Multiple banks accounts expose counties to graft, Nyakang'o

County governments continue to operate multiple bank accounts, creating an avenue for corruption and irregular expenditure. This is despite being warned several times in the past.

In her County Governments Budget Implementation Review report for the 1st quarter of the 2024/25 financial year, Controller of Budget Margaret Nyakang’o highlighted that the county government received Sh55 billion for the period under review with Sh7.3 billion allocated towards development and Sh47.8 billion towards recurrent expenditure.

Dr Nyakang’o, however, expressed concerns that a majority of the devolved units had opened multiple bank accounts which not only made it hard for her office to account for but also prone to use as conduits of corruption as they went against the Public Finance Management Act.

Bungoma County government, headed by Governor Ken Lusaka, was flagged for operating 300 bank accounts contrary to law. Baringo County, under the stewardship of Benjamin Cheboi is operating 292 accounts. Of these, 256 are said to be for health facilities only.

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READ: Puzzle of Lusaka's 352 bank accounts, 'faceless' signatories

“This is 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. The only exemption is for imprest bank accounts for petty cash and revenue collection bank accounts,” reads the report.

A total of 221 accounts are said to be operated by the Wavinya Ndeti-led Machakos County, of which 192 are related to health facilities.

Elgeyo Marakwet, headed by Wisley Rotich, was also highlighted for operating 155 commercial bank accounts, Kajiado, led by Joseph ole Lenku has 50, Cecily Mbarire’s Embu 46, Fernandes Barasa’s Kakamega 44, while Fatuma Achani’s Kwale and Ochillo Ayacko’s Migori are operating 64 and 76 bank accounts respectively.

Mutula Kilonzo Junior’s Makueni County was listed as having 39 bank accounts of which 17 were for county hospitals while Hillary Barchok’s Bomet County has 17 operational commercial bank accounts.

The Council of Governors (CoG) has however since defended the devolved units operating multiple bank accounts. Through its chair Wajir Governor Ahmed Abdullahi, the council emphasised that all accounts opened and operated by the county governments are lawful.

Abdullahi, through a media statement, held that there were varied reasons for counties to be operating multiple bank accounts. He explained that counties run separate entities that are required to have their own accounts.

“In accordance with Section 5(2) of the Facility Improvement Financing Act, 2023, all county health facilities have been declared entities of county governments and are required to open and operate bank accounts in commercial banks for purposes of revenue retention and expenditure,” Mr Ahmed said.

The governor noted that the 47 county governments have a total of 7,011 health facilities which are commensurate with the accounts they operate in commercial banks.

“Pursuant to Regulation 82(1)(b) of the PFM (County Governments) Regulations, 2015, County governments are required to open accounts in commercial banks for purposes of revenue collection,” he added.

CoG noed that since county governments implement various projects funded from conditional grants by development partners, some of the conditions include the requirement to open special purpose accounts for the projects for operational convenience to ensure ring-fencing of the funds for specific projects.

The CoG chair was also quick to tell off the office of the Controller of Budget over the budget review report that faulted counties for not spending any of the funds allocated in quarter one of the 2024/25 financial year on development projects.

Nyakangó had revealed that county governments spent only Sh6.71 billion on development activities, representing an absorption rate of 3 per cent against the annual development budget of Sh203.55 billion.

ALSO READ: Treasury faults counties for opening private bank accounts

She also disclosed that 10 counties out of the 47 did not undertake any development expenditure during the period under review.

“Analysis of development expenditure as a proportion of the approved annual development budget revealed that ten county governments did not report any expenditure on development programmes,” reads the report.

The counties include Johnson Sakaja’s Nairobi, Baringo (Benjamin Cheboi), Elgeyo Marakwet (Wesley Rotich), Kajiado (Lenku), Kisii (Simba Arati), Lamu (Isa Timamy), Nyandarua (Moses Badilisha), Tana River (Dhadho Godhana), Uasin Gishu (Jonathan Bii Chelilim), and West Pokot (Simon Kachapin).

The report, covering the period from July to September this year, showed that all 47 counties had been allocated a total of Sh576.73 billion, comprising Sh205.33 billion for development expenditure and Sh371.4 billion for recurrent expenditure.

Governor Abdullahi however termed the report as misleading.

“Counties received zero exchequer releases from the National Treasury during the quarter. Any development done during that quarter was funded from last full year’s arrears while most counties were forced to go for short-term loans from commercial banks to pay salaries and sustain service delivery,” he said.