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World Bank Defends State On County Funding

February 11, 2014

Kings Waweru

THE World Bank has defended the national government against accusations by some governors that it is blocking county governments from accessing external funding.

Speaking during a meeting at Sportsmans Arms Hotel in Nanyuki town, Governors Joshua Irungu (Laikipia), Peter Munya (Meru) and Julius Malombe (Kitui) told World Bank officials that the national government does not support devolution.

"The country has 48 governments which should be independent according to devolution but the national government is behaving like a big brother. It is holding a lot of money, for which which many of its functions have been devolved," Irungu said.

He said the national government failed failed to be a guarantor for Laikipia to borrow money from commercial banks to buy maize from local farmers through a warehousing receipting system last year.

Malombe said county governments cannot borrow money externally without the national government's guarantee because the law is not explicit on external borrowing.

"Clear frameworks need to be put in place on how devolved governments can access bank guarantees because sooner or later we will have the nice boys and girls of devolution among counties. The repercussion is that those who will feel that they were unfairly treated could cause chaos," he said.

Malombe urged the banking institution to push the national government to invest in the development of a framework that will facilitate easier bank guarantees for the devolved units.

Munya said the World Bank's funding for agriculture, infrastructure and health sectors will be used effectively when channeled through counties.

An economist from the World Bank, John Randa, however, told the governors that it is the institution that proposed that the counties be given at least two years after they were in place to borrow funds externally.

"As economists we were afraid of the economic risks in that if all of you are allowed to borrow, it will be a competition that would result in a fiscal instability. That is why we decided on the two year period" said the official.

He said the World Bank was, however, working with the National Treasury's inter-counties committee on the way forward.

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Source: AllAfrica

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