The National Treasury has made a significant move to reassure the public and county governments that it is up to date with its payments to the devolved units. On Monday, it confirmed that it had disbursed a total of Sh30.8 billion to counties, settling all outstanding arrears with the exception of the current month’s allocation for November. This announcement, while somewhat reassuring, comes amidst growing concerns from the Council of Governors (CoG), which has warned that delays in the disbursement of funds could seriously disrupt service delivery and cripple operations in counties across Kenya.
The Treasury’s statement outlined that as of October 18, 2024, it had cleared arrears dating back to June 2024. Additionally, payments for the months of July, August, September, and October had been successfully processed, totaling Sh158 billion in disbursements. With the usual disbursement deadline being the 5th of every month, the only delay cited by the Treasury pertains to the month of November.
However, despite this progress, the Council of Governors remains deeply concerned about the persistent delays, which it views as a direct threat to the smooth functioning of county governments. The CoG’s statement, following an extraordinary meeting, pointed to the ongoing financial uncertainty and the delay in passing the County Allocation of Revenue Act (CARA). The governors argue that without timely access to their equitable share of revenue, counties may face operational disruptions, affecting critical services ranging from healthcare to education and infrastructure development.
This deadlock over the disbursement of county funds has been a long-standing issue. Treasury Cabinet Secretary John Mbadi has previously acknowledged that delays in the start of the current financial year were due to a combination of legal and administrative challenges. Chief among these challenges is the ongoing tussle between the Senate and the National Assembly over the Division of Revenue (Amendment) Bill, which has left counties in a state of financial limbo.
The dispute centers on the amount of money to be allocated to the counties for the 2024/25 financial year. The National Treasury proposed a reduction of Sh20 billion from the originally agreed budget, a move that was supported by the National Assembly. However, the Senate strongly opposed this reduction, arguing that once funds are allocated to counties, they cannot be taken back. The Senate’s stance is based on the principle that the devolved units should receive their full share of the national revenue as outlined in the Constitution, and any attempt to reduce this allocation would be a violation of county governments’ rights.
As a result, the National Assembly’s Budget and Appropriation Committee failed to reach an agreement in early November, further exacerbating the uncertainty surrounding the disbursement of funds. The lack of resolution on the Division of Revenue Bill has thrown counties into a state of financial distress, with some even warning that they may be forced to scale back essential services if the situation is not addressed soon.
The financial standoff is a reminder of the ongoing challenges facing Kenya’s devolved governance system. The Constitution, which established county governments in 2010, promised equitable resource allocation to enhance service delivery at the local level. However, the inability of lawmakers to agree on the Division of Revenue Bill has cast a shadow over this promise, threatening to undermine the gains made through devolution.
While the Treasury’s recent announcement about clearing arrears is a step in the right direction, the delay in the November disbursement, coupled with the ongoing standoff between the National Assembly and the Senate, highlights the fragility of the current fiscal arrangement. Unless a compromise is reached, county governments may face continued financial instability, making it increasingly difficult for them to fulfill their constitutional mandate to provide essential services to their citizens.
In conclusion, the standoff over the Division of Revenue Bill and the delayed disbursements are key issues that need urgent resolution. The National Treasury’s efforts to clear arrears are commendable, but unless a lasting solution is found, the ability of counties to operate efficiently remains in jeopardy. The next steps in the ongoing negotiations between the Senate, National Assembly, and Treasury will be crucial in determining the future of devolution in Kenya.
