Leaders from counties with vast landmasses but sparse population decry the current revenue sharing formula that is largely pegged on population, popularly known as one-man, one-vote, one-shilling formula.

Since the onset of devolution in 2013, approximately Sh. 3.62 trillion has been sent to the 47 counties with the lion’s share of about Sh.135 billion having gone to Nairobi county as counties including Elgeyo Marakwet, Taita Taveta and Lamu receive the least share of Sh. 39 billion, Sh. 48 billion and Sh. 18 billion respectively since devolution started, a situation that has continuously hinder development in these counties in the 10 years of devolution.

This has forced leaders from the six counties lead by their governors to come out openly pushing for the one-man, one-coin, one-kilometer formula that puts more weight on the landmass.

The leaders have raised concerns about the inadequate resources they receive compared to the vast land areas of some of the counties stating that it makes provision of security, road infrastructure, health services and other basic services costly.

The delays in fund transfers from the treasury to the counties have also been blamed for underdevelopment and low absorption rates leading to pending bills that hinder co-funding of donor projects.

This comes even as the Commission on Revenue Allocation (CRA) is engaging experts and stakeholders in developing the fourth revenue-sharing formula to inform the next basis for equitable revenue sharing among devolved units.

The new framework, expected to be approved by the Senate by end of the year, will dictate revenue sharing among counties for the financial year 2025/26 to 2029/30.

This development occurs amidst ongoing controversy surrounding Kenya’s Finance Bill 2024 that has seen widespread opposition to its numerous proposed tax measures, igniting protests nationwide, with both opposition and ruling party members expressing discontent as other leaders amplify debate on the appropriate resource allocation criteria for devolved units.

Recently, Deputy President Rigathi Gachagua backed by opposition leader Raila Odinga sparked controversy by advocating for a revenue-sharing formula commonly referred to as “one-man, one-vote, one-shilling,” which some of the leaders especially from the less-populous counties are opposing.
In the midst of the debate, it has been established that some counties including Taita Taveta, Elgeyo Marakwet and Lamu, are grappling with revenue allocation and disbursement challenges.

The funds that we receive from the national government, to be sincere, depending on the size of this county, is very little money because about 70% of wildlife conflict in Kenya are in Taita Taveta county. This means, children living near the parks cannot go to schools over 5 kilometers. We need to construct ECDEs closer to them. We need hospitals and other infrastructure but the allocation we get from the national government is not enough

said Mwadime

The governor suggests that all the 47 counties should receive equal revenue allocation of Sh. 7 billion before population factor can be factored in. “In this country if we want a win-win situation, all the 47 counties should have the same amount of revenue allocation, whether Sh. 7 billion or Sh. 6.5 billion. To me, it should be Sh. 7 billion though most of the leaders have stick to Sh. 6.5 billion. Then we can now come back and look at factors like population. Where people are many, they receive more based on the population,” he said.

“If you look at the transition report 2012/13, it suggested that we employ 4,200 workers. Currently, we have employed 3,300 workers but already the wage bill is too high. This means that calculations were not well done based on the shareable revenue we receive,” he added.

The county senator Jones Mwaruma on the other hand stated that in order for citizens to receive quality services, counties should get a shareable allocation of Sh. 415 billion.

“We’ve said, counties must get Sh. 415 billion to be able to provide good health services, build roads and ECDE centers, as well as obtaining of agricultural inputs,” said Mwaruma.

Warning the Deputy President from advocating for one-man, one-vote, one-shilling revenue sharing formula, Mwaruma added that, “2020, we had a problem with the regions that have many people like Central Kenya, Rift Valley, Nyanza and Western. The revenue sharing formula affected counties such as Taita Taveta and had to lose Sh. 400 million. The same process that risks Taita Taveta to lose funds has begun today and we will vote in 2025.”

Dawson Katuu Mzenge, the County Executive Committee Member (CECM) for Finance and Economic Planning in Taita Taveta, the county receives around Sh. 5.1 billion from the exchequer annually.

Additionally, donor funding contributes about Sh. 1.5 billion with the own source revenue amounting to approximately Sh. 400 million.

Despite these funds, the county relies heavily on donor contributions for development projects due to its limited internal revenue.

On revenue allocation and absorption rates, Katuu disclosed that delays in the disbursement of funds from the national government have significantly slowed down development projects.

