Governors threaten to quit budget talks over ‘empty’ revenue negotiations
Council of Governors vice-chairperson Ahmed Abdullahi (second left) addresses journalists while flanked by Kakamega Governor Fernandes Barasa (left), Nyeri’s Mutahi Kahiga (second right) and Makueni’s Mutula Kilonzo Jnr at Movenpick Hotel and Residences in Nairobi on February 1, 2023.
Governors are threatening to boycott future negotiations on the division of revenue between the national and county governments, saying the process has been reduced to a mere formality.
The development comes after the National Treasury allocated Sh405 billion to counties in the budget for the financial year ending June 30, 2026, against their demands of Sh536 billion.
The move infuriated the county chiefs, who are mulling giving future discussions on the Division of Revenue Bill a wide berth, saying the outcome is predetermined.
The Bill is a key piece of legislation that, upon enactment, provides for the equitable division of revenue raised nationally between the national and county governments in every financial year.
Council of Governors chairperson Ahmed Abdullahi argued that their participation in the Bill’s negotiations is only to “tick the box” and the discussions have become static and largely academic, with little regard for the realities of devolution.
He said it will be pointless to attend such negotiations if the allocation for the 2025/2026 financial year is anything to go by.
“It loses all meaning if the national government unilaterally decides county allocations. Our input must be meaningful, not ceremonial,” he added.
He also dismissed the ongoing mediation process between the National Assembly and the Senate over the Division of Revenue Bill, 2025, as mere tokenism, accusing the national government of sidelining their input.
According to the Bill, county governments are set to receive Sh405.1 billion as their equitable share of nationally raised revenue for the 2025/26 financial year.
The amount represents a modest increase of Sh17.6 billion from the Sh387.4 billion allocated in the financial year ending June 30, 2025.
In the previous cycle, the Division of Revenue (Amendment) Act, 2024 allocated Sh387.4 billion to counties despite a mediation process between the National Assembly and the Senate settling on Sh400 billion.
The reduction was occasioned by the withdrawal of the Finance Bill, 2024, by President William Ruto due to a deadly pushback by Gen Zs.
'Not enough'
Over the past five financial years, the equitable share has steadily risen from Sh316.5 billion in the fiscal year ending June 2021 to Sh370 billion in the financial year ending June 2022 and 2023.
However, governors argue the increases fall far short of what is needed to fully support devolved functions, many of which have already been unbundled, costed, and transferred to counties, estimated to be worth at least Sh150 billion.
Governor Abdullahi said the at least 200 functions transferred to county governments are not adequately factored into the equitable revenue sharing.
The equitable share is a critical lifeline for county governments, distributed using a formula that factors in population size, health services, agriculture, road infrastructure, and poverty levels.
During this year’s deliberations, the Council had proposed an allocation of Sh465 billion (later revised upwards), the Commission on Revenue Allocation (CRA) Sh417 billion, while the National Treasury proposed Sh405 billion.
Governor Abdullahi speaking on behalf of his colleagues, voiced frustration with the outcome of the Intergovernmental Budget and Economic Council, a forum bringing together national and county governments, the CRA, and the National Treasury.
“At the IBEC meeting, we deliberated and revised the figure capped at Sh536 billion, but the National Treasury’s earlier proposal of Sh405 billion has been retained. It’s disappointing,” Mr Abdullahi said.
'Lukewarm support'
The governors also criticised the Senate for what they termed as “lukewarm support” for counties, accusing the House of failing in its constitutional mandate to protect and defend the interests of county governments.
“The Senate has not stamped its authority in the DORA negotiations. We appear before the Finance and Budget Committee, but when things go wrong, they shift the blame to governors yet we don’t have a seat at the table during mediation,” he said.
He urged senators to take a firm stand during the mediation process and insist on the Sh465 billion proposal advanced by the CoG.
“Senators must reject any increment that falls below what was costed during the unbundling of devolved functions. Settling for less than Sh150 billion worth of transferred responsibilities is unacceptable,” he added.