COUNTY FUNDS FALL SHORT: GOVERNORS SOUND ALARM OVER REVENUE ALLOCATION

Governors across Kenya, led by Ahmed Abdullahi, the Chairperson of the Council of Governors (CoG) and Wajir Governor, have expressed their dissatisfaction with the Ksh387 billion allocated to counties for the 2024/2025 financial year. Despite a Ksh2 billion increase from the previous year’s allocation of Ksh385 billion, the CoG argues the figure falls significantly short of the Ksh400 billion proposed by the Senate, threatening critical county services.

A Contentious Mediation

The final figure was determined after a prolonged mediation process between the National Assembly and the Senate. Mediators, including Kiharu MP Ndindi Nyoro and Mandera Senator Ali Roba, were tasked with reconciling starkly different positions:

• National Treasury’s Proposal: Ksh380 billion, supported by the National Assembly.
• Senate’s Proposal: Ksh400 billion, citing urgent county financial needs amidst a national cash crunch.
  The agreed Ksh387 billion reflects a compromise, though one Governor Abdullahi labels “disappointing.”

Critical Gaps and Implications

The governors argue that the allocation fails to cover key needs, particularly:

1. Collective Bargaining Agreements (CBAs): Many counties are grappling with pending CBAs for staff, threatening industrial unrest.
2. Essential Services: The shortfall risks hampering healthcare, education, and infrastructure development at the county level.

Governor Abdullahi underscored the challenges counties face in managing these deficits, emphasizing the ripple effect on residents dependent on county services.

Legal Loopholes and Future Risks

Abdullahi raised concerns over legal ambiguities exposed during the mediation process. Historically, DORA (Division of Revenue Act) allocations have been immutable once passed. However, this round of mediation revealed that adjustments could be made post-passage—a precedent that governors fear could erode counties’ financial stability.

“Counties have never revisited DORA since 2013,” Abdullahi remarked. “Allowing revisions introduces a loophole that could delay or diminish allocations in future.”

He called for clear legislative guidelines to prevent downward revisions while enabling upward adjustments should government revenue projections increase.

A Call for Structural Reforms

The CoG also highlighted the disconnect between the DORA process and the national finance bill, suggesting structural reforms:

• Synchronisation of Legislation: Ensuring DORA allocations correspond with adjustments in national revenue collection.
• Protected Negotiations: Establishing binding agreements to prevent arbitrary changes during mediation.

“If taxes are raised, there must be a mechanism to ensure counties receive their fair share. This would mitigate delays and enhance financial predictability for counties,” Abdullahi proposed.

A Balancing Act for Parliament

While the Senate’s push for Ksh400 billion was well-intentioned, the National Assembly’s stance reflects Kenya’s broader economic struggles. The country is battling a cash crunch, and Treasury officials argue for fiscal prudence to avoid exacerbating national debt.

Despite this, critics note that underfunding counties undermines devolution, a cornerstone of Kenya’s 2010 Constitution. Abdullahi warned of a potential constitutional crisis if counties are persistently underfunded, urging Parliament to prioritise counties’ constitutional mandate.

What Lies Ahead?

With the financial year looming, counties face an uphill battle to stretch the Ksh387 billion allocation. As governors lobby for long-term reforms, attention will also focus on Parliament’s role in protecting the spirit of devolution.

For millions of Kenyans relying on county services, the stakes couldn’t be higher. Whether Parliament heeds the governors’ concerns or remains tethered to the Treasury’s purse strings, the future of Kenya’s counties—and their residents—hangs in the balance.