Lawmakers push parastatals to account for own-source cash

State agencies that do not draw funding from the Treasury will now have to declare the amount of money they collect and how they use the funds in running their operations.

The Parliamentary Finance and National Planning Committee said State entities have been collecting the funds also known as Appropriation-in-Aid (A-I-A) to run their operations without an oversight body.

The committee singled out agencies that fall under the finance department such as the Insurance Regulatory Authority, Capital Markets Authority and Central Bank of Kenya (CBK), which will now be required to make returns on their spending from the funds they collect.

Read: Nairobi own source revenue grows 17pc

“The performance of the Appropriation-In-Aid is projected at Sh463.5 billion for the financial year 2023/24,” said CBK governor Kamau Thugge in a letter to the House committee.

The committee, chaired by Molo MP Kimani Kuria, was forced to adjourn its sittings after the banking sector regulator failed to turn up to provide details on the amount of money State entities generate and use at source.

Dr Thugge, in a letter addressed to the Finance and National Planning Committee and copied to the National Assembly Clerk, Treasury Cabinet secretary Njuguna Ndung’u and PS Chris Kiptoo, declined the invitation to appear before the committee.

“I would like to clarify that the Central Bank of Kenya funds its own budget and therefore its annual budget estimates are not presented to the National Assembly,” Dr Thugge wrote in a letter to the committee.

The MPs summoned Dr Thugge for failing to appear before the team, citing a lack of provisions that direct CBK to appear before the House.

“We have government entities collecting and spending public money without any oversight and now they have the audacity to tell Parliament that their budget cannot be oversighted by the National Assembly because they finance their own budget,” said Mr Kimani.

“Going forward all the ministries, departments and agencies of government under the oversight of this committee and all the other departmental committees of Parliament will have to examine their A-I-A.”

The CBK is estimated to have collected Sh463.5 billion during the financial year 2022/23 as Appropriation in Aid which sought to scrutinise the expenditure.

“I would like to clarify that the Central Bank of Kenya funds its own budget and therefore its annual budget estimates are not presented to the National Assembly,” Dr Thugge wrote in a letter to the committee.

Mr Kimani termed Dr Thugge’s response as “an insult to an independent arm of government.”

He said the money the CBK internally generates is not their own money and therefore cannot be exempted from scrutiny by Parliament as mandated by Article 95 of the Constitution.

“Going forward, all the MDAs under the oversight of this committee and all the other departmental committees of Parliament will have their AIA examined by the oversight bodies of their respective State departments and agencies.”

Mr Kimani said the time has come for MPs to look into the expenses and budgets of the agencies that assist the government in order to save money from the main budget.

“Most of these entities are coming in during the main budget to struggle for little resources to finance their budgets while their internally collected funds have not been disclosed,” he said.

“This could be an avenue for corruption,” Kesses MP Julius Rutto said.

The committee directed the Treasury to fast-track the process of implementing a single Treasury Account to be operated by all parastatals and the money collected banked at the Central Bank.

The lawmakers said State agencies are using internally generated funds to invest in government securities.

“Like for example the CMA earned Sh77 million from investment in government securities,” Mr Kimani said.

“So essentially the government is borrowing and paying interest on its own money,” Mr Kimani said.

Also read: Counties still struggling to collect own revenues

The Insurance Regulatory Authority and Capital Markets Authority, who were both turned back for failing to furnish the sitting with required documents, appeared before the committee on Thursday.

Insurance Regulatory Authority and Capital Markets Authority have been directed to appear before the House team in 14 days.

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