The recent budget implementation review report by the Controller of Budget (CoB) for the first nine months of the fiscal year 2023/24 revealed significant irregularities in the banking practices of county governments in Kenya. According to the report, county governments have been operating accounts with commercial banks, which contravenes established laws that mandate the use of the Central Bank of Kenya for county government accounts. Margaret Nyakang’o, the Controller of Budget, reported that over 1,400 unauthorized bank accounts were identified, posing substantial challenges in monitoring public expenditure.
The use of unauthorized bank accounts by county governments is illegal under Regulation 82(1)(b) of the Public Finance Management (County Governments) Regulations, 2015, which stipulates that all county government bank accounts must be opened and maintained at the Central Bank of Kenya. The only exceptions to this rule are imprest bank accounts for petty cash and revenue collection accounts. Despite these regulations, the CoB found widespread non-compliance among county governments, with significant numbers of illegal bank accounts operating across various counties.
Among the counties, Bungoma, Baringo, and Migori were highlighted as having the highest number of unauthorized bank accounts, with 357, 304, and 208 accounts, respectively. This situation has made it extremely difficult for the CoB to effectively monitor public expenditure and ensure financial accountability.
Here is a list of the top 10 counties with the highest number of illegal bank accounts, as reported by the Controller of Budget:
- Bungoma County: 357 illegal bank accounts
- Baringo County: 304 illegal bank accounts
- Migori County: 208 illegal bank accounts
- Nyandarua County: 86 illegal bank accounts
- Kwale County: 63 illegal bank accounts
- Kiambu County: 52 illegal bank accounts
- Embu County: 37 illegal bank accounts
- Taita Taveta County: 37 illegal bank accounts
- Kajiado County: 27 illegal bank accounts
- Kericho County: 25 illegal bank accounts
Notably, Nairobi County’s data was missing from the report because the county government did not submit the required information to the CoB’s office. This omission further complicates the effort to ensure transparency and accountability in the financial operations of Kenya’s county governments.
The CoB’s report has led to a series of recommendations aimed at rectifying these irregularities. One of the primary recommendations is that all county governments must ensure that their bank accounts are opened and operated at the Central Bank of Kenya, in compliance with the law. This measure is crucial for enhancing financial oversight and ensuring that public funds are managed appropriately.
The revelation of these unauthorized bank accounts has sparked a broader conversation about financial governance and accountability in Kenya’s county governments. Ensuring compliance with financial regulations is essential for maintaining the integrity of public finances and promoting trust among citizens. The CoB’s findings underscore the need for stringent oversight mechanisms and robust enforcement of financial laws to prevent such irregularities in the future.
In addition to addressing the issue of unauthorized bank accounts, the CoB’s report also highlighted other financial aspects of county governance, including revenue collection. In a related news piece, it was reported that Nairobi County, under Governor Johnson Sakaja’s administration, collected the highest own-source revenue among counties, totaling KSh 9.23 billion. Overall, county governments collected KSh 41.40 billion in own-source revenue, reaching 51.3% of the annual target of KSh 80.78 billion.
The CoB’s report serves as a critical reminder of the importance of adherence to financial regulations and the need for ongoing efforts to improve financial management practices at the county level. By implementing the recommended changes and enhancing oversight, Kenya can strengthen its public finance management system and ensure that public resources are used effectively and transparently.
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