The County Revenue Fund in Kenya exists under Article 207 of the Kenyan Constitution. This article is under Chapter 12 of the Constitution on Public Finance. Section 109 of the Public Finance Management (PFM) Act expounds further on the County Revenue Fund.
Article 207 says that the County Revenue Fund should be established to receive all money raised or received on behalf of the County Government. However, this excludes any money that an Act of Parliament my exclude from being paid reasonably to the County Revenue Fund.
The County Revenue Fund for every county government resides at the Central Bank of Kenya. It may also be referred to as the County Exchequer Account.
The County Treasury is in charge of the Fund. It should ensure that all money raised or received by or on behalf of the county government is paid into the Fund, except money that—
- is excluded front payment into that Fund because of a provision of the Public Finance Management Act or another Act of Parliament, and is payable into another county public fund established for a specific purpose;
- may, according to other legislation, the PFM Act or County legislation, be retained by the county government entity which received it for the purposes of defraying its expenses; or
- is reasonably excluded by an Act of Parliament as provided in Article 207 of the Constitution.
Counties to deposit local revenue to County Revenue Fund
All the sources of county government revenue in Kenya should be deposited in the County Revenue Fund. Funds excluded from the Fund include the appropriation in aid (AIA). AIA is received by county departments when they offer services and they can retain that money to cover their expenses.
What this means is that county governments should not spend their own source (local) revenue at the source. They should first deposit it in the County Revenue Fund, then seek the approval of the Controller of Budget to withdraw the funds. The National Treasury should also deposit the county equitable share of revenue raised nationally in the County Revenue Fund.
Once the Controller of Budget approves withdrawals from the County Revenue Fund, the money goes into County Operational Accounts.
The County Treasury should—
- arrange for the County Revenue Fund to be kept in the Central Bank of Kenya or a bank approved by the County Executive Committee member responsible for finance and shall be kept in an account to be known as the “County Exchequer Account; and
- ensure that all money authorised to be paid by the county government or any of its entities for a public purpose is paid from that account without undue delay.
Any unutilised balances in the County Revenue Fund should not lapse at the end of the financial year but shall remain for the purposes for which the fund exists.
Commission on Revenue Allocation and the Controller of Budget should receive financial statements from the County Treasury.
For more about this Fund, see Section 109 of the Public Finance Management Act. The main takeaway point is that the Fund houses all revenue received by a county government.