Counties eye Sh100 billion revenue as MPs set new basis

MPS have proposed a new basis for national revenue sharing to give more money to counties.

Should the plenary approve the report of the Public Accounts Committee, the new revenue sharing basis would be Sh1.92 trillion, a few millions shy of Sh2 trillion.

The basis was arrived at after review of audit reports for ministries and state departments.

The basis has increased by about Sh350 billion when compared with the audited revenue of the previous review for the financial year 2020-21, which was set at Sh1,570,562,945,014.

“The committee recommends that the total nationally collected revenue of Sh1,920,434,085,078 forms the basis of sharing revenue between the national and county governments as contemplated in Article 203 of the Constitution,” PAC said in a report tabled in the National Assembly.

During the financial year ending June 30, 2022, the government collected Sh2.03 trillion, which was Sh314 billion or 18 per cent higher than the previous fiscal period.

This means counties’ share of revenue would start from Sh290 billion – calculated at the rate of 15 per cent set in the constitution County allocations have increased over time.

The current Division of Revenue Bill (2025) sets aside Sh405 billion for the 47 counties, translating to about 26 per cent.

At the same rate, and with the new revenue base, MPs on the Public Accounts Committee have tipped counties for a raise, pushing their equitable share to about Sh500 billion.

For many years, counties suffered from low funding because MPs delayed the approval of audited accounts, a situation the National Assembly has been keen to reverse since 2019.

The National Treasury is also accused of failing to disburse equitable shares on time for implementation of budgets.

The Auditor General recently released audited books for the year ending June 2024, meaning MPs are lagging behind by two financial years.

At the same time, counties arguably are not collecting enough internal revenue to meet budget shortfalls at time of funding constraints.

In the financial year 2024-25, counties got Sh387 billion as the equitable share, which resulted from mediation between the National Assembly and the Senate.

The political class has been grappling with difficulties in amending the threshold set in the constitution to give counties more money.

A push to increase the base to 25 per cent failed after the Building Bridges Initiative was thrown out by the courts, which ruled it unconstitutional and cited lack of public participation.

A recent push by the National Dialogue Committee to increase the share to 20 per cent is also yet to be realised as players delay implementing the report.

The joint Justice and Legal Affairs Committee of the Senate and National Assembly has supported the Nadco proposal