Kisii risks losing Sh800 million in donor funds for projects

Kisii County could lose nearly Sh800 million in donor funding over failure to raise matching funds from its treasury and budgetary allocation.

This means that some key projects, including the Sh200 million industrial park, a joint venture between the county and national government could stall.

Others are the National Agricultural and Rural Inclusive Growth Project (NAGRIP) funds for the agricultural sector worth Sh250 million and matching funds for the Financing Locally-Led Climate Action (FloCCA) programme estimated at Sh400 million.

Unlike the equitable share grant, conditional grants are used for specific purposes and in some cases, the line ministry retains some control over how funds are spent.

Under the FloCCA programme, counties are expected to set up the County Climate Institutional Support (CCIS) grant. The governor appoints an executive member in charge of climate change and opens a Special Purpose Account (SPA) for the CCIS and CCRI grant.

There should be a county cabinet-approved work plan and budget for the use of the CCIS grant and a signed FLLoCA participation agreement.

A report by the National Treasury dated April 30, 2024, indicates that Kisii county is yet to receive Sh84.1 million as part of its 50 per cent disbursement. However, by April 4, 2024, the county had not transferred its CCIS to the Special Purpose Account as required.

Kisii county has not received any funding so far, while Kisumu, Homa Bay, Migori and Nyamira counties have received their 50 per cent disbursement of Sh62 million, Sh90 million, Sh83 million, and Sh56 million respectively.

Under the programme, county governments must establish a County Climate Change Fund and capitalise at least 1.5 per cent of the county development budget.

A report by the Controller of Budget for the first quarter of 2023/24, released in November last year, shows that Kisii County had an annual allocation of Sh150 million under the National Agricultural and Rural Inclusive Project, but the county had not spent the funds.

Under the Finance for Locally-Led-Climate Action  Programme, the county was to receive Sh11 million and Sh100 million for the Industrial park.

Kisii Senator Richard Onyonka, who spoke to The Standard yesterday, said he had nothing much to comment on the expenditure in Kisii.

“We have the issues, all we need are answers. Why don’t we have matching funds? Is it because there was an alteration of the budget and the Controller of the Budget has to get to the bottom of the issue,” he said.

A report presented before the Senate on budget implementation analysis for the first half of the financial year 2023/2024 shows that, for the second time in a row, Kisii county has recorded the lowest expenditure rates against the total expenditure, at 3.9 per cent. Nairobi comes second at 4.3 per cent and Taita-Taveta is third at 4.9 per cent. 

Section 107(2) (b) of the Public Finance Management Act, 2012 stipulates that, over the medium term, a minimum of 30 per cent of the County Government’s budget shall be spent on development expenditure.

During the first half of  FY 2023/24, counties spent Sh 24.80 billion on development expenditure, representing 14.7 per cent of the total expenditure.