Controller of Budget exposes 16 counties for violating budget rules, accumulating debts
Nyakang'o said the overspending trend suggests counties are not banking all their revenues before seeking requisitions from her office.
Sixteen including Kilifi, Wajir, Kwale and Turkana, spent beyond their approved budgets in the first half of the 2024/25 financial year, defying expenditure limits set by the Office of the Controller of Budget (OCOB), a new report has revealed.
The report highlights that some counties are failing to utilise allocated funds efficiently, leaving billions idle instead of implementing crucial development projects.
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Controller of Budget Margaret Nyakang'o disclosed that several counties have been diverting funds meant for specific programmes to other uses without approval. She noted that county governments are not adhering to exchequer requisition work plans, leading to the diversion of funds across various departments.
“Analysis of expenditure against exchequer issues shows that counties do not adhere to exchequer requisition work plans during expenditure, leading to the diversion of funds across departments,” she said.
Significant overspending
The report shows that some counties recorded significant overspending, with certain devolved units exceeding their approved budgets by substantial margins.
Kilifi spent Sh6.13 billion against an approved budget of Sh5.11 billion, while Machakos, under Governor Wavinya Ndeti, recorded the highest overspending rate, using Sh5.97 billion instead of the approved Sh4.77 billion. Turkana followed closely, spending Sh6.62 billion despite an approved budget of Sh5.37 billion. Other counties also recorded excess spending, with some surpassing their budgets by more than 120 per cent.
The Controller of Budget warned that the widespread disregard for spending limits suggests a pattern of financial mismanagement.
“The devolved units are exploiting the manual exchequer process to divert funds approved for some budget lines to other uses. Given that the exchequer process is mainly manual, it is challenging to tie approved requests and supporting work plans to actual expenditures,” she said.
Nyakango’o flagged Kilifi County for overspending in multiple departments, including the County Executive, Water, Environment and Natural Resources, Health Services, Agriculture, Crop Production and Irrigation, Education, Culture and Social Services and Youth and Sports.
Kakamega County was also cited for spending beyond exchequer releases in some departments.
“The county reported that expenditures in some departments exceeded the amounts released by the exchequer. This situation arose due to the diversion of funds from the exchequer work plans submitted to the OCOB,” reads the report.
The report further revealed that total expenditure by county governments for the first half of the financial year 2024/25 stood at Sh181.86 billion, representing an absorption rate of 31 per cent of the total annual county government budget. Of this, Sh151.26 billion was spent on recurrent expenses, while only Sh33.60 billion went to development, representing just 18 per cent of total expenditure.
Not banking revenues
Nyakang'o emphasised that the overspending trend suggests counties are not banking all their revenues before seeking requisitions from her office, which is a violation of financial regulations.
“The law requires counties to bank all the money they receive before making requisitions to my office for withdrawal. This is essential for accountability because it helps track inflows and expenditures,” she explained.
The report also highlighted concerns over pending bills, noting that counties continue to divert funds meant for clearing debts, leading to the accumulation of unpaid bills.
“Several county governments did not adhere to their submitted plans while paying pending bills,” Nyakang’o said.
By December 31, 2024, counties had accumulated pending bills amounting to Sh182.13 billion.
Only seven counties — Nairobi, Lamu, Embu, West Pokot, Taita Taveta, Mandera and Kitui — adhered strictly to their approved budget requests, spending exactly what was authorised.
Underutilised funds
Meanwhile, some counties significantly underutilised funds, leaving billions unspent despite approval. Busia, for example, utilised only 69 per cent of its approved requisitions, followed by Tana River at 83 per cent, Kericho at 84 per cent and Vihiga at 86 per cent.
Article 228 (4) of the Constitution and Section 5 of the Controller of Budget Act, 2016, outline guidelines for withdrawing funds from the County Revenue Fund. However, many devolved units appear to be disregarding these provisions, raising concerns over transparency and fiscal discipline at the county level.
Nyakang'o called for stricter oversight and better financial planning to curb the misuse of funds and improve service delivery at the county level.
“It is a legal requirement for accountability because we know what has come in and what has gone out and for what reasons,” she said.
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