He stated that by the third quarter of the financial year, Taita Taveta’s absorption rate was only 7%. However, after receiving its revenue share from development partners in the 10th and 11th months, the absorption rate increased to 26%.

Katuu stressed that the current revenue allocation formula is inadequate, advocating for a revised model that better supports counties with smaller allocations.

He addressed the issue of pending bills as a major challenge facing counties, stating that Taita Taveta currently has about Sh. 1.4 billion in pending bills. For the current financial year, the county has allocated Sh. 220 million to settle these debts which are expected to be cleared in the subsequent years.

Katuu noted that coastal counties, including Taita Taveta, have proposed a new formula to ensure more equitable revenue shares. “All counties have equal needs, and if a county receives little revenue, it becomes difficult to facilitate its daily needs,” he explained.

He further suggested that all counties should receive a basic share of Sh. 7 billion to sustain themselves. The regional block has engaged the Commission on Revenue Allocation (CRA) and senators, urging them to consider the county’s proposals.

According to a CRA report through the World Bank, Taita Taveta County has the potential to raise Sh. 1.2 billion in a financial year.

However, valuation roles and rates have been a challenge since 2006, preventing the county from achieving its revenue targets.

Under the current regime, own-source revenue has increased significantly. Last year, it rose by over Sh. 100 million to Sh. 424 million, and as of the 11th month of this financial year, it stands at Sh. 428 million.
To improve revenue collection, the county has established a revenue management board and a monitoring unit to conduct baseline surveys of all revenue streams and collection points. Additionally, an integrated revenue management system has been installed to facilitate cashless transactions.
The county assembly has also passed another bill to collect revenue from Tsavo National Park in order to increase its own-source revenue.

Since the start of devolution in 2013, Taita Taveta has received a total of Sh. 41.3 billion from the exchequer, Sh. 1.6 billion from donors, and Sh. 2.9 billion from other government entities, amounting to Sh. 48.9 billion used for development projects and other needs.

Taita Taveta County assembly has passed a bill to push CRA and other institutions like the senate to give Sh. 10 billion as minimum share to all counties.

On the other hand, Elgeyo Marakwet county which receives a shareable revenue allocation of Sh. 6 billion from the national government supplemented by the significant growth in locally generated revenue have devised innovative measures for resource allocation and development amidst challenges in the revenue allocation.

According to Elgeyo Marakwet County Speaker, Hon. Kiplagat Sabulei, despite being among the least funded counties alongside Tharaka Nithi, Taita Taveta, and Lamu, Elgeyo Marakwet has turned challenges into opportunities for innovation in resource management.

“Elgeyo Marakwet county because of its space, because of the numbers as the population, receive quite a very little allocation from the national government. If you compare with other counties, we are struggling with Tharaka Nithi and Lamu counties as being the least funded counties.

This has given us of course a challenge but we have also had to be very creative and very innovative to ensure that with the little resources that we receive, we can still afford better services to our people each financial year,” said Sabulei.

Sabulei said that Elgeyo Marakwet County receives a shareable revenue allocation of Sh. 6 billion from the national government. He added that the county’s own source revenue has seen a tremendous growth in the past five years.

“The county has seen growth in its own source revenue. Five years ago, the revenue was at Sh. 90 million, increasing gradually to Sh. 100 million, 110 million with current projection at Sh. 200 million. Last financial year, the county collected Sh. 170 million from its own source revenue,” said Sabulei.

He stated that the Local Equitable Development Act, enacted in 2015, ensures fair distribution of resources across the 20 wards.

He stated that through Ward Development Fund Committees and project committees, residents actively participate in prioritizing projects with each ward typically receiving over Sh. 50 million annually, a total of around Sh. 1 billion for development.

Conditional grants from donors and development partners such as FLOCKA Initiative for climate action further bolsters the county’s budget.

However, Hon. Sabulei emphasizes the need for a reconsideration of the national allocation formulas, advocating for a fairer distribution of resources to account for the equal administrative and developmental responsibilities of all counties.

According to some of the residents in Elgeyo Marakwet led by Kiaro Wilfred, an activist in the county, residents are in darkness on matters of budget.

