Health Cabinet Secretary Aden Duale has rejected remarks by Controller of Budget Margaret Nyakang’o on the oversight of statutory funds and government levies.
Duale said funds established through Acts of Parliament have mechanisms for management, withdrawal and audit and remain subject to oversight by the Auditor-General and Parliament.
“Our attention has been drawn to public remarks by the Controller of Budget suggesting that certain public funds fall outside any framework of oversight and accountability. This characterisation is inaccurate and requires clarification,” Duale said.
He cited Article 228 of the Constitution and the Controller of Budget Act, 2016, on the mandate of the Controller of Budget.
“Under Article 228(4), the office authorises withdrawals from public funds under Articles 204, 206 and 207 — the Equalisation Fund, the Consolidated Fund and County Revenue Funds — and, under the Act, from any other public fund that an Act of Parliament expressly places under its approval,” Duale said.
“In every case, Article 228(5) requires only that she confirm the withdrawal is authorised by law.”
Duale said the funds referred to by Nyakang’o were established through separate legislation.
“The funds referred to in the interview were established by their own legislation, each with defined mechanisms for management, withdrawal and audit. They remain fully subject to the oversight of the Auditor-General and Parliament,” he said.
“To suggest that money lawfully appropriated and administered under an Act of Parliament is beyond scrutiny is to misstate both the law and the facts.”
Nyakang’o has said her office does not have direct visibility over expenditure from several statutory funds and levies.
“No visibility at all. Anything called a fund or a levy, we will not see it, are not part of the Consolidated Fund,” Nyakang’o said during a television interview.
She said some funds are transferred to implementing agencies without a reporting mechanism that enables her office to monitor the expenditure.
“Many times, I have felt that we have gone out of the safeguards the Constitution has provided. For instance, why don’t they have a reporting mechanism whereby the reports are scrutinized?” she said.
Nyakang’o listed the Social Health Insurance Fund, National Infrastructure Fund, Sovereign Wealth Fund and Primary Healthcare Fund among the funds outside the Consolidated Fund.
She also listed the Affordable Housing Levy, Social Health Insurance levy, Road Maintenance Levy, Railway Development Levy and Air Passenger Service Levy.
The National Infrastructure Fund has been proposed to finance infrastructure projects.
The fund was initially presented as capable of mobilising Sh5 trillion.
Nyakang’o’s office raised concerns about the proposed structure of the fund, including its establishment as a corporate entity and the exclusion of the Controller from authorising withdrawals and expenditure.
The Institute of Certified Public Accountants of Kenya called for independent oversight of the fund.
“We want oversight and credibility...which must be enhanced through funds management by an independent body,” ICPAK council member Hesbon Omollo said.
The High Court has ordered the National Treasury to disclose certified accounts and regularly report deposits, withdrawals and allocations relating to the National Infrastructure Fund.
Nyakang’o has also reported an increase in expenditure approved under Article 223 of the Constitution.
She said Sh209.37 billion was approved under the provision in the 2025/26 financial year, compared with Sh66.54 billion the previous year.
Article 223 allows withdrawals from the Consolidated Fund for urgent and unforeseen expenditure, subject to parliamentary approval.
“The Controller of the Budget observed that some of the approvals under Article 223 of the Constitution concerned routine, day-to-day office operations but had not been allocated funds in the budget formulation process,” her report said.
She recommended that Article 223 be used for expenditure that was unforeseen during budget preparation or was of an emergency nature.
“The Controller of Budget recommends that expenditure under Article 223 of the Constitution should be used strictly in line with the requirements on use of Article 223, which is for expenditure that was unforeseen at the time of budget formulation or of an emergency nature,” the report said.
Nyakang’o has also proposed greater access to national and county government accounts, including viewer rights to exchequer accounts and powers to reject withdrawals that breach approved spending limits.
Duale said the Government respected the independence of the Controller of Budget.
“The Controller of Budget is an independent constitutional office, and Government respects that independence,” he said.
“Independence, however, is exercised through the constitutional and statutory instruments provided — reports to Parliament and lawful approval of withdrawals — not through public commentary that mischaracterises the legal framework.”
Duale said amendments to the Public Finance Management Act aimed at expanding oversight of funds and levies outside existing budget channels were before Parliament.
“Where any office holder believes their mandate should be widened, the proper avenue is the legislative process,” he said.
Regulation 101 of the Public Finance Management Regulations, 2015, also governs confidential expenditure.
A Daily Nation investigation reported that the regulation allows accounting officers to certify confidential expenditure and examined the limits placed on public disclosure of such spending.
Governance expert Wanjiru Gikonyo criticised the confidentiality provisions.
“For a regime intent on plunder, the transparency exemptions around ‘national security considerations’ have become a costly loophole for state-sponsored criminal enterprises,” Gikonyo said.
“Kenya presents a paradox of high transparency without accountability,” she said.
Regulation 101 was gazetted in 2015.
The Government has also enacted amendments to the Public Finance Management Act, including provisions on accountability by accounting officers and implementation of parliamentary and county assembly resolutions relating to budget and audit reports.
Parliament is considering proposed changes to the public-finance framework relating to oversight of funds and levies outside existing budget channels.
