President William Ruto has assented to the Division of Revenue (Amendment) Bill, 2024, which will see county governments receive Sh387 billion as their equitable share of national revenue for the 2024-25 financial year. This marks a pivotal moment in the country’s devolved governance system, with an allocation that is not only higher than the initial proposals but also exceeds the constitutional minimum threshold set for devolution.
The Bill, initially designed to allocate Sh400 billion to counties, had faced a roadblock when the Finance Bill, 2024, was rejected. This rejection led to a downward revision of the allocation to Sh380 billion, prompting further negotiations that ultimately resulted in a Sh387 billion allocation for counties. This amount, while still short of the original figure, represents a meaningful compromise aimed at ensuring that counties receive their fair share of national revenue in line with constitutional requirements.
The Division of Revenue Bill, 2024 seeks to amend the Division of Revenue Act of 2024 to reflect the revised projections for ordinary revenue collection in the 2024/25 financial year. With the national revenue falling short by an estimated Sh346 billion, it became necessary to adjust the revenue-sharing formula. However, despite this shortfall, the additional Sh7 billion allocated to counties after a mediation process stands as a testament to the government’s commitment to supporting devolution and the critical services provided at the county level.
The Bill’s passage through Parliament was marked by a series of hurdles. The National Assembly passed the Bill on August 7, 2024, before it moved to the Senate, where amendments were made on October 3. However, the National Assembly rejected these amendments on October 16, leading to the formation of an 18-member mediation committee to resolve the dispute. The committee, co-chaired by Kiharu MP Ndindi Nyoro and Mandera Senator Ali Roba, played a crucial role in the negotiation process. After careful deliberations and assessments of revenue projections, historical collections, and county revenue performance, the committee struck a deal that added Sh7 billion to the counties’ allocation.
The new allocation now represents 24.67 percent of the most recent audited national revenue, far exceeding the 15 percent minimum threshold required by the Constitution. This increase is a clear indication that despite challenges in the national revenue collection, the government remains committed to bolstering the financial capacity of counties to better serve local communities.
In addition to the Division of Revenue Bill, President Ruto also assented to the Rating Bill, 2022, and the Water (Amendment) Bill, 2024. The Rating Act creates a standardized framework for property valuation and rating, providing counties with clear guidelines on how to assess property values and impose rates. This is expected to streamline the process of property taxation and improve local revenue generation.
Meanwhile, the Water (Amendment) Act, 2024, introduces provisions for Public-Private Partnerships (PPPs) to finance the development of water works by National Government Agencies. This move is aimed at enhancing water access across the country by leveraging private sector expertise and investment in the development and management of water infrastructure.
The signing of these three Bills represents a significant milestone in the government’s efforts to ensure the efficient implementation of devolution and the development of essential services. Present at the State House event were Deputy President Kithure Kindiki, National Assembly Speaker Moses Wetang’ula, Senate Speaker Amason Kingi, and other senior government leaders, underscoring the importance of the occasion.
As the counties prepare to receive their share of the national revenue, it is hoped that this funding will empower local governments to address pressing issues such as healthcare, education, infrastructure, and economic development. Moving forward, the continued collaboration between the national and county governments will be essential in realizing the full potential of Kenya’s devolved system of governance.
