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Members of Parliament have accused the National Treasury with deliberately undermining crucial development projects by withholding KES 218.5 billion intended for several government departments.
This allegation emerged during a tense meeting of the Departmental Committee on Trade, Industry, and Cooperatives, where lawmakers, led by Hon. James Gakuya, expressed grave concerns over the Treasury’s failure to disburse funds.
The funds in question were designated for five state agencies under the Ministry of Cooperatives and Micro, Small, and Medium Enterprises (MSMEs), including the departments of Investment Promotion, Industry, Trade, Cooperatives, and MSMEs. Hon. Gakuya, leading the committee, expressed significant concern, accusing the Treasury of undermining the government’s industrialisation and manufacturing efforts.
“Our biggest concern as a committee is that the National Treasury has decided to kill industrialisation and the manufacturing sector by starving the state departments of funds,” said Hon. Gakuya, highlighting the potential damage to the country’s economic growth and industrial base.
Committee Vice Chairperson Hon. Marianne Kitany further questioned the rationale behind the fund withholding, emphasizing the importance of investment for revenue generation.
“For the government to collect more revenue in key sectors of the economy, it has to invest funds to spur growth. How do you project to get revenue when you are not investing?” she asked.
In response, Treasury officials, including Bernard Ndungu, Director General of Accounting Services, and Francis Anyona, Director of Budget, attributed the funding delays to a shortfall in revenue and limited cash resources. Ndungu explained that the Treasury must prioritize public debt, security, salaries, county allocations, and essential social programmes such as education and health over other expenditures due to financial constraints.
The funding delays have critically impacted several high-profile projects. Among the most affected is the construction of six Export Promotion Zones (EPZs), each initially allocated KES 500 million for a total of KES 3 billion in the previous financial year. To date, only KES 300 million has been disbursed for these projects, which were a priority of President William Ruto aimed at boosting export-driven growth.
Similarly, the Coffee Cherry Fund, vital for supporting coffee farmers, has received only KES 500 million of its KES 4 billion allocation for the 2023/24 budget. Additionally, KES 350 million allocated for the modernization of Kenya Planters Cooperative Union (KPCU) warehouses remains unreleased, despite being included in the Supplementary Budget II of 2023/2024.
