The Budget and Appropriations Committee of the National Assembly has thwarted the governors’ push for Sh536.8 billion as an equitable share in the financial year starting July, which could escalate disagreements between the two levels of government.
The committee, in its report on the Division of Revenue Bill, 2025, instead allocated counties Sh405.06 billion, saying that giving the devolved units a higher amount would significantly hit the ability of the national government to service debt.
Governors hinged their push on the need for additional billions to cater for unmet discretionary expenses like the housing levy and enhanced contributions to the National Social Security Fund (NSSF).
The committee’s decision is set to trigger a fresh fight between lawmakers and governors who have recently decried the failure of the national government to increase the equitable share due to counties.
“The committee noted that while the proposal is plausible, the national government’s share includes interest payment on public debt, which has been on an upward trajectory and that sharing of resources should be cognisant of the prevailing macroeconomic conditions,” the committee says in the report.
Cabinet Secretary for National Treasury and Economic Planning John Mbadi.
Photo credit: Dennis Onsongo | Nation Media Group
The National Treasury had also proposed that counties be allocated Sh405.06 billion as an equitable share and Sh2.41 trillion to the national government, while Sh10.58 billion as an equalisation fund to counties.
Counties are currently grappling with mounting debt that includes pending bills to contractors, besides unremitted Pay-As-You-Earn, NSSF, and the recently introduced housing levy that all formal workers must pay.
“The equitable share to counties be increased from Sh405,069,420,197 to Sh536,880,000,000 to cater for unmet discretionary expenses such as enhanced contributions to NSSF, housing levy deductions…,” the Council of Governors said in their submission to the committee.
But continued dismal performances in raising own-source revenue have made it difficult for counties to meet the growing financial demands, forcing the units to push for more cash from the national government.
But the national government, on the other hand, is hard pressed largely due to debt payment, which is gobbling a considerable share of the revenue collections.
For example, in the financial year that starts in July, the National Treasury projects that payment of public debt is projected to gobble 52 percent of ordinary revenue that will be collected.
The Sh405.06 billion to counties is also lower than the Sh417.4 billion that the Commission of Revenue Allocation (CRA) had proposed to be given to counties.
Chairperson of the Commission on Revenue Allocation Mary Wanyonyi address senators on February 6, 2025, in Naivasha.
Photo credit: Boniface Mwangi | Nation Media Group
But the parliamentary committee rejected CRA’s push, saying that the proposal of Sh417.4 billion was not based on the funds available, given other competing needs facing the Exchequer.
It remains to be seen whether Senators back the decision by the National Assembly and adopt the allocations proposed, paving the way for the signing of the Bill into law and the subsequent release of the funds.
Release of equitable share to counties is pegged on the passage of the revenue sharing Bill into an Act of Parliament.
In the past, disagreements between the National Assembly and Senate over the revenue sharing between the two levels of government have delayed the disbursement of funds to the counties.
