Which way to resolve late funds disbursement to counties?

When it comes to timely disbursement of funds to county governments, accusations never cease to flare up. What the law envisioned to be a simple click of the button becomes a web of finger pointing. 

Counties accuse the national government of sabotage; Controller of Budget points finger at counties; governors blame Controller of Budget; national government blame Controller of Budget—and the National Treasury says it is the economy.

As such, services in the counties stall and governors then resort to overdrafts, which means more debt.

In the recent past, delays of disbursement to counties have been linked to the country’s competing needs amid shrinking fiscal space.

This may have hit a new high in 2024 as the country narrowly escaped a possible default on the Eurobond that was maturing in June.

At some point, National Treasury Principal Secretary Chris Kiptoo linked the funding challenge to how expensive it is to implement the 2010 Constitution.

Sometime in April 2025, during a meeting with the private sector, Dr Kiptoo explained how the onset of the Constitution coincided with the country’s increasing debt and expanding budget deficit as constitutional bodies and counties needed the requisite funding to operate.

“By 2020, our budget deficit was 8.1 per cent of the gross domestic product (GDP). In 2013, the country’s debt carrying capacity was high and the possibility of default was low.

"By 2018, it was rated moderate and by 2020, we were at high risk,” he said.

In the 2013-14 financial year, when counties first began operating, the entities received Sh190 billion in shareable revenue from the National Government. In the 2025-26 financial year, they are expected to receive Sh405 billion as their equitable share.

In 2013, Kenya’s nominal GDP stood at Sh3.8 trillion while in 2024 it was Sh16.2 trillion, according to the Kenya National Bureau of Statistics (KNBS).

Council of Governors chief executive Mary Mwiti says there is no concrete explanation why counties are still experiencing delays in disbursements.

“We are always told the fiscal space is constrained, which I don’t think so,” she said during an interview with Standard Group's Spice FM.

She argued delays are associated with a "big brother" syndrome that the national government displays through the National Treasury.

The solution: make the National Treasury independent.

“If a budget has been passed, the only issue for the National Treasury is to disburse. That is why we have called for reforms for the National Treasury not to be an entity of the national government but a National Treasury that serves both levels of government,” Mwiti said.

In such a case, she observed, if there is a cash crunch, then the national government will feel the pinch as well, and fund the National Treasury.

“There are court pronouncements in as far as timely disbursements are concerned, that by every 15th of the subsequent month, counties must be able to receive their money.” 

“But we have this big brother syndrome, and that they have the power of the purse.”

Mwiti said that despite the existence of the law, counties have been going even for four months without any money.

“You cannot account for what you have not spent. And for that reason, if there is delay for four months, you have nothing to absorb,” she said.

An analysis by the Institute for Economic Affairs (IEA) agrees withMwiti’s assessment, noting that the challenge starts with the push and shove that always happens during the tabling and debating of the Division of Revenue Bill, and the County Allocation Revenue Bill.

“The inability of the National Assembly and the Senate to agree on the division of revenue between the two levels of government, in a timely manner, has an impact on how efficiency of disbursements to the counties,” says IEA in the June 2025 analysis titled, Impact of Delays in the Disbursement of Funds on Budget Planning at the Counties.

IEA cites shortfalls in revenue collections by the national government as contributing factors to the delays.

Such is usually brought about by overestimates tabled by the National Treasury on how much it envisions to collect that financial year.

“Other issues related to the late disbursement at the county level include procedures related to exchequer requisition process where the transfer of the requested funds or the exchequer issues may cause delays,” IEA adds.

This was the reason behind a prolonged delay experienced last year where governors and National Treasury Cabinet Secretary John Mbadi accused the Controller of Budget of delaying approval for counties to access the funds even after the National Treasury had released the money, albeit late.

But the County Governments Budget Implementation Review Report for the first quarter of 2024-25 showed that none of the 47 counties submitted on time the required documents to allow Controller of Budget to permit access to draw the funds.

These documents are the respective County Appropriation Acts, Governor’s Warrants and approved budgets.

The earliest submission documented in the report was by Taita Taveta and Bungoma counties, which were done on July 15, 2024, 15 days into the subsequent financial year.

“All county governments submitted their Appropriation Acts, Governor’s Warrants, and approved budgets late with the last submission made on September 5, 2024,” the report reads.

“The late submission of budget documents resulted in a delay in implementing the 2024-25 financial year budgets, including exchequer requisitions.”

This back and forth happens even as most Kenyans back devolution as a key driver of development across the country, according to a survey done by civil society organisations under the Kenya Devolution CSOs Working Group and Twaweza.

The report released on Friday shows that public opinion on devolution remains largely positive, with 48 per cent satisfied with its current trajectory and overall satisfaction since its inception in 2013 standing at 71.2 per cent.

Improved access to services (cited by 66 per cent) and greater citizen inclusion (13 per cent) were among the main benefits highlighted.

However, the data shows that 74.2 per cent of citizens oppose the national government’s decision to withhold devolved funds, while 76.7 per cent want the money released without delay to keep essential county services running.

The polls, conducted between March and August 2025 among more than 5,600 respondents, reveal a striking contrast: citizens continue to believe in devolution’s promise but feel increasingly let down by national leadership.