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Why City Hall risks missing out on Treasury billions

The Controller of Budget has threatened to stop the release of funds to the county government following a continued failure by City Hall to remit collected local revenue to the County Revenue Fund account.

Through a paper tabled at the County Assembly, on the consideration of the controller of budget, Mr Michael Okumu, the chairman of the committee on budget and appropriation, said the county treasury had been breaching the law by using collected revenue at source.

“The budget committee confirmed from treasury that they have been cases when there had not been total fidelity to the law with regard to use of collected revenue at source,” said Mr Okumu.


The controller of budget office reported that the breach has left them with no option but to revoke the provision of Section 96 of the Public Finance Management Act and invite the Cabinet secretary for National Treasury to stop further release of funds to the county.

However, the County Assembly budget committee has pleaded for the consideration of the proposed sanctions terming it ‘hefty to bear’ over negligence of a few county officials.

Mr Okumu has also recommended periodical submits from the county treasury for the documentation showing all revenues collected and those taken to the County Revenue Fund.

The County budget Coordinator from the controller of budget office Ms Sheikh Farhiya Ibrahim also raised concerns on the departments spending.


He said the County had turned into an employment bureau with the bulk of its resources, pegged at 66 per cent, going to remuneration of employees.

“These are indeed huge numbers and if nothing is done to change the trend of the Sh2.61 billion increase in compensation expenses then the county may very well end up becoming an employment bureau at a very early stage of devolution,” read the report from Ms Sheikh.

Seven sectors have spent in excess of the approved budget of recurrent purposes including county public service board, office of the governor, health sector, ICT, finance and economic planning, water and trade.

The office of the Governor was allocated Sh4.31 billion for recurrent expenses and Sh476 million for development in the financial year 2014/2015. The Exchequer requisitioned for Sh3.08 billion and spent Sh5.34 billion on recurrent budget.


“An excess of Sh564 million over its budget allocation was not legalised through a supplementary budget and during the year there was no requisition of development funds though Sh145 million was spent towards development,” said Ms Sheikh.

County Public Service Board was allocated Sh79.94 million for recurrent expenses and Sh28 million for development.

However, it requisitioned Sh38.48 million and spent in excess of Sh58 million creating an excess of Sh15.27 million though there was no requisition on development they spent Sh3.64 million.

Nairobi County had approved a budget of Sh28.76 billion, which was later revised, through a supplementary budget, to Sh25.59 billion. It allocated Sh18.74 billion for recurrent expenditure and Sh6.85 billion for development.