit copies of the authorisation letters to the Controller of Budget for the opening of all commercial bank accounts, as required under Regulation 82(5) of the Public Finance Management (County Governments) Regulations, 2015,” the report says

“Non-submission of copies of authorization letters for opening bank accounts as per Regulation 82(5) of the Public Finance Management (County Governments) Regulations, 2015,” the CoB report states in its key observation and recommendation

It adds that he County Government uses commercial bank accounts for operations contrary to Regulations 82(1) (b) of the PFM (County Governments) Regulations, 2015, which requires that County Government bank accounts be opened and maintained at the Central Bank of Kenya.

CoB says the commercial bank accounts are for Health Facilities, Vocational Training Centres, Established Funds, special purpose accounts (additional allocations), and Early Childhood Development Accounts (ECDs).

Among the issues raised by the Controller of Budget in the report include the underperformance of Own Source Revenue, use of manual payroll and low development performance.

While the county’s own source revenue annual target is Sh21 billion, the county reported Sh2.1 billion cited as an under performance by the controller of budget representing 12 per cent of the financial year target which is below the expected 25 per cent.

Of concern, the CoB noted the use of manual payroll pointing out that personnel emoluments amounting to Sh109.61 million for casual staff, gratuity for contract staff, and community health workers were processed through manual payroll.

This, the report says accounted for 2.3 per cent of the total payroll cost warning that manual payroll is prone to abuse and may result in the loss of public funds.

The CoB recommended that the County should address its own-source revenue performance to ensure the approved budget is fully financed and opt for austerity measures to ensure expenditure commitments are aligned with available revenue.

“The government requires that salaries be processed through the Human |Resource Information System -Kenya system, and the County is advised to fast-track the acquisition of Unified Personnel Numbers for their staff,” the report says

Adding that, “The County Public Service Board should regulate staff engagement on contract and casual workers as provided under Section 74 of the County Governments Act 2012. Furthermore, strict adherence to the approved staff establishment should be maintained."