The Council of Governors’ Call for a New Directorate at the National Treasury

The relationship between the National Government and county governments in Kenya has been a subject of ongoing debate and concern, especially regarding the disbursement of funds meant for devolved units. The Council of Governors (CoG) is now urging the National Treasury to take a significant step towards improving this relationship by establishing a dedicated directorate to oversee county finances. This call comes amid persistent allegations that county issues are often sidelined in favor of national matters, leaving governors frustrated and demanding immediate action.

Background: The Devolution Landscape in Kenya

Devolution in Kenya was meant to bring governance closer to the people by granting counties greater autonomy and resources to manage their own affairs. However, the financial relationship between the National Government and county governments has been fraught with challenges. Delayed disbursements of funds have become a recurring issue, with counties often going without their share for several months. This situation has led to threats of protests and total shutdowns by governors, who are frustrated by the continued neglect of county financial needs.

Recently, CoG Vice Chairperson and Wajir Governor Ahmed Abdulahi articulated these frustrations, emphasizing the urgent need for a new directorate at the Treasury that would focus solely on devolution issues and county finances. His remarks come at a time when the financial challenges faced by counties have reached a critical point, affecting service delivery and the welfare of citizens at the grassroots level.

The Proposal for a New Directorate

During discussions with Treasury Cabinet Secretary John Mbadi, Governor Abdulahi emphasized that establishing a dedicated directorate for devolution and county finances should be a flagship project for the new Treasury leadership. He pointed out that financing counties is one of the National Treasury’s biggest responsibilities, and a specialized directorate would ensure that county financial issues are prioritized and effectively managed.

“Actually, one of the legacies you can leave us at Treasury is to create a directorate of devolution or a directorate for dealing with county finance matters. Financing counties is one of the biggest responsibilities that the National Treasury has. I think we deserve to have a dedicated directory,” Abdulahi stated.

The proposed directorate would be tasked with streamlining financial processes related to county governments, ensuring timely disbursement of funds, and addressing any issues that arise in the management of devolved resources. By having a dedicated team focused on these matters, the CoG believes that the Treasury can better address the unique challenges faced by counties and facilitate more efficient governance at the local level.

The Current Challenges in County Finances

The strained relationship between the National Government and county governments is evident in the persistent delays in the disbursement of funds. Counties often go for months without receiving their allocated resources, which hampers their ability to deliver essential services to their citizens. Just last week, the National Treasury released approximately Ksh. 32 billion owed to counties for the month of July, highlighting the critical need for more consistent and timely financial support.

Governor Abdulahi pointed out that such delays not only affect service delivery but also lead to increased borrowing by counties from commercial banks at exorbitant interest rates. This situation creates a cycle of debt that can severely hinder the financial sustainability of devolved units.

Moreover, the governor raised concerns about non-compliance with constitutional mandates regarding fund disbursement timelines. According to the Constitution, counties should receive their funds by the 15th of every month, yet this is often not the case. “There is no mechanism for a shilling that belongs to counties to remain untransferred by midnight on June 30th each year. The Constitution did not envision that. It does not provide for rolling over county funds from one year to another,” he stated, emphasizing the need for accountability and adherence to legal timelines.

Government Response: Commitment to Timely Disbursements

In response to the concerns raised by the CoG, Treasury CS Mbadi has assured governors that the government is committed to ensuring that funds due to counties are released on time. He acknowledged the detrimental effects that delayed disbursements can have on service delivery and pledged to implement measures to improve the timeliness of financial transfers.

“On disbursement of funds, I want to be very categorical; I have committed myself to make sure that funds are disbursed to the counties at the right time. This is because, the moment counties don’t receive monies, it is costly to the country because you are borrowing monies from commercial banks at highly inordinate rates to pay salaries… I have told my team at the Treasury not to keep counties’ money,” said CS Mbadi.

This commitment from the Treasury is a positive step, but it remains to be seen whether these promises will translate into tangible changes in the way county finances are managed. The establishment of a new directorate could provide a framework for greater accountability and oversight in this area.

Addressing Misconceptions About County Spending

The CoG has also taken issue with comments made by CS Mbadi regarding unused development funds lying in county accounts. They accused him of attempting to shift focus from the underlying issues of delayed disbursements and mismanagement of funds. “We see situations where an entire quarter passes before counties have accessed any funds related to that quarter, and then you read in the newspapers that counties spend zero on development,” Abdulahi remarked, highlighting the disconnect between actual fund disbursements and perceptions of county financial management.

This situation underscores the need for better communication and transparency between the National Treasury and county governments. The proposed directorate could play a crucial role in fostering this dialogue, ensuring that both parties are aligned on financial matters and that county governments receive the resources they need to function effectively.

The Way Forward: The Role of the Proposed Directorate

The establishment of a new directorate at the National Treasury dedicated to overseeing county finances could be a game-changer in Kenya’s devolution landscape. By prioritizing the needs of counties and ensuring timely disbursement of funds, the National Government can strengthen its relationship with county governments and improve service delivery for citizens.

In addition to addressing financial challenges, the directorate could also facilitate the full devolution of functions that are still held at the national level, along with their associated costings. This move would empower county governments to take charge of their own affairs and promote greater accountability in the use of public resources.

Conclusion: A Call for Urgent Action

The call by the Council of Governors for a dedicated directorate at the National Treasury is a timely reminder of the challenges facing Kenya’s devolved system of governance. With the continued sidelining of county issues and persistent delays in fund disbursement, it is imperative that the National Government takes decisive action to address these concerns.

By establishing a new directorate focused on devolution and county finances, the Treasury can pave the way for a more equitable and effective governance structure that benefits all Kenyans. The time for action is now, and the establishment of this directorate could be a critical step towards achieving the goals of devolution and ensuring that county governments can fulfill their mandate effectively.