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Counties in cash crisis as revenue standoff persists

Hillary Mageka @hillarymageka

Counties across the country have been plunged into a financial crisis as the stalemate between the National Assembly and Senate over the Division of Revenue Bill continues.

The standoff has left some devolved units unable to pay salaries with fears of delivery of key services in the 47 county governments being disrupted.

Consequently, the Council of Governors (CoG) has moved to the Supreme Court in a bid to unlock the stalemate that has also seen them fail to pay suppliers.

Yesterday, governors left their cosy offices and held an unprecedented protest march in Nairobi, from the Hotel Intercontinental to the Supreme Court, while accusing the National Assembly of trying to strangulate counties by denying them funds.

Though most have settled staff salaries, counties have been starved of development funds by the National Treasury because of lack of consensus between the Senate and the National Assembly over the county governments’ equitable share.

While the National Assembly has revised its earlier position and proposed that counties get Sh316 billion, the Senate has insisted that the law must be followed and counties allowed to get their due share as recommended by the Commission on Revenue Allocation (CRA) which had proposed Sh335 billion.

Carrying placards with messages such as “M-pigs ni wasiliti” (MPs are betrayers), the governors demanded a quick resolution of the stalemate so that money can be released.

“Today marks the third week into the new Financial Year 2019/20 without an agreement on this stalemate. County governments have suspended their operations as they have no money to carry out their functions,” said Kakamega Governor Wycliffe Oparanya, who is the CoG chairman said.

Addressing a press conference outside the Supreme Court after lodging the petition, Oparanya said counties had shut down many of their operations after being denied their equitable share by the National Treasury.

Equitable share

He said governors had opted to petition the apex court to intervene in unlocking the impasse before the situation gets out of hand.  

Governors want the Supreme Court to enforce the advisory opinion it had offered over the same issue in 2013. They want all bills concerning counties to be submitted to the Senate for consideration in line with the court ruling.

The governors faulted the National Assembly for refusing to consider the Senate’s input in calculating the equitable share of county governments.

Oparanya observed that though a few counties had passed their budgets, a majority were yet to do so because of the standoff.

 “How can counties operate, if they have not approved any budget? They don’t even know what amount to allocate and for what purpose,” he said.

Oparanya, was flanked by Governors Mwangi wa Iria (Murang’a), Martin Wambora (Embu), Ndiritu Muriithi (Laikipia), Amason Kingi (Kilifi), Ali Roba (Mandera) and Wibur Otichillo (Vihiga).

Others were Wycliffe Wangamati (Bungoma), Cornel Rasanga (Siaya), Anyang’ Nyong’o (Kisumu), Mutahi Kahiga (Nyeri), Paul Chepkwony (Kericho), James Ongwae (Kisii) and Kivutha Kibwana (Makueni).

According to Oparanya, major operations involving procurement and supplies were the worst hit by the cash crunch.

“County governments have remained a shell. We can’t procure any service because we do not have resources,” he said.

“Also, counties have not been able to clear pending bills amounting to Sh108 billion due to unavailability of funds,” the governor told People Daily in an interview.

President Uhuru Kenyatta had directed all ministries and government agencies to settle pending bills that do not have audit queries by June 30.

The President also ordered county governments to clear pending payments, which he stated had negatively affected businesses.

Statutory deductions

The People Daily understands that Kisumu, Kisii, Murang’a, Vihiga and Nyamira counties, whose health workers had gone on strike, have not met their end of the bargain after signing a return-to-work formula because of lack of funds.

If the impasse is not resolved, county governments have warned they will be unable to remit statutory deductions to the National Hospital Insurance Fund (NHIF), National Social Security Fund (NSSF), retirees pensions, bank loans and sacco contributions, among others.

Senate Leader of Majority Kipchumba Murkomen said there was a near shutdown in the counties, adding that a financial crisis would not only affect the devolved units, but also the National government. 

“We are not solving a problem for this year, we are solving a problem for posterity,” he added.  Senate Leader of Minority James Orengo accused the National Assembly of sabotaging devolution.

Previous efforts to arrive at a consensus hit a dead end after members of a mediation committee formed by the two speakers of Parliament failed to agree.  The Division of Revenue Bill allocates funds between the two levels of government.

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