President William Ruto/ HANDOUT
The move could unlock billions of shillings that counties have long argued are necessary to perform responsibilities transferred to them under the Constitution.
The development comes even as Ruto ordered immediate unbundling of remaining devolved functions that are still being performed by the national government.
Ruto said the transfer of functions must be accompanied by the resources required to execute them, warning against a situation where counties are handed responsibilities without adequate funding.
“Devolution cannot succeed when functions move but resources remain behind; when responsibilities are assigned without capacity; or when expectations are created without the means to meet them,” Ruto said.
The President spoke on Tuesday at State House, Nairobi, during the 13th National and County Governments Coordinating Summit.
He said the Intergovernmental Relations Technical Committee (IGRTC), working with the Commission on Revenue Allocation (CRA), had developed recommendations following verification of the previously identified interim allocation of Sh65.9 billion.
The recommendations are to be submitted to Treasury for consideration in the 2027-28 financial year, with the aim of facilitating the transfer of the required resources to county governments.
The development comes amid years of wrangling between the national and county governments over the cost of functions transferred to devolved units.
The summit directed IGRTC to immediately begin unbundling national government functions listed under Part One of the Fourth Schedule of the Constitution.
Once the functions are unbundled, CRA will submit the verified resource requirements to Parliament for consideration and allocation to counties in the 2026-27 financial year.
Ruto said the government had already completed the delineation, unbundling and gazettement of several devolved functions, including areas that had previously been contested.
He cited electricity and gas reticulation and energy regulation, sporting activities and facilities, fisheries, and soil and water conservation.
“This clarity will reduce duplication, strengthen accountability, and improve service delivery,” he said.
The President insisted resources must move together with responsibilities.
“Whenever a function is transferred, the resources necessary to perform it must follow,” he said.
The summit further directed Treasury to work with IGRTC to identify the financial resources required to begin evaluating the performance of the two levels of government.
Ruto said the framework for the evaluation had been developed but implementation had been delayed by budgetary constraints.
“What is not measured cannot be improved; what is not evaluated cannot be strengthened; and what is not accounted for cannot inspire public confidence,” he said.
The President also put county pending bills on the agenda, directing the Controller of Budget and Auditor-General to help counties verify outstanding debts and establish credible payment programmes.
Ruto warned that mounting pending bills were hurting businesses, particularly small and medium-sized enterprises.
“For many enterprises, especially small and medium-sized businesses, an unpaid government bill is not merely an accounting entry. It is working capital withheld, salaries delayed and livelihoods placed at risk,” he said.
Counties have been allocated Sh503.5 billion for the 2026-27 financial year, comprising Sh428 billion in equitable share and Sh75.5 billion in conditional allocations.
The equitable share rose from Sh415 billion in the previous financial year.
The summit resolved that counties absorb all eligible Universal Health Coverage workers currently employed on contract into permanent and pensionable terms, effective July 1, 2026.
The financing of the transition will be provided through County Governments' Additional Allocations for the 2026/27 financial year.
The meeting also ordered the restoration of approximately Sh3.25 billion earmarked for 13 remaining county aggregation and industrial parks but redirected to the Kenya Industrial Training Institute.
Ruto said the ultimate test of devolution was not the amount of money allocated to counties but what citizens received in return.
“Kenyans do not experience devolution through budget figures or institutional structures. They experience it through medicine in hospitals, water in their homes, accessible roads, productive farms, cleaner towns, and responsive public services,” he said.
INSTANT ANALYSIS
The President said the national government would continue working with counties on healthcare, agriculture, infrastructure, urban development, climate action, digital systems and local economic development. He also urged the two levels of government to settle disputes through consultation and alternative dispute resolution rather than litigations.
