Counties Turn to Bank Loans as Treasury Delays Funds
Trans Nzoia Governor Natembeya Accuses Treasury of Breaking the Law
Counties across Kenya are being forced to borrow money from commercial banks to stay afloat as delays in disbursement of funds by the National Treasury continue to strain their operations.
Trans Nzoia Governor George Natembeya on Tuesday, April 30, accused the Treasury of acting unconstitutionally by failing to release funds to county governments on time.
Speaking during a press conference, the governor blamed Treasury Cabinet Secretary John Mbadi for prioritising national government operations while neglecting devolved units.
“There is a lot of delay in disbursing funds to the county governments,” Natembeya said. “According to the government’s financial calendar, funds should be disbursed before the 15th of every month. Yet, we are just receiving allocations meant for February.”
Natembeya revealed that counties have only received two disbursements this year instead of four, which has crippled essential services, including payment of salaries and health sector operations.
The governor warned that this delay has pushed counties to seek alternative financing options, such as borrowing from commercial banks at high interest rates not accounted for in their budgets.
“It has now forced counties to go and borrow money from banks and pay interest rates that are not in the budget,” he said. “This means we are unable to provide quality services to the people.”
His remarks come amid growing tensions between county leaders and national government officials over financial management.
Just a month ago, Senate Majority Leader Aaron Cheruiyot accused governors of misusing county funds by allocating a majority of their budgets to salaries instead of development.
Speaking in Kericho on March 30, Cheruiyot said the Senate is preparing a law that will penalise counties that fail to comply with the Public Finance Management Act, which requires not more than 35 per cent of the budget to go toward salaries.
“Many county governments have now turned away from serving the common citizen and are only focused on hiring people,” Cheruiyot said. “Some counties are spending more than 50 per cent of their resources on salaries.
We will soon pass a law that withholds funding from counties until they show they are spending at least 65 per cent on development.”
The standoff highlights growing concerns over the sustainability of Kenya’s devolved system as counties struggle to balance limited resources with increasing demands for services.
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