Tough times for devolved units as cash crunch made worse by Senate

Kirinyaga Governor and CoG chairperson Anne Waiguru when she appeared before Senate CPAC committee at KICC,Nairobi on April 20, 2023. [Elvis Ogina, Standard]

A shock rejection of a Sh407 billion revenue share by senators on Thursday dashed hopes of county governments earning a meaningful increase in their annual allocation.

But that may not have been the immediate preoccupation for governors contending with a cash crunch crippling the devolved units. A good number spent last week fighting fires. Health workers in Kisumu, Mombasa, Nyamira, Vihiga, Bomet and Nyandarua counties are on strike over unpaid dues. More counties could face the same situation in coming days.

Across the country, workers in several counties have not received March salaries, with others owed their February and January pay. Pending bills are also heaping up on the governors, who inherited colossal amounts of debt accrued by successive governments in addition to their own. The mound of debt will, most certainly, grow, given that counties are taking up loans to pay their staff and run critical affairs.

In the last few weeks, county bosses have pleaded with the national government to disburse some Sh125 billion collectively owed to counties, an amount without which service delivery has grounded to a halt in several counties.

On Thursday, Senators accused the Council of Governors chairperson Anne Waiguru of being silent.

They said the Kirinyaga governor, who appeared before the Public Accounts Committee, had left them to push for counties to receive their monies on time and for allocations to be increased.

"It is absurd that while senators are accused of crying more than the bereaved, the CoG chairperson seems more apologetic to the Kenya Kwanza administration that has failed to disburse funds to the counties," said Committee chairman Moses Kajwang'.

Waiguru told the senators that counties had received Sh31 billion, their share of revenue for the month of January, stating they expected February's cash by the end of this month.

"We have never been here. I have been a governor for five years and it is a critical situation at the counties," she said.

"You would have to be a wizard to run a county in such times," Mombasa Governor Abdulswamad Shariff Nassir told The Sunday Standard.

Since the inception of devolution in 2013, few things have been as consistent as a delay in disbursement of county cash. For the most part of his tenure, former President Uhuru Kenyatta clashed with governors, who would lament Treasury's delay in disbursing money.

Service delivery was the obvious casualty in the face of such delays. The varied successes they have enjoyed in undertaking their devolved functions have been eclipsed by their failures, made ever apparent by the dire situations to which counties have grown accustomed.

Counties struggled to provide healthcare, with hospitals lacking drugs for long spells and critical protective equipment for medical personnel. Every year, counties have been affected by strikes by medical workers. The devolved units are also grappling with adequate provision of water and sanitation services.

The story is not much different in agriculture, a significant contributor to the economy. "It is quite a mess, especially for Small and Medium Enterprises trying to supply goods and services to the counties," economist Timothy Njagi said of the current crunch and its effects on service delivery.

"We have new governments that inherited outstanding bills that they don't want to pay, insisting first on an audit. And no one is supplying the counties on credit because they don't know when they will get paid, affecting the supply chains. The counties are, therefore, unable to discharge their services," Dr Njagi said.

To address these perennial issues and help counties establish a solid footing, President William Ruto promised timely disbursements of county cash and an increase in their allocation.

Only the bit on timely disbursements "transferred to counties in a... predictable manner" made it to his manifesto, with the increase largely a promise made on campaign podiums.

That county governments are yet to receive their cash shows the promise has proven difficult for the president to keep. The government's justification has been that it is facing a cash crunch.

But not everyone has been convinced by the excuse, especially in the face of a government that is growing its waistline amid the exceeding of budgets by various offices and departments.

The ballooning size of the executive and the accompanying wage bill, and claims by insiders such as David Ndii of "wastage" has sparked doubt over the reported financial strain.

On Thursday, Nairobi Senator Edwin Sifuna made the stated point as he countered Waiguru's exoneration of Ruto's government as being cash-strapped.

"Data from Treasury does not show that the national government is struggling... despite this government's pledge to scrap Sh300 billion in expenditure, it has increased spending in other areas," Sifuna said.

And following the Kenya Kwanza senators' move to reject a proposal that would have seen counties get an extra Sh37 billion, many accusing Ruto of going back on his word that he would increase county allocation.

On Thursday, 22 of his allies in Senate ganged up to retain an allocation of Sh385 billion, rejecting an amendment by the Senate's Finance Committee chaired by Mandera Senator Ali Roba.

It was, perhaps, the first time that the finance committee had proposed an increment, with previous committees usually siding with the government of the day. Opposition senators have accused the president of allegedly stifling devolution.

"These people never believed in devolution or the Constitution in the very first place. They are like step-fathers of devolution and because they don't love this child, they want to starve it," said Sifuna.

Nyandarua Senator John Methu argued that it was important to be realistic in the current financial times.

"The Senate voted to add Sh15 billion to the current Sh370 billion. The Division of Revenue Act as passed on Thursday gave counties Sh385 billion. Our thinking is giving the counties a realistic target," said Methu, arguing that the increment proved Ruto's commitment to enhancing devolution gradually.

But Sifuna argued that the Sh15 billion increase was a mockery of devolution, given the additional the national government would receive.

"They have added Sh360 billion on top of what they have and only give the 47 county governments Sh15 billion to share among themselves. It doesn't make any sense," the Orange Democratic Movement secretary-general said.

Governors, who had cried out for more funds, were not amused by the Senate's retention of Sh385 billion, against a recommendation from the Commission on Revenue Allocation

"Senators seem to have forgotten their roles. Their job is to safeguard the interests of the counties," said Kakamega Governor Fernandes Barasa, who also chairs CoG's finance committee.

"Whatever Senate has passed is already law. The national government has had its way but they need to understand that counties need to run," Nassir said, urging the national government to support county entities in raising their own source revenue.

"We can choose to lament or we can be innovative. We have to ensure that counties generate their own revenue so that they are not at the mercy of the national government. These delays will eventually become a dangerous trend," said Nassir.

Nassir argued that this has not always been the case, citing an example of the betting industry that is under county governments, but whose revenue is collected by the national government.

"Counties don't have to spend all the approved budget. They should plan with what they are able to receive, and not what was approved. Discipline will also help get rid of wastage of resources. Late disbursement frequently leads to wastage spending because in some instances you are spending what you would in for quarters in just a single quarter," Dr Njagi advised.