Governors Insist on Equitable Share as National Budget Increases
The Council of Governors (CoG) has strongly opposed the proposed reduction in county revenue allocation, demanding that the National Government reinstate the Sh400.1 billion equitable share previously agreed upon.
The CoG’s Executive and Liaison, Management and Business Committee insists that the revised national budget, recently adopted by the Cabinet, must reflect a fair distribution to county governments.
The dispute arose after the withdrawal of the controversial Finance Bill (2024/25) following Gen-Z-led protests in June last year.
The subsequent budgetary review saw the National Government propose a reduced allocation of Sh387 billion to counties, down from the initially projected Sh400.1 billion.
The CoG argues that this reduction undermines devolution and will negatively impact essential county services.
If the reduction is implemented, 31 counties will suffer a cumulative loss of over Sh12 billion, while seven counties—primarily in Northern Kenya—will see a collective gain of Sh7 billion.
The CoG insists that the agreed-upon Sh400.1 billion must be restored to ensure equitable resource distribution and effective service delivery at the county level.
Counties to Stop Contributions to NSSF Tier II
In addition to their revenue concerns, the governors have reaffirmed their stance on county employees’ pension contributions.
The CoG maintains that county governments will cease contributing to the National Social Security Fund (NSSF) Tier II under the NSSF Act, Cap 258.
This is based on an exemption that applies to employees whose pensions are funded from the Consolidated Fund.
County employees are covered under the Local Authorities Pension Trust (LapTrust) and Lap Fund, which qualify for exemption.
Meanwhile, the NSSF is set to revise its contribution thresholds, with the upper-income limit increasing from Sh36,000 to Sh72,000 and the lower-income limit rising from Sh7,000 to Sh8,000.
Under the new structure, employees earning Sh50,000 will contribute Sh3,000, up from Sh2,160, while those earning Sh72,000 will have deductions increase from Sh2,160 to Sh4,320.
Governors Convene in Naivasha to Address Devolution Challenges
The latest pushback from governors was articulated in a communique signed by CoG Chairperson FCPA Ahmed Abdullahi Jiir (Wajir Governor) and the Chair of the Executive and Liaison, Management and Business Committee, Mutahi Kahiga (Nyeri Governor).
The announcement followed a high-level meeting in Naivasha, held under the theme “Fostering Collaborative Leadership and Synergy for Transformative Governance and Devolution.”
The meeting aimed to:
- Update CoG Committee Chairs on key policy and legal issues affecting devolved governance.
- Reaffirm a collective commitment to strengthening devolution.
- Develop urgent and long-term solutions to improve county financing and intergovernmental collaboration.
Revenue Sharing Formula Under Review
At the heart of the ongoing debate is the proposed Fourth Basis for revenue sharing (2025/26–2029/30), which has been submitted to the Senate for consideration.
As per Article 217 of the Constitution, the Senate is required to review the revenue-sharing formula every five years, with the National Assembly given 60 days for subsequent approval.
The current Third Basis (2020/21–2024/25) retained 50% of the revenue allocation formula from the Second Basis (2019/20), incorporating multiple population-based indices such as healthcare, agriculture, road networks, and poverty levels.
The proposed Fourth Basis introduces new parameters, including:
- Blue economy
- Economic growth
- Water and sanitation
- Fiscal effort and prudence
- Affirmative action for smaller counties
- Environmental performance
- Security
- Infrastructure needs
- Early Childhood Development (ECD)
- Disease prevalence
- Afforestation
- Urban service costs
Commission on Revenue Allocation (CRA) Chairperson CPA Mary Wanyonyi has defended the proposed formula, assuring counties that no region will suffer outright financial losses due to the stabilisation fund.
She emphasized that the new framework aims to address historical marginalization, particularly in arid and semi-arid areas.
Historical Tensions Over County Revenue Sharing
The dispute over equitable revenue sharing is not new. Since the introduction of devolution in 2010, tensions have persisted between densely populated regions—such as Central, Western, and Nyanza—which advocate for funding based on population and service demand, and sparsely populated counties in Northern Kenya, which push for allocations based on geographical size and historical marginalization.
The CRA, as mandated by Article 216 of the Constitution, is responsible for recommending the criteria for revenue distribution among counties.
However, disagreements between counties and the National Government have often delayed disbursements, affecting service delivery.
Call for Timely Transfer of Funds for New County Functions
The CoG has also urged the National Government to ensure timely transfer of funds for recently unbundled county functions, as outlined in a Gazette Notice dated December 16, 2024.
The governors insist that counties must receive the necessary resources in the 2025/26 financial year to implement these devolved functions effectively.
As the debate over county funding continues, the coming weeks will be crucial in determining whether the National Government will heed the CoG’s demands and reinstate the full Sh400.1 billion equitable share.
With the Senate set to deliberate on the Fourth Basis for revenue sharing, the decision will have far-reaching implications for Kenya’s devolved governance system.
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