Central Bank of Kenya (CBK) Governor Dr. Kamau Thugge, on July 24, clarified that the establishment doesn’t have the authorized authority to compel county governments to shut unauthorised business financial institution accounts.
Thugge made the remarks whereas showing earlier than the Senate Standing Committee on Devolution and Intergovernmental Relations following considerations that devolved models are working over 1,800 financial institution accounts in business banks, opposite to the Public Finance Management (PFM) Act and Regulations.
“The Central Bank’s position is to facilitate account opening upon request by the CEC Finance and County Assembly Clerk and preserve county governments’ financial institution accounts at CBK, excluding business financial institution accounts,” Thugge acknowledged.
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Thugge remarks on the county funds difficulty
He additional defined that county treasuries are permitted to make autonomous banking choices beneath the present authorized framework, and CBK solely has entry to data flagged by oversight establishments.
“We should not have the ability to compel county governments to shut unauthorised financial institution accounts,” he stated.
Thugge famous that CBK offers system entry and transaction visibility to entities such because the Controller of Budget, however can not monitor or regulate county accounts in business banks until irregularities are formally raised.
He urged lawmakers to think about strengthening present insurance policies and authorized frameworks to reinforce compliance.
“I like to recommend reinforcing Public Finance Management Regulation 82(1)(b), automating validation methods, and imposing sanctions for non-compliance,” he informed the committee.
Senators considerations
Senators raised considerations over the restricted oversight and management mechanisms over county monetary operations and supported the necessity for pressing authorized reforms.
Senator Mohamed Abbas, Chairperson of the Committee, referred to as for necessary reporting by banks.
“Commercial banks ought to present quarterly statements of county authorities accounts to CBK for higher oversight,” he stated.
Vice Chairperson Senator Catherine Mumma added that the authorized framework requires clarification.
“We have to make clear the authorized framework and laws round county financial institution accounts, together with the potential for permitting overdraft services for counties to handle income and expenditure imbalances,” she famous.
The Committee pledged to interact stakeholders, together with the Controller of Budget, the Council of Governors (CoG), and CBK, to evaluation Section 119 of the PFM Act.
Auditor General Warns Against Multiple Accounts
Senators stated the aim is to ascertain a coherent and enforceable banking framework that promotes accountability, transparency, and correct monetary administration in county governments.
This comes after the Cabinet Secretary for the National Treasury and Economic Planning, John Mbadi, on Thursday, July 17, 2025, authorized the proposed new system to cease governors from stealing county funds.
The transfer was resolved after the Controller of Budget submitted the County Budget Implementation Review Report to the Senate in keeping with constitutional necessities.
The report famous that the excessive variety of financial institution accounts makes it troublesome to trace how counties are spending cash, creating room for fraud and mismanagement.
