Counties are set to receive an increase of over Sh43.9 billion in their equitable share of revenue in the next financial year if a proposal by the Commission on Revenue Allocation (CRA) is adopted.
The recommendation submitted to the National Treasury covers the financial year ending June 30, 2027. According to the Commission, the 47 county governments should be allocated Sh458.94 billion as their equitable share, a Sh43.94 billion increase from the Sh415 billion they received in the current fiscal year.
Additionally, the CRA recommends allocating Sh9.60 billion to the Equalisation Fund for 2026/27.
Last financial year, counties received Sh415 billion after a prolonged negotiation between senators, who proposed Sh465 billion, and MPs, who supported the Treasury’s Sh405.1 billion proposal. The impasse required intervention from President William Ruto to resolve.
Section 190(1) of the Public Finance Management Act, 2015, requires the Commission to make such recommendations at least six months before the start of a new fiscal year or at a later date agreed with the National Treasury.
CRA Chairperson Mary Chebukati said the proposed allocation represents 23.9 percent of the most recent audited and approved revenue accounts for the financial year ending June 2022, which amounted to Sh1.92 trillion.
Article 203(2) of the Constitution stipulates that counties must receive at least 15 percent of all revenue collected by the national government, based on the most recent audited accounts approved by the National Assembly.
Ms Chebukati noted that shareable revenue is projected to increase from Sh2.63 trillion in the 2025/26 financial year to Sh2.98 trillion in 2026/27, translating to a total revenue increase of Sh342.6 billion.
Consequently, the CRA recommends allocating Sh2.51 trillion to the national government, with Sh458.94 billion to counties as their equitable share for 2026/27.
“The increased allocation to county governments is crucial for financing and improving service delivery across the country,” said Ms Chebukati.
She explained that the additional Sh43.94 billion for counties comprises a revenue growth adjustment of Sh35 billion and an Sh8.94 billion transfer from the national government’s equitable share.
The latter is intended to fund the permanent and pensionable transition of Universal Health Coverage (UHC) workers, in line with a presidential directive effective September 2025.
“The Ministry of Health, in consultation with the Council of Governors, agreed that UHC workers be transitioned to permanent and pensionable terms, with the budget calculated based on prescribed SRC rates,” Ms Chebukati said.
She added that Parliament would make the resources available in the 2026/27 financial year through the Division of Revenue Act.
The CRA chair said the latest revenue-sharing recommendations are informed by a projected economic growth of 5.3 percent in the medium term, supported by a stable macroeconomic environment characterized by low inflation, low interest rates, and a stable exchange rate.
“The sharing of revenue has historically favored the national government. Over time, the proportion allocated to the national government has increased substantially, while that for counties has continued to shrink,” she said.
Article 202(1) of the Constitution mandates that nationally raised revenue be shared equitably between the national and county governments.
Since the 2012/13 financial year, county governments have received a total of Sh4.67 trillion, including Sh4.14 trillion in equitable share, Sh203.5 billion in conditional grants from the national government, and Sh324.7 billion in loans and grants from development partners.
