Governors Demand Increase in County Allocations Amidst Budget Stalemate

Council of Governors Chairperson Anne Waiguru during a special sitting of governors on April 16.

The perennial tussle over equitable revenue distribution between the national government and county administrations has once again surfaced, with governors advocating for a substantial increase in funds directed to the devolved units.

At the heart of the issue lies the allocation of resources, with governors asserting that most counties are grappling with financial instability due to insufficient funding.

The Council of Governors (CoG) in January proposed a significant boost in allocation, pushing for an increase to Ksh439.5 billion, a figure sharply contrasting with the government's proposed raise to Ksh391 billion.

During a session before the Senate's Committee for Finance and Budget, Chairperson of the Council of Governors, Anne Waiguru, highlighted the critical need for enhanced resources. "We are not seeking favours; we are advocating for resources adequate to sustain counties and ensure their continued functioning," Waiguru asserted.

On the other hand, the Commission on Revenue Allocation (CRA) has advocated for a revision of county allocations to Ksh398 billion, citing the imperative to meet the fiscal demands of the devolved units. The body proposed an increase of Ksh7 billion.

According to Constitutional provisions, the national and county governments must share revenue equitably. Specifically, county allocations cannot be less than 15 per cent of the total revenue collected by the national government.

Nevertheless, new information indicates a considerable delay in the distribution of funds, which exacerbates the financial hardship that counties are facing.

Njuguna Ndugu
Treasury CS Prof. Njuguna Ndugu During the signing of Aid Credit Facility Agreements between the Governments of Kenya and Hungary, March 27.

As of March, reports indicate that county governments have yet to receive nearly half of their equitable revenue share from the Treasury, further deepening the fiscal strain at the local level. With only 53.4 per cent of the allocated funds disbursed by February 29, 2024, counties are left grappling with acute financial uncertainties.

The impasse in budget negotiations has led to a deadlock, with governors and government officials at odds over the appropriate allocation for counties in the upcoming fiscal year.

While the National Treasury has proposed Ksh391 billion, the Council of Governors remains steadfast in its demand for Ksh439.5 billion, reflecting the stark disparity in resource allocation priorities.

The protracted negotiations over vertical revenue sharing underscore the challenges of balancing the fiscal needs of both national and county governments. Despite efforts to mediate the dispute through the Intergovernmental Budget and Economic Council (IBEC), a resolution remains elusive, with divergent positions on the allocation of shareable revenue.

Governors have reiterated their stance, advocating for a Ksh450 billion allocation to counties, citing escalating operational costs and the need to sustain essential services and projects.

Nyeri Governor Mutahi Kahiga underscored the financial strains faced by counties, particularly in meeting wage obligations and funding critical programmes like Early Childhood Development (ECD) education.

The meeting on Tuesday convened to address revenue allocation for counties and brought together key stakeholders, including the Council of Governors, Commission on Revenue Allocation, National Treasury officials, and Senate representatives. 

However, it is now a matter of time to see whether the discussions will yield a breakthrough, prolonging the uncertainty surrounding county finances.

A group of governors led by Governor Waiguru addressing the media after a special sitting, April 16.
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