CBK boss flags gap enabling county rogue bank accounts
By John Otini, July 28, 2025The Central Bank of Kenya (CBK) says it cannot fully account for the hundreds of bank accounts operated by county governments, citing a lack of visibility that potentially enables the misuse of public funds.
This comes amid mounting concerns from the Senate’s Standing Committee on Devolution and Intergovernmental Relations, which has warned that the proliferation of commercial bank accounts by counties—with little or no central oversight—creates fertile ground for corruption and fiscal mismanagement.
Senators questioned CBK Governor Kamau Thugge on why counties are allowed to open and close multiple accounts without accountability, citing patterns that suggest the practice may be used to divert and conceal public money.
“As Central Bank, can you tell the committee how this can be stopped? Because they are opening it for corruption purposes, stealing money, then they close that account, and open another account. How can we deal with that?” Kiambu Senator Karungo Wa Thang’wa asked.
Thugge noted that the apex bank’s team cannot have full access to the information regarding the banks.
“There’s limited visibility by CBK banking teams over accounts opened at commercial banks unless they are flagged by oversight agencies,” he explained.
According to the senators, the counties claim to have special accounts for each service, such as education, donor funding and health.
They said that during a previous sitting, it was established that counties opened accounts for all the hospitals from level 4 to level 1, with numbers running to about 300 accounts.
Thugge, however, noted that they are on course to have a single treasury account set up to help limit such, which its process had been introduced more than two decades now without being implemented.
Corruption could be one of the reasons why the implementation has taken this long.
Treasury single account
“It’s not the first time, many other countries actually have a treasury single account, and we’ve, honestly, been trying to have a treasury single account for as long as I can remember, for the last maybe 20 years,” he claimed.
“I think now there’s progress, with the issues that this committee is raising, it gives it an impetus to actually move towards having a treasury single account.”
Additionally, he noted that there is a coordination gap between the oversight offices, which creates a leeway for counties to create more accounts.
“There’s inadequate coordination among oversight agencies, the Controller of Budget, Office of the Auditor General.”
Furthermore, there is a lack of clarity in the legal framework which guides the opening of accounts.
For instance, Section 192 of the Public Finance Management Act, according to him, allows the County Treasurer to open the county government accounts at either the central bank or the commercial bank, with the Act itself also providing for the establishment of the treasury single account.
“It says the treasury single account will be established at the central bank, and then it adds, or at a bank authorised by the county treasury.
Really, this is one area that we’ll need to look at to see whether we can remove the ambiguities and the contradictions that are there sometimes between the Act itself and the regulations,” he said.
In this regard, the governor is now calling for a joint oversight coordinated approach by oversight agencies, such as the Controller of Budget, the Auditor General, in line with set regulations enforcing compliance; sensitising the commercial banks on the demand of the Public Finance Management (PFM) Act, regulations and their roles.
“The National Treasury has sent quite a number of memos to the county governments, really reminding them of the need to follow this particular law, but again, as I said, I think the lack of clarity in the legal framework as to who can open and close accounts, maybe limits the National Treasury’s powers,” he said.
In the interim, CBK is advocating for a harmonised oversight approach among regulatory agencies, better sensitisation of commercial banks about their responsibilities under the PFM Act, and a legal review to close gaps that facilitate financial opacity.
Thugge concluded that although numerous reminders have been issued to county governments, the weak legal framework remains a stumbling block to enforcing tighter control over public funds.