World Bank to channel funds direct to counties

World Bank Country Director, Diarietou Gaye while addressing the press. Photo/SALATON NJAU  NATION MEDIA GROUP

By GRIFFINS OMWENGA 

 

gomwenga@ke.nationmedia.com, Tuesday, June 4  2013 

 

 

The World Bank has undertaken to fund county government projects directly over the next five years in a move aimed at supporting devolution.

The global lender on Tuesday said it is finalising on its five-year plan for Kenya in which devolution takes central position.

Addressing journalists in Nairobi, the new World Bank Country Director, Diarietou Gaye said the institution will disburse loans and grants directly to county governments provided the national government provides guarantee through the Treasury.

Ms Gaye said the bank, in its efforts to support the current devolution exercise, will work closely with counties to help in the set-up institutional and governance structures.

“The World Bank as a lender is in the forefront of supporting the government on devolution on all fronts and will provide its support in order to ensure that the exercise becomes a success,” said Ms Gaye said.

She said that the bank’s new “Country Partnership Strategy (CPS),” will reflect the face of the new form of government compared to the past where everything was centralised under the Finance ministry.

Senior World Bank economist Jane Kiringai said that the lender will work with the Treasury to set minimum threshold that counties must meet to receive funding from the lender.

However, the lender said, proper county structures must be in place and those seeking help must demonstrate they have the capacity to absorb any funding into viable projects upon approval by Treasury.

“We will have to work with the Treasury because the lending must be guaranteed by the national government and the projects will have to be viable and economically or socially feasible,” said Ms Kiringai.

The development comes at a time when the Treasury cautioned that it will not fund any budget deficits in the counties and that it will also monitor how funds allocated to them are spent.

Budget Controller Agnes Odhiambo warned that the national government needs to keep a keen eye on county spending.

In a recent report assessing the implementation of the 2012/2013 budget in the nine months to March 2013, Ms Odhiambo called for “a comprehensive monitoring and evaluation framework” to be put in place to “ensure close supervision of projects at county level”.

The Treasury last week succumbed to pressure from MPs and raised revenue to counties from Sh154.77 billion to Sh190 billion.

It also provided Sh20 billion as conditional grants to counties, raising the total revenue to counties from Sh198.6 billion to Sh210 billion.

At the same time, the national government has also raised its external debt ceiling to Sh1.2 trillion to allow it headroom to guarantee more external loans being lent to Kenya.