Cash crunch looms as 26 counties’ budgets rejected

By Newsflash Writer

At least 26 county governments are facing a financial crisis after the Controller of Budget (CoB), Dr Margaret Nyakang’o, declined to approve their budgets due to non-compliance.

The decision has blocked disbursement of funds, leaving the devolved units unable to access money for operations. Dr Nyakang’o said her office returned budget documents to 18 counties that disguised recurrent expenses as development spending or failed to link allocations to specific projects.

Six other counties did not submit their approved 2025/26 budgets by Tuesday, automatically locking themselves out of funding. Only counties whose documents met legal requirements have been cleared and processed through the Integrated Financial Management Information System (IFMIS), enabling them to requisition funds.

“Only those cleared are sent to IFMIS and can access funds. Those with comments had compliance gaps and must correct them within given timelines,” Dr Nyakang’o said. The impasse is likely to result in salary delays, stalled payments to suppliers, and shortages of drugs and medical supplies in hospitals. Counties affected include Nakuru, Kisumu, Uasin Gishu, Bungoma, Busia, Narok, Bomet, Kericho, Garissa, and Kajiado. Isiolo’s case is under legal review, while Kericho’s budget is still being examined. Wajir, Mandera, Nyandarua, Meru, Trans Nzoia, and Siaya had not submitted their budgets by the deadline.

Missing documents and legal breaches

The CoB cited failure by some counties to submit mandatory documents such as the County Integrated Development Plan (CIDP), the Annual Development Plan (ADP), and the County Fiscal Strategy Paper (CFSP), as required under the County Government Act, 2012. These documents provide a legal framework for planning, budgeting, and expenditure.

The CIDP serves as a five-year guide for development, while the CFSP outlines fiscal policy, revenue, and expenditure projections for the coming year. Dr Nyakang’o revealed that most counties flagged for non-compliance submitted these documents only this month, contrary to timelines.

This delay was a key reason counties did not receive their July equitable share of revenue. “Even after Treasury released the July funds, very few counties have requisitioned even salaries,” Dr Nyakang’o noted. Treasury Cabinet Secretary John Mbadi confirmed that the July allocation was disbursed on August 11 and insisted that the national government has been timely in releasing funds, with only August disbursements pending. “By June 26, Treasury had released all 2024/25 allocations. Complaints now arise from non-compliant counties, not from delays in disbursement,” Mr Mbadi said.

Dubious allocations and inflated expenditure

The CoB said some counties attempted to pass off recurrent expenditure as development spending to meet the legal requirement of allocating at least 30 percent of budgets to development. Among items wrongly classified as development were car and mortgage loans for MCAs and staff, bursaries and scholarships, foreign trips, benchmarking tours, and consultancy fees. The office stressed that such expenses do not create or renew assets and cannot be justified as development.

Other questionable allocations flagged include publicity campaigns, procurement of drugs, purchase of motor vehicles, office furniture, computers, and software — unless clearly tied to a development project.

Counties planning to undertake national government functions were also directed to provide agreements with the relevant ministries, as they are expected to focus first on devolved functions.

The CoB further ordered counties to allocate adequate resources to sustain basic services, comply with a wage bill ceiling of 35 percent of revenues, and limit emergency funds to two percent. “Information on geographical locations of projects is vital for equity in resource distribution and for transparent monitoring of development,” the CoB emphasised, underscoring the need for accountability in public spending.