Counties flout law, open 287 bank accounts in 3 months

Controller of Budget Dr Margaret Nyakango

Controller of Budget Dr Margaret Nyakang'o.

Photo credit: File | Nation Media Group

Counties opened 287 more accounts at commercial banks between December and March this year in continued breach of the law, hurting efforts to boost accountability on how the devolved units spend public funds.

An analysis of official data from the Controller of Budget shows that counties had 1,668 accounts at commercial banks in March from 1,381 at the end of last year.

The devolved units are under the law only allowed to open and maintain bank accounts at the Central Bank of Kenya (CBK) for ease of accountability. The only exemption is for imprest accounts for petty cash and revenue collection. The number could be higher given that some such as Nairobi and Mombasa did not disclose the number of accounts they are operating.

Underhand deals

Dr Margaret Nyakango, the Controller of Budget, has on many occasions flagged use of such accounts, on grounds that they are prone to abuse and with a lack of checks, can be used to drive underhand deals using taxpayer funds.

“Key challenges that hampered effective budget execution during the period; use of commercial bank accounts to operate the established public funds and other operational accounts contrary to the regulations,” Dr Nyakango says.

Counties with the most new accounts in the period include Bungoma with 31 bringing its number to 352, Machakos with 26 new ones bringing its tally to 31, and Taita Taveta with 27 new ones to 37 accounts.

But other counties notably, Kwale cut the number of accounts at commercial banks by 102 to have 63 accounts as of March. Makueni closed seven accounts, remaining with 17 in the period.

The Public Finance Management (County Governments) Regulations, 2015 bar regional governments from operating accounts at commercial banks, except those for petty cash and revenue collection. Counties use bank accounts for their car loan and mortgage schemes, debt collection, hospitals, bursaries, and conditional grants.

Track public expenditure

The growing number of bank accounts operated by counties has made it more difficult for the Controller of Budget to track public expenditure. There have been concerns that some of these accounts are used for private dealings with commercial banks, exposing taxpayers to losses and suits. Dr Nyakango recently lost a push to have her office granted real-time access to the bank accounts that counties hold at the CBK.

The CoB had since 2021 been pushing CBK and Treasury to be granted real-time access to the accounts of the counties to curb the inexplicable use of funds.

The failed attempt allows counties to escape scrutiny amid growing concerns of massive corruption in clearing pending bills.