Senate uncovers ghost Municipalities and financial mess
Politics
By
Edwin Nyarangi
| Apr 30, 2026
The Senate has uncovered how Municipalities in the Counties have failed to fully operationalize Municipality Charters, have weak budgetary control and also suffer from revenue under-realisation.
A report by the Senate County Public Investment and Special Funds Committee shows that the Municipalities had unsupported or undisclosed property and plant and equipment.
Non-collection of Own-Source Revenue, inaccuracies and errors in financial statements. and a lack of operational autonomy from the County Executive were also reported.
The Committee pointed out that several municipalities were granted charters but remain un-operationalised with the functions delegated and gazetted under the charter continue to be performed by the County Executive with inadequate funding in the municipalities, a lack of strategic plans, and municipal boards not operating as required by law.
“A good example is in Maralal Municipality in Samburu County where the Charter was granted in 2018; however, the municipality has not been operationalised in line with its delegated functions to date,” states the report.
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The Committee noted that many municipalities either failed to maintain a comprehensive fixed asset register, could not provide valuation reports and ownership documents, had material property, plant and equipment (PPE) balances that could not be verified.
The Committee, chaired by Vihiga Senator Godfrey Osotsi, further observed that the majority of the municipalities disclosed nil PPE values despite assets physically existing with assets remaining with the County Executive rather than being transferred to the municipality.
The Senate Committee raised concerns that some municipalities could not even demonstrate ownership of the land on which their offices sit, which put them at risk of being grabbed by some crafty individuals.
“Most municipalities lacked operational autonomy, a situation that is contrary to the provisions of Sections 12 (management independence), 20 (functional independence), and 45–46 (financial independence) of the Urban Areas and Cities Act,” states the report.
In practice, municipal operations are significantly constrained where budgets are prepared by the County Executive, revenue collection is conducted centrally by the County, payments are processed through the County Treasury, and municipal staff remain on the County payroll.
According to the report, most municipalities prepared financial statements that had inaccuracies, casting errors, misclassifications, omissions, unexplained inter-statement variances, and non-compliance with the Public Sector Accounting Standards Board (PSASB presentation template.
“These include discrepancies between figures in financial statements and their supporting ledgers, inconsistent comparative balances, missing notes, incorrect budget-versus-actual reporting, and failure to prepare financial statements on the correct basis,” states the report.
For instance, the Municipality of Eldoret in Uasin Gishu County had multiple anomalies, including a missing 'cash generated from operations note, inconsistencies in prior-year depreciation across notes, an unsupported prior-year depreciation adjustment, and unreconciled inter-entity transfers.
The Committee now recommends that the Governors should ensure by the commencement of the financial year 2026/2027 that the municipalities are fully operationalised in line with their delegated functions as gazetted by their respective county governments in accordance with the Urban Areas and Cities Act.