Governors have continued to open illegal bank accounts for county operations pushing the numbers to 2,421 as of September 30, 2024.
The move is in total disregard of warnings by oversight agencies.
This was a jump of more than 400 accounts from the 2,000 commercial bank accounts that were reported in the first nine months of the previous fiscal year ( 2023-24 ).
The latest data from the Controller of Budget for the first quarter of the current financial year shows that Nakuru had the highest at 301 commercial bank accounts.
In the alarming trend, the report by CoB Margaret Nyakang’o shows that Bungoma was second with 300 while both Baringo and Kiambu had 292 commercial bank accounts.
Nyakang’o says her review established that Machakos was operating 221 commercial bank accounts at the time of the review followed closely by Elgeyo Marakwet with 155.
The numbers could be higher considering Nairobi did not disclose the number of commercial bank accounts it was holding, as did Narok and Nyandarua.
In the last review, the latter had 86 bank accounts deemed as not properly grounded in the law on public finance management.
Laikipia equally did not disclose accounts operated by the executive, and only listed three that are under the management of the county assembly.
Public finance laws and attendant regulations require that county government bank accounts must be opened and maintained at the Central Bank of Kenya.
Counties, however, were found to be operating the kitties in breach of Regulations 82( 1 )(b) of the PFM (County Governments) Regulations, 2015.
“The only exemption is for imprest bank accounts for petty cash and revenue collection bank accounts,” Nyakang’o said in the report covering spending from June to September this year.
The revelations showed how counties ignored earlier warnings that the growing number of bank accounts operated by devolved units outside the law had made it hard to track public expenditure.
“County governments should ensure that bank accounts are opened and operated at the Central Bank of Kenya as the law requires,” Nyakang’o recommended, triggering a row with governors.
For the county chiefs, the numerous bank accounts were inevitable, dismissing earlier assertions by Nyakang’o that they make it hard to trace county spending.
In a statement following the release of the report, Council of Governors chairman Ahmed Abdullahi said the accounts opened and operated by county governments were lawful.
The Wajir county chief said all counties are required to open and operate bank accounts in commercial banks for revenue retention and expenditure.
He cited the Facility Improvement Financing Act, 2023 as the basis for which counties are operating the otherwise deemed illegal accounts.
“To date, county governments have 7,011 health facilities which are commensurate with the accounts incommercial banks,” Abdullahi said, even as the controller of budget put the total count at 2,420 accounts.
The governor added that some of the accounts were to meet conditions for implementing various projects funded by conditional grants by development partners
. “Some of the conditions include the requirement to open special purpose accounts for these projects in a commercial bank for operational convenience and to ensure ring-fencing these funds for specific projects,” the county boss said.
He argued that it was not practical for counties to operate only one account without flouting existing laws.
Abdullahi said the numerous entities, revenue collection accounts and special purpose accounts were the reason counties had many commercial bank accounts.
Nyakang’o, in her report, said only imprest bank accounts for petty cash and revenue collection accounts would be exempted.
Other counties flagged for unwanted bank accounts include Migori ( 76), Kwale (64), Kajiado (50), Embu ( 46 ), Kakamega ( 4 ), Lamu ( 40 ), Makueni ( 39 ), Taita Taveta ( 37 ), and Tana River ( 32 ).
Homa Bay and Turkana had 26 commercial bank accounts during the review period, while Kericho, Mombasa and Samburu had 25 each.
Kisumu had 23, Mandera ( 22 ), Murang’a ( 21 ), Nyamira ( 18 ), Wajir ( 18 ), Bomet ( 17 ), Kisii ( 16 ), Meru ( 16 ), Uasin Gishu ( 16 ), Kitui ( 13 ), Siaya ( 13 ) and Kirinyaga ( 12 ). Garissa, Isiolo, Kilifi, Tharaka Nithi, Marsabit, Nandi, Nyeri, Trans Nzoia, Busia, Nairobi, West Pokot and Laikipia also had between three and 11 bank accounts.
The latest numbers show that while the accounts have increased in some counties, they have gone down in others.
Governor Ken Lusaka’s Bungoma county had the highest drop from the 352 that was reported in the first nine months of the 2023-24 financial year.
Migori has also had a significant drop from 208 to 76 while Baringo closed 12 to drop from 304 in the previous review to the current 292.
Meru’s case also had a drop of 10 accounts from the 26 it had in the last review, while Kiambu had the highest jump by 240 — from 52 to 292.
Machakos also opened 190 more accounts, having reported 31 in the last review and is now among those with the highest number.
Embu also opened nine more while West Pokot reduced its count by 20 from 24 to four in the latest review.
At the height of the outrage by governors, the budget boss said the numerous bank accounts were among the challenges that hampered effective budget implementation.
Counties were also flagged for late submission of their financial reports to the COB leading to delays in publishing the implementation review report.
“All county governments submitted their Appropriation Acts, Governor’s Warrants, and approved budgets late, with the last submission made on September 5, 2024,” Nyakang’o said.
She said early submissions would
“facilitate the prompt commencement of budget implementation,
including exchequer requisitions.”
