The Council of Governors (CoG) Executive and Liaison, Management and Business Committee has called on the National Government to reinstate Sh400.1 billion as equitable share revenue for County Governments as earlier agreed between the parties.
They argue that the revision and increase in the national budget were adopted by the Cabinet recently and this should be reflected in the sharable revenue to the counties.
Following the withdrawal of the Finance Bill (2024/25) after the Gen-Z protests in June last year affected budgetary allocations and the National Government determined to send to counties Sh387 billion from the projected allocation of Sh400.1 billion, which they want reinstated.
The plan to allocate counties Sh387 billion would see 31 counties lose over Sh12 billion, while seven counties, mostly in Northern Kenya, would gain an extra Sh7 billion.
The CoG has also maintained that County Governments will cease contributing to Tier II under the NSSF Act, Cap 258, as per the exemption under the Act for beneficiaries of a pension scheme funded out of the Consolidated Fund since their contributions are under the Lap fund, a retirement scheme exempted from such changes.
NSSF will this month adjust the upper-income limit and lower-income limit from Sh 36,000 to Sh 72,000 and Sh 7,000 to Sh 8,000, respectively. Kenyans earning Sh50,000 monthly will contribute Sh3,000, up from Sh2,160, while employees taking home Sh72,000 will have Sh4,320 deducted, up from Sh2,160.
This was contained in a Communique signed and released by Fellow Certified Practicing Accountant (FCPA) Ahmed Abdullahi Jiir, who is the Chair of CoG and Governor for Wajir and the CoG Chairperson; Executive and Liaison, Management and Business Committee Mutahi Kahiga, who is also Nyeri Governor, during a meeting held in Naivasha on Thursday.
The meeting was organised under the theme ‘Fostering Collaborative Leadership and Synergy for Transformative Governance and Devolution’. The objectives of the meeting were to update Chairs of the CoG Committees on the actionable policy and legal issues in devolved sectors; collectively reaffirm renewed commitment to devolution; and discuss urgent and long-term solutions that will improve resourcing for County Governments and strengthen intergovernmental relations.
The Fourth Basis for revenue sharing (2025/26–2029/30) has been submitted for Senate consideration, with Article 217 requiring the Senate to determine the basis every five years, with the National Assembly reviewing it within 60 days.
The Third Basis (2020/21–2024/25) retained 50 per cent of the Second Basis allocation from 2019/20 with revenue allocation considering multiple population-based indices, including health, agriculture, roads, and poverty.
For the proposed Fourth basis, additional parameters have been suggested, including blue economy, economic growth, water and sanitation, fiscal effort, and prudence.
Other proposed factors include affirmative action for small counties, environmental performance, security, infrastructure needs, early childhood development (ECD), disease prevalence, afforestation, and urban service costs.
The Commission on Revenue Allocation (CRA) Chairperson Certified Public Accountant (CPA) Mary Wanyonyi was quoted defending the formula, emphasising that no county would lose funds outright due to the stabilisation fund.
She explained that the funding model aims to correct historical marginalisation, particularly in arid and semi-arid regions.
The current dispute mirrors the recurring challenge of balancing county funding under Kenya’s devolved system due to the fact that since the introduction of devolution in 2010, revenue-sharing formulas have sparked tensions and disputes, particularly between populous counties (Central, Western, and Nyanza regions), which contend for funding based on population and service demand.
Further, the expansive and sparsely populated counties in the Northern Kenya region have been seeking an allocation formula based on geographical size and historical marginalisation.
The Commission on Revenue Allocation (CRA) is mandated by Article 216 of the constitution to recommend the basis for equitable revenue sharing among counties.
The devolution leaders urged the National Government to ensure the transfer of funds for the recently unbundled functions (vide Gazette Notice dated 16th December, 2024) to the County Governments in the FY 2025/26 financial year is done in good time.
They also want the Cabinet directive of January 21, 2025, with respect to the restructuring of state corporations, to be implemented to ensure all devolved functions with the attendant resources are transferred to counties.
They agreed to convene a meeting with the Office of the Controller of Budget (CoB) to discuss the digitisation of approvals to eliminate inordinate delays experienced by County Governments in the approval of funds and ensure National Government ministries undertaking county functions sign the Inter-Party Agreement (IPA) as required by law in line with the advisory by the COB.
Consequently, COB to immediately ceased approval of any function undertaken by the national government in relation to county functions where there are no IPA. They urged the National Government to transfer functions to the new cities and municipalities together with attendant resources to operationalise urban entities.
Enact County legislation based on the model law developed by the Council to operationalise financing of cities and emerging urban areas.
By Mabel Keya—Shikuku
