New Bill seeks to have counties receive conditional grants without Treasury approval

County governments may soon access conditional grants without going through the long and bureaucratic processes currently required by law if a proposed amendment by the government is passed.

A new bill before Parliament seeks to remove the National Treasury from managing conditional grants by scrapping sections of the law that require counties to sign intergovernmental agreements before accessing the funds.

The bill, sponsored by National Assembly Majority Leader Kimani Ichung’wah, aims to ease access to the additional allocations by repealing Sections 191A to 191E of the Public Finance Management Act.

“The purpose of the Public Finance Management (Amendment) Bill, 2025, is to ensure there shall be no duplication in the management of additional allocations through intergovernmental agreements,” said Ichung’wah in the bill’s memorandum.

Currently, counties are required to negotiate agreements with the Treasury, submit them to county assemblies for approval within 14 days, and carry out public participation.

The agreements must then be published in the Kenya Gazette and submitted to both the Senate and the Controller of Budget before the funds are disbursed.

The government argues that this process creates delays that hurt service delivery.

The existing law was designed to ensure that conditional grants, which are typically earmarked for specific functions such as healthcare and infrastructure, are used appropriately. However, the new proposal says the process has become a burden rather than a safeguard.

Under the current system, some county projects, including the construction of county headquarters, have stalled for years.

In some cases, contractors have pulled out due to continued delays and breaches of agreement. The delays have also affected other major programmes like aggregation and industrial parks, and payment of community health promoters.

The National Assembly’s budget committee recently flagged the uncertainty surrounding these funds, warning that it could derail important county projects that depend on external funding.

“This financial uncertainty could undermine the effectiveness and sustainability of such projects, especially in sectors that rely heavily on external funding,” the committee said after approving an additional Sh50 billion to counties last month.

The proposed change would remove the requirement for intergovernmental agreements, meaning counties would be able to receive and spend the funds without the Treasury’s direct involvement.

If the law is passed, it would mark a major shift in how conditional grants are handled and potentially allow counties greater independence in managing funds, including those from donors.

However, the move could also raise concerns about whether the funds will be used for their intended purposes in the absence of binding agreements.

Other Topics To Read

• National
• Treasury
• Council of Governors
• Kimani Ichung'wah
• New Bill seeks to have counties receive conditional grants without Treasury approval
• Headlines

Governors have long complained about delays in the disbursement of funds and the national government’s control over devolved functions.

Through their council, county chiefs have demanded talks to address the stalled transfer of funds and powers. As of May 2025, the counties were still owed Sh75 billion in pending disbursements.

The Council of Governors has urged the Treasury to release the conditional grants already approved by law, insisting that counties are ready to use the money as required.