Governors demand higher allocations in Division of Revenue Bill 2025

Kakamega Governor Fernandes Barasa before the Senate's Devolution and Intergovernmental Relations committee at Bunge Towers, Parliament, Nairobi. March 24th,2025 [Elvis Ogina, Standard]

The Council of Governors (CoG) has strongly opposed the proposed Ksh 417.4 billion allocation to counties in the 2025/26 Division of Revenue Bill, terming it insufficient to support effective service delivery and undermining the spirit of devolution.

The CoG, chaired by Kakamega Governor Fernandes Barasa-who also chairs the Finance, Planning, and Economic Affairs Committee-argues that the current allocation heavily favors the national government at the expense of counties' constitutional mandates.

Speaking during the deliberations on the Division of Revenue Bill, the governors called for an increase in the equitable share to at least Sh536.8 billion, noting that the Senate's proposal of Sh465 billion still falls short of addressing the financing needs of county governments.

They cited Kenya's projected economic growth of 5.3 per cent and a growing shareable revenue base-expected to hit Sh2.8 trillion in 2025/26-as justification for a higher allocation to counties.

"The resource allocation framework does not reflect the country's improved fiscal space," said Governor Barasa.

"Over the last five years, while ordinary revenue has grown from Sh1.8 trillion to Sh2.6 trillion, and is projected to rise further, the counties' equitable share has increased by only Sh70.9 billion compared to the national government's Sh702.6 billion growth. This trend is inequitable and unsustainable."

Governors also raised concerns about non-discretionary expenditures passed down to counties through national government policy shifts, including the doubling of NHIF contributions beginning February 2025, the rollout of Universal Health Coverage, and the funding of national priority programmes such as affordable housing, conservation efforts, and community health promoter compensation.

They argued that counties have been burdened with implementing these programs without corresponding financial support, especially after a Sh14 billion budget cut in 2024/25.

Makueni Governor Mutula Kilonzo Junior voiced frustration over the national government's direct interventions in county health facilities without consultation, citing recent examples in Kigumo, Kibugu, and Lusigetti.

"Healthcare is a devolved function under the Constitution. What we are seeing is a repeat of the 2015 NYS and medical equipment leasing scandals," said Mutula.

"This politicised allocation of resources is weakening devolution. If this continues, the Senate must intervene."

He further criticised the National Treasury for failing to attend three critical meetings to defend its budget recommendations, making it difficult for stakeholders to engage in informed deliberation.

According to CRA Chairperson Mary Chebukati, the 2025/26 proposal allocates 57.5 per cent of shareable revenue to the national executive, up from 56.7 per cent, while counties' share drops from 10.4 per cent to 9.3 per cent.

"This decline will hamper counties' ability to improve service delivery and is a serious setback to the objectives of devolution," Chebukati warned.

CRA's vertical allocation recommendation gives Sh2.41 trillion to the national government and Sh417.4 billion to county governments.

Moreover, county governments have been unable to implement key programmes valued at Sh25.03 billion due to budget shortfalls in 2024/25, attributed to revised revenue projections.

With the gazettment of additional devolved functions in December 2024, governors emphasised that relevant resources currently under national ministries should be reallocated to counties starting July 2025.

During a meeting of the Senate Standing Committee on Finance and Budget, governors also called for the clearance of Equalization Fund arrears and measures to address persistent county budget deficits.

Despite the growing tensions, both the Senate and CRA acknowledged that the level of engagement on the matter has improved.

As the debate continues, county leaders remain firm on their demand for a fairer, more transparent revenue-sharing model that supports meaningful devolution and equitable service delivery across the country.