Kiharu Member of Parliament Ndindi Nyoro in the Division of Revenue Bill 2024, has proposed increasing the revenue share for county governments by Ksh16.6 billion.
Nyoro, who also serves as the chairperson of the Budget Appropriations Committee, suggested that the funds should be raised from Ksh374.5 billion to Ksh391.1 billion.
"The bill proposes to allocate county governments Ksh391.1 billion for the financial year 2024/25 as an equitable share of revenue raised nationally, which is an increase from a base of Ksh374.5 billion allocated in the financial year 2023/24," the MP stated.
According to the MP, the rationale behind the increase was driven by the observed trends in Kenya's revenue performance, alongside increased expenditures for the national government. These expenses are attributed to debt servicing obligations, coupled with the depreciation of the shilling against the dollar.
Nyoro further explained that counties should get the extra funding due to the government's commitment to implement a fiscal consolidation plan targeting to reduce the debt to 3.9 per cent in the 2024/25 financial year.
The MP added that this plan was being implemented to slow down the accumulation of public debt.
Another reason for the extra funds is the financing constraints due to limited access to finance in the domestic and financial markets.
Nyoro further explained that the other reason was the low ordinary revenue collections attributed to the ongoing geopolitical shocks.
"This includes the Russia-Ukraine war and the US Federal Reserve's interest rate hike which has negatively affected the dollar exchange rate against the Kenyan shilling and international debt market," the MP emphasised.
The final reason explained by the MP was that the national government continued to solely bear shortfalls in revenue in any financial year while county governments continued to receive their full allocation despite the budget cuts affecting the national government entities.
He further explained that the bill, if enacted, would facilitate the equitable distribution of revenue generated nationally between the national and county levels of government.
Nyoro noted that this would facilitate the proper functioning of governments and ensure continuity of service delivery to the citizens.
Per the bill, the national government will be required to bear the shortfall of the deficit between the actual revenue and the expected revenue.
On the other hand, if the actual revenue is more than the expected revenue, the excess funds shall accrue to the national government and may be used to reduce borrowing or pay debts.
