Parliament strikes deal to release Sh70.6 billion additional funds to counties after prolonged standoff

Parliament has reached a compromise that will see counties receive Sh70.6 billion in additional allocations for the 2025/26 financial year, ending months of wrangling between the National Assembly and the Senate over the funds.

The funds are expected to ease cash flow challenges in county governments and revive projects affected by the prolonged budget impasse.

The approval follows an agreement by senators to adopt the National Assembly’s amendments to the County Governments Additional Allocation Bill, 2025, which outlines both conditional and unconditional allocations to counties beyond the equitable share of revenue.

At least 30 counties that had not commenced the rollout of County Aggregation and Industrial Parks (CAIPs), and another five without completed county headquarters, now risk missing out on the additional allocations following the deal struck by the two Houses.

The move finally unlocks Sh70.6 billion to the 47 devolved units for the financial year ending June 30, 2026, ensuring that stalled projects can resume after months of financial paralysis.

Legislators had been divided over the size of additional allocations to counties, with senators demanding Sh93.5 billion while MPs insisted on capping the figure at Sh70.6 billion. The main point of dispute was the Sh23.64 billion Roads Maintenance Levy Fund (RMLF), which is currently before the courts for determination on whether it should be controlled by the national or county governments.

After months of negotiations, senators agreed to pass the Bill with the National Assembly’s amendments, allowing counties to receive the Sh70.6 billion allocation.

In its report, the Senate Finance and Budget Committee supported the amendments, urging members to approve the compromise for the sake of service delivery.

“For the sake of the counties and service delivery to our people in the 47 counties, we agreed to consider the amendments that had been proposed by the National Assembly,” Nominated Senator Tabitha Mutinda, the vice chairperson of the committee, said.

“I will be requesting fellow senators to vote yes, so that we close this matter for this particular financial year. In the next financial year, any deficiencies that will have been incurred will be dealt with then.”

Migori Senator Eddy Oketch, a member of the committee, also urged senators to support the Bill, noting that continued delays would only worsen funding interruptions in the counties.

He downplayed the differences between the Houses, saying they were minimal and should not hold back disbursement.

“I would like to categorically say that this is not indicative of any lack of effort or sense of giving up on the RMLF fight. We are still going to fight it. Let the court decision take due process. Once that court decision is done, we are still going to take it forward and fight for it,” Oketch said.

Senator Mutinda echoed the sentiment, saying, “The reason we agreed to this (RMLF) is simply because this matter is in court. Both Houses felt that since it is a matter that is ongoing, we let the due court process take its course as directed by our Standing Orders.”

Under the approved amendments, counties whose CAIPs have progressed by more than 50 per cent will receive the remaining balance of their funds instead of diverting allocations to new counties. This, MPs said, will allow ongoing projects to be completed without interruption.

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Sixteen counties have already started implementing CAIPs, each allocated Sh250 million from the national government.

Additionally, MPs trimmed Sh1 million each from five counties that have yet to complete their headquarters. These include: Isiolo, Lamu, Nyandarua, Tana River and Tharaka Nithi. As a result, Isiolo will now get Sh59 million, Lamu, Nyandarua and Tana River Sh120 million each and Tharaka Nithi Sh30 million. The allocation for the five headquarters was revised from Sh454 million approved by the Senate to Sh449 million.

“As a Committee, we looked at this and said, instead of the back and forth, we would ensure that the Sh5 million is included in the next financial year so that the matter comes to an end,” Mutinda said.

On the other hand, the National Assembly increased allocations for two key development programmes; the Kenya Devolution Support Programme from Sh1.76 billion to Sh3.43 billion, and the Kenya Informal Settlement Improvement Project from Sh1 billion to Sh2.5 billion.

Despite supporting the committee’s report, several senators expressed concern over what they termed interference by the National Assembly in county matters.

“As much as I support the motion, the National Assembly has no right to deduct the monies that we allocate to counties because they do not deal with counties. So, anything to do with the counties, they should just respect us and leave it at our suggestion,” Machakos Senator Agnes Kavindu said.

Nominated Senator Catherine Mumma called for a formula to ensure the timely disbursement of additional allocations, warning that delays undermine service delivery.

“They are funds that should not be causing arguments, but we have subjected them to so much argument,” she said.

Nairobi Senator Edwin Sifuna accused the National Assembly of using intimidation tactics, saying the Senate should not yield to pressure.

He challenged his colleagues to stand firm, arguing that the compromise had shortchanged counties.