Kisumu Governor Prof. Anyang’ Nyong’o has dismissed claims of financial mismanagement in the wake of a Sunday Nation newspaper exposé highlighting “voided payments” in 15 counties, including Kisumu, which was listed as having the highest value of such transactions.
In a detailed response issued by the County Treasury on Sunday, the County Government of Kisumu refuted suggestions that the voided payments were a scheme to divert public funds, clarifying instead that the cancellations were part of a normal end-of-year financial procedure.
“Voided payments are a normal end-of-year procedure. A ‘voided’ payment is a payment that is cancelled after being fully processed to the last pay point in the Integrated Financial Management Information System (IFMIS) system,” said the County.
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The explanation follows media reports that painted voided payments as suspicious activities. However, the county insists the voiding process is triggered when there are insufficient funds in the County Revenue Fund (CRF) account at the Central Bank to finalize transactions before the end of the financial year.
According to the statement, Kisumu’s situation was largely due to unrealized revenue, particularly a delayed June 2024 disbursement amounting to Ksh668,943,824 ( USD 4.9 million) and a shortfall in Own Source Revenue (OSR) totalling Ksh1,475,770,986 (USD 10.9 million).
“Those two items alone account for Ksh 2,144,714,810 (USD 15.8 million) of voided transactions,” the county clarified.
The County Treasury also pointed to discrepancies between projected and actual opening balances and conditional grants that were not disbursed in time, all of which contributed to the accumulation of voided payments.
Governor Nyong’o’s admin acknowledged the issue as a financial management challenge but insisted it was not linked to corruption or misappropriation.
“The challenge, however, at least in the case of Kisumu County, is not misuse of public funds. It is partly a delicate balance and struggle by counties to adhere to fiscal ratios especially the ceiling on the wage bill,” he noted.
He further noted the structural constraints faced by Kisumu, including the heavy wage burden inherited from defunct local authorities and the operation of a regional teaching and referral hospital.
The County also cited instances where the Controller of the Budget declined to approve some payments, contributing further to the voided figures.
Despite the challenges, the County expressed optimism, pointing out that the National Treasury had begun implementing reforms to address the issue.
“It remains necessary to review rules on fiscal ratios and their implications to planning and budgeting in counties,” the statement concluded.
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