After weeks of intense negotiations and a prolonged standoff between the Senate and the National Assembly, a breakthrough has been reached concerning the allocation of funds to county governments. In a deal brokered by an 18-member mediation team, counties will now receive Sh387 billion for the 2024/2025 fiscal year, marking a Sh2 billion increase from the previous year’s allocation.
The mediated agreement came after a series of heated debates and clashes between MPs and Senators over the appropriate amount to allocate to the devolved governments. Senators had initially pushed for Sh400.1 billion, while MPs argued for a lower figure of Sh380 billion. The resolution, which falls in between these two figures, has provided much-needed relief to counties, which had been facing a cash crisis due to the prolonged impasse.
Mandera Senator Ali Roba, who co-chaired the mediation committee with Kiharu MP Ndindi Nyoro, confirmed the Sh387 billion allocation after the team’s final deliberations. Roba, alongside Nyoro, emphasized that the deal was reached after careful consideration of various factors, including the current economic climate and the additional financial burdens counties would face in the coming year.
“The figure we have agreed upon is Sh387 billion as the mediated position for county governments,” Roba stated, following the stormy session in which journalists were temporarily removed from the meeting. The breakthrough marks the end of a contentious standoff that had risked halting the disbursement of crucial funds to county governments.
The Division of Revenue Bill, which splits the nation’s revenue between the national and county governments, has been at the center of the debate. The proposed allocation to counties had become a major point of contention, with MPs insisting that a figure closer to Sh380 billion was more realistic given the national financial situation. Meanwhile, Senators argued that Sh400 billion was necessary to support the operations and services provided by county governments.
In their joint statement, Roba and Nyoro explained that the final allocation took into account the broader financial and economic circumstances, particularly the inflationary pressures and new levies that would impact counties this year. These include the newly introduced housing levy and changes in healthcare funding and employee PAYE. Nyoro noted that while the economic situation remained challenging, the committee wanted to ensure that county governments were not left in a financial crisis.
“The magnanimity of the members of this mediation has been based on the fact that we are proceeding on recess, the two houses. And the way we all support devolution, we do not want to be seen to be in a situation where our counties are grounding to a halt,” Nyoro said.
This agreement comes at a critical time as the country navigates a series of new financial and policy challenges. The economic situation has placed a strain on government revenues, and counties were increasingly concerned about their ability to meet service delivery expectations amid rising costs.
The mediated figure of Sh387 billion is expected to provide counties with some financial breathing room as they plan for the year ahead. However, MPs and Senators both acknowledged that while the allocation was not as high as initially hoped, it represented a balanced and pragmatic approach to supporting devolution in Kenya.
This resolution sets the stage for the passage of the revised Division of Revenue Bill, 2024, as well as the amended County Allocation of Revenue Bill, 2024, which will now move forward to ensure the timely disbursement of funds by the Treasury. The mediation process highlights the complexities of inter-governmental negotiations in Kenya, but also the resilience of the country’s devolved system in ensuring that counties receive the financial support they need to continue operations.
As the legislation moves toward final approval, county governments can now breathe a sigh of relief, knowing that they will receive the funding necessary to sustain essential services and meet their fiscal obligations.
