Inside governors clash over Sh534.96B county allocations

The Council of Governors, led by Chairman Ahmed Abdullahi, during a media briefing on the Division of Revenue Allocation on May 19, 2025. [Collins Oduor, Standard]

A battle is looming between the Council of Governors (CoG), the National Treasury, and the Commission on Revenue Allocation (CRA) over the amount of money to be allocated to counties as equitable share for the 2026/27 financial year. 

The Council of Governors is proposing that counties be allocated Sh534.96 billion as an equitable share, while the Commission on Revenue Allocation recommends they get Sh458.94 billion. The National Treasury proposes an allocation of Sh420 billion.

COG Chairperson Ahmed Abdullahi said the proposed allocation represents a Sh106.97 billion increment comprised of Sh35 billion being an adjustment for revenue growth, Sh8.94 billion budget requirement to transition to the Universal Health Care Workers.

“Out of the increment we are seeking Sh10.06 billion, which will go to the budget requirement to implement the outstanding 3rd and 4th remuneration and benefits review cycles and Sh65.97 billion identified for transfer under the first phase of delineated and gazetted devolved functions,” said Abdullahi.

The Wajir Governor said that under the draft Budget Policy Statement, ordinary (shareable) revenue is projected to grow from Sh2.64 trillion in the financial year 2025-26 to Sh2.98 trillion in the financial year 2026/27, which is a 13% growth and Sh342.6 billion in absolute terms.

The CRA allocation proposal includes Sh43.94 billion increment comprised of Sh35 billion being an adjustment for revenue growth and Sh8.94 billion being the budget requirement for the transition of the Universal Healthcare (UHC) workers to county governments.

The counties received Sh415 billion for the financial year 2025/26 following a mediation process between the Senate and the National Assembly, the current proposal by the National Treasury being a Sh5 billion increase, which is attributed to an adjustment for revenue growth.

“The Kenyan economy is projected to expand by 5.3 per cent and remain stable in 2026 and 2027 with a projected revenue growth of Sh342.6 billion and the expected macroeconomic stability, counties' allocation of Sh35 billion as recommended by CRA on this account, is equitable given that the National government will get Sh298 billion increment,” said Abdullahi.

He said that UHC workers' contracts will lapse between April 2026 and September 2026. The Ministry of Health, in consultation with the Council of Governors, agreed that the workers will be transitioned to County governments in the FY 2026/27 on permanent and pensionable terms, and the budget transferred through the Division of Revenue in perpetuity to ensure sustainability.

Abdullahi said the Ministry of Health has confirmed the availability of the attendant cost of Sh8.94 billion to be transferred to County governments, which was ratified during the 12th National and County Governments Coordinating Summit. This is therefore a non-discretionary expenditure item and should be provided in the Division of Revenue Bill as a matter of priority.

The COG Chairperson said that the Salaries and Remuneration Commission through a letter to the Council confirmed that County governments are in arrears regarding implementation of the 3rd and 4th Remuneration and Review Cycles. The final phase of the 3rd Cycle requires Sh4.77 billion while the first phase of the 4th Cycle requires Sh5.28 billion to implement.

 “The National government has already implemented all cycles, leaving behind the Counties. This is discriminatory and has already triggered industrial action from various County Public Officers and is expected to escalate if not implemented,” said Abdullahi.

The COG Chairperson said that the first phase of identification of financial resources indicated that Sh65.97 billion is available for transfer to Counties from various National Government Ministries, Departments, and Agencies in the unbundling of functions to counties.

Abdullahi said that the 12th Summit adopted the interim report and resolved that the CRA and National Treasury should verify and include in the 2026/27 FY Division on Revenue Bill financial resources identified so far from the delineated devolved functions.

He said that Governors will lobby strategic partners, including the Summit (Executive Office of the President), the Senate, and the National Assembly, to adopt the position of Council over the need to increase allocation to counties.

The Senate and National Assembly in July last year approved the mediated version of the Division of Revenue Bill (National Assembly Bill No. 10 of 2025), paving the way for the disbursement of Sh415 billion to county governments as an equitable share for the 2025/26 Financial Year.

This allocation reflected a Sh10 billion increase from the National Assembly's earlier proposal of Sh405.1 billion and the Senate's reduction by Sh50 billion from its earlier proposal of Sh465 billion following extensive deliberations by the Mediation Committee of both houses.

Senators voted in support of the decision in concurrence with the National Assembly, which paved the way for President William Ruto to assent the bill into law, which will enable the counties get the increased allocation beginning from July last year.

The decision by the two houses was to validate the decision by the Mediation Committee Co-Chaired by Senate Finance Committee Chairman Ali Roba and National Assembly Budget and Appropriation Committee Chairman Samuel Atandi.

“The Committee that was sent to mediate on behalf of the Senate and as representatives of the interests of the county governments has managed to improve the allocation to counties in the form of the shareable revenue from Sh387.4 billion to Sh415 billion, which is an increase of nearly Sh30 billion in a given financial year,” said Senator Roba last year.