County governments opened 199 additional unauthorised commercial bank accounts in the three months to March, pushing the total number of irregular accounts to 6,585 in a development that raises fresh concerns over transparency in the management of devolved funds.
A new report by the Controller of Budget (CoB) shows the number of commercial bank accounts operated by counties rose from 6,386 in December last year, despite longstanding concerns over the proliferation of accounts outside the approved framework.
Under the Public Finance Management Act, counties are expected to hold their accounts at the Central Bank of Kenya (CBK), with only a limited number of special-purpose accounts permitted in commercial banks after obtaining approval.
In her latest report, CoB Margaret Nyakang’o said county treasuries had not submitted authorisation documents for the 6,585 accounts as required, making it difficult to establish their legality and purpose.
“County treasuries had not submitted copies of authorisation letters for these accounts to the COB, as required, thereby limiting transparency and assurance regarding the number and purpose of commercial bank accounts maintained by counties,” wrote Ms Nyakang’o.
Account surge
The Treasury argues that fragmented accounts allow large sums of public money to remain idle in commercial banks even as county governments struggle to pay suppliers, workers and other obligations.
The existence of thousands of commercial bank accounts has for years complicated efforts to monitor county cash positions and repeatedly exposed weaknesses in financial controls within devolved units.
The CoB has, in previous reports, flagged the proliferation of commercial bank accounts as a major governance risk, warning that it creates opportunities for the misuse of public funds while weakening accountability.
During the quarter under review, Makueni opened the highest number of additional accounts, at 230, followed by Siaya (191), West Pokot (79), Taita Taveta (65), Laikipia (38), Embu (20), Nyamira (15), Uasin Gishu (five) and Isiolo (four).
At the same time, Meru closed the highest number of accounts during the period, at 462, followed by Machakos (62), Mombasa (16) and Kericho (three).
Kitui continues to have the highest number of unauthorised commercial bank accounts, at 493, while Nandi operates the fewest, with 10.
The proliferation of county bank accounts has remained one of the most persistent governance concerns in Kenya’s devolved system since the establishment of county governments in 2013.
The planned rollout of the TSA framework is intended to address the problem by consolidating visibility over public cash balances and reducing the use of numerous standalone accounts.
Under the new arrangement, counties will progressively migrate to a more centralised cash management system similar to the one already in use by the national government.
