The National Assembly has finally unlocked the disbursement of the Sh50.5 billion in donor support to county governments after passing the long overdue County Governments Additional Allocation (CGAA) Bill 2025.
The Bill, awaiting presidential assent, had stalled for almost a year. The bill was originated by Senators and backed by the Council of Governors (CoG) — replacing one which members of the National Assembly had recommended the disbursement of just Sh25 billion.
House Speaker Moses Wetang’ula said this happened following a meeting on Wednesday that included Leader of Minority in the National Assembly Junet Mohamed (Suna East), Deputy Majority Leader Owen Baya (Kilifi North) and Minority Whip Millie Odhiambo (Suba North) and Council of Governors led by its chairperson Ahmed Abdullahi (Wajir).
During the meeting held with Parliament buildings on Wednesday, Council of Governors was forced to cede its agitations for the control of the Sh10.5 billion annual Roads Maintenance Levy Fund (RMLF) kitty so that the National Assembly fast tracks the passage of the Bill.
The Council of Governors also gave an undertaking to withdraw a case in court challenging the MPs’ control of the roads levy proceeds.
“Following the discussions with the leadership of Council of Governors, we made tremendous and acceptable progress on the matter that has been causing anxiety with many of our members here,” said Speaker Wetang’ula.
He gave the MPs the “assurance and comfort that all is under control and that there is no unhealthy exposure for you as MPs in relation to the matter in contention.”
“You are safe, you are comfortable and things are alright. As your speaker I will always be your first and last line of defence in your interest,” the House Speaker said before directing that the Bill be fact tracked. “We can dispose of it as quickly as practically possible.”
The Bill was adopted without changes and forwarded back to the Senate for onward transmission to the president for assent.
Of the Sh50.5 billion additional allocations, Sh42 billion is financed from the proceeds of loans and grants from development partners, Sh8.42 billion from the national government’s share of revenue and Sh116.1 million from court fines.
However, with two months to the end of the 2024/2025 financial year, it is highly unlikely that the counties will absorb the funds within the period.
The CGAA law is enacted every year and its delayed passage has affected the counties’ budget absorption and implementation for the financial years to which the allocations relate.
The Bill’s passage comes as a number of development partners had threatened to channel their funding elsewhere.
The Council of Governors had previously admitted that it was ready to withdraw the case challenging its exclusion from the use of the roads fund proceeds to break the impasse but on condition that the National Treasury embraces consultation that benefits the interests of the devolved units.
“We are ready for consultations that will see the matter out of court. We are more than willing to discuss,” Ms Wanga told the House Budget and Appropriations Committee (BAC) chaired by Alego Usonga MP Samuel Atandi.
The CGAA Bill 2025 is a republication of the 2024 Bill that was lost at the mediation committee level of the National Assembly and Senate after they failed to arrive at a compromise Bill due to disagreements on the amount of money to be allocated to the counties.
The National Assembly had proposed the allocation of Sh25.3 billion with the Senate pushing for Sh50.5 billion, creating a significant gap that the mediation committee of the two Houses failed to strike a compromise version.
This necessitated the loss of the Bill with the counties potentially missing out on the donor funding.
The CGAA law was first established during the 2021/22 financial year following a High Court ruling to have the additional allocations to the devolved units managed through a separate law from the Division of Revenue Act (Dora), which was left to handle equitable shareable revenue to counties.
The third schedule of the Bill contains Sh42 billion in additional allocations from the proceeds of loans and grants from development partners.
The projects to be financed are proposed through 17 programmes with inventions being in the Agriculture and Health sectors, Water and sanitation services and other devolution support programmes.
The Bill allocates Sh523.1 million for the construction of county headquarters for four county governments: Isiolo Sh115.3 million, Lamu Sh264.7 million, Tana River Sh95 million, and Tharaka Nithi Sh47.9 million.
About Sh3 billion has been allocated to 21 counties under the County Aggregation of Industrial Parks (CAIPS) programme, a key initiative under the Bottom-up Economic Transformation Agenda (BETA).
The distribution is determined by outstanding balances from previous funding from the national government and the progress of ongoing projects.
But one key condition to participating counties is that they must contribute Sh250 million to complement the national government's funding.
There is also the Sh3.23 billion distributed across all the 47 counties according to the distribution of the 107,831 Community Health Promoters (CHPs).
The funds are intended to provide a monthly stipend of Sh5,000 per CHP, with the national government contributing Sh2,500 and county governments matching the remaining Sh2,500.
The Bill also allocates Sh1.759 billion for the settlement of salary arrears owed to county governments’ health workers during the 2024/25 financial year.
This allocation follows a Return-to-Work Agreement signed in March 2024 between the national government through the Ministry of Health and the Kenya Medical Practitioners, Pharmacists, and Dentists Union (KMPDU), which resolved the doctors' industrial action.
As part of the agreement, the national government committed to facilitating the payment of Sh3.5 billion – the outstanding basic salary arrears accrued by county governments in two phases.
Since the introduction of CGAAB, it has always been passed late and outside the timelines provided for in the Public Finance Management Act.
Section 42 of the Act provides that Parliament shall consider the Division of Revenue Bill, the County Allocation of Revenue Bill, and a County Governments Additional Allocations Bill not later than 30 days after the Bills have been introduced.
For instance, the CGAAB for financial year 2021/2022 was assented to on April 22, 2022 as opposed to by June 30, 2021.
The CGAAB for financial year 2022/2023 was assented to on December 12, 2022 as opposed to by June 30, 2022, the CGAAB for financial year 2023/2024 was assented to on March 4, 2024 as opposed to by June 30, 2023.
