Counties could get Sh500 billion as MPs push for higher national revenue allocations

Counties could soon receive a larger share of national revenue if a new proposal by Members of Parliament is approved.

The MPs have suggested a revised formula for revenue allocation, which would be based on Sh1.92 trillion in audited revenue.

If passed by the National Assembly, this could push county allocations closer to the Sh500 billion mark, offering much-needed funding for devolved services.

The Public Accounts Committee (PAC) arrived at this figure after reviewing audit reports from ministries and state departments.

The latest revenue base represents an increase of about Sh350 billion compared to the previous review for the financial year 2020-2021, which stood at Sh1.57 trillion.

"The committee recommends that the total nationally collected revenue of Sh1.92 trillion forms the basis of sharing revenue between the national and county governments as contemplated in Article 203 of the Constitution," PAC stated in its report tabled in the National Assembly.

During the financial year ending June 30, 2022, the government collected Sh2.03 trillion, an increase of Sh314 billion compared to the previous fiscal period.

Counties are entitled to at least 15 per cent of the total revenue as per the Constitution, meaning their share would start at around Sh290 billion.

Over time, counties have seen an increase in allocations.

The Division of Revenue Bill (2025) proposes Sh405 billion for the 47 counties, amounting to about 26 per cent of the revenue base.

New formula

With the new formula, lawmakers anticipate this amount to rise to approximately Sh500 billion.

For years, counties have faced funding challenges due to delays in approving audited accounts.

The National Assembly has been working to clear these backlogs since 2019.

The National Treasury has been blamed for late disbursement of funds, further straining county budgets.

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The Auditor-General has recently released audit reports for the financial year ending June 2024, showing that MPs are still two financial years behind in reviewing the accounts.

Counties have also struggled to generate enough internal revenue, making them heavily reliant on national government allocations.

In the Financial Year 2024-25, counties received Sh387 billion after mediation between the National Assembly and the Senate. However, efforts to increase county allocations beyond the current constitutional minimum have faced setbacks.

A bid to raise the base to 25 per cent under the Building Bridges Initiative was dismissed by the courts for being unconstitutional. More recently, the National Dialogue Committee proposed increasing the share to 20 per cent, but its implementation has been delayed.

The joint Justice and Legal Affairs Committee of the Senate and National Assembly has backed the proposal, but no concrete steps have been taken to enforce it.