Wilfred disclosed that the residents were not involved in the budget making process through public participation by the government. “In Elgeyo Marakwet, we were not given a chance to give our opinion in the budget making process like others. Why did the budget committee come to Elgeyo Marakwet? That is our biggest question,” Wilfred said.

He noted that the county is poor in terms of the revenue the county receives from the national government.

“At the moment, we only have 10% on projects. The rest of the money goes to salaries and medicine in hospitals, nothing more,” he said.

He added that leaders in the county struggles with finance issues disclosing that there are no flagship projects taking place in the county. “There is a lot of struggles amongst our leaders and that is why there is no any flagship project in the county because there are no enough funds to facilitate the projects,” he added.

The residents lead by Samson Kiptoo, Patrick Chemolo, and Wilfred calls on the CRA to review the initial formula to favor the underdeveloped counties so that development can be achieved for all citizens to feel as part of others in the country.

According to him, the majority of these funds, Sh. 3.8 billion, were allocated to recurrent expenditures, including staff salaries and operations, leaving about Sh. 1 billion for development projects under the Equitable Development Act, which distributes funds to various wards for local projects.

Kipkemboi said that a significant portion of the development budget was allocated to the establishment of an industrial park and improvements to the healthcare system.

He further detailed that Sh. 250 million was earmarked for the industrial park, with additional funding expected from the national government. The healthcare sector saw an allocation increase to Sh. 150 million from Sh. 90 million the previous year, primarily for hospital improvements and procurement of essential equipment.

He also highlighted the county’s efforts in boosting local revenue collection, which rose from Sh. 220 million to Sh. 300 million thus reflecting enhanced fiscal management.

Despite these initiatives, Kipkemboi expressed concerns over the low absorption rate of development funds and the challenges posed by delayed disbursements from the national government.

He emphasized the need for prompt project implementation to avoid rollovers and stressed on the importance of increasing the equitable share to at least Sh. 6 billion to better meet the county’s needs.

The major problem is what we get from the national government equitable development share which is very low because we get only Sh. 4.8 billion. That 4.8 is not actually adequate to serve maybe development projects. So I would like to request maybe the national government that in the coming financial years, they need to increase maybe even to around Sh. 6 billion. With Sh. 6 billion, maybe we will be able to manage

said Kipkemboi

Despite the county receiving peanuts, Kipkemboi noted the county’s commitment to transparency and accountability, citing the absence of pending bills as a positive outcome of their fiscal strategies.

“we are one of the counties which does not have pending bills and I think it’s a good thing. The only challenge we have which I may mention is on implementation of projects. We have very low absorption rate on development.

On the other hand, Lamu county receives the least amount of the shareable revenue from the national government ever since devolution started.

With a population estimate of about 150, 000 people based on the 2019 census and a county comprising of mainly islands, it faces bigger challenges to work for the citizens.

According to governor Issa Timamy, Lamu comprises of Islands which he said, carrying out development is very expensive. He says that the government allocates funds based on population without considering such cases which affects the county’s development plans due to shortage of funds.

Because of the geographical location and being a county of Islands, doing development becomes very expensive. We are therefore struggling because our population is small but we are not getting any extra funds based on the expenses we use to work for the citizens

said Timamy

Timamy disclosed that since devolution began, the county has never crossed the Sh. 3 billion mark in sharable revenue from the national government.

In 2019, Lamu county received Sh. 2.3 billion from the national government. In 2020, the county received Sh. 2.8 billion while in 2021 it received Sh. 2.8 billion.

In 2022 however, the county crossed the Sh. 3 billion mark by receiving Sh. 3.1 billion.

In the current budget, Lamu is set to receive a shareable revenue worth Sh. 3.3 billion.

Despite receiving the lowest amount of the shareable revenue, and being a county with 1,676 workers, the governor stated that it has achieved about 60% on development and that the county has not crossed the maximum wage bill of 30% of their shareable revenue.

The governor disclosed that the county, despite being a tourist destination county, it has no industries and with limited parking spaces which affects revenue collection.

However, in 2023, the county’s own source revenue was Sh. 155 million. The governor noted that in the coming financial year, the county is projecting to collect about Sh. 200 million own source revenue.

Further, despite the county receiving the lowest share of the national cake, the governor disclosed that the county is experiencing delays in disbursement of funds from the national government stating that this affects their development pan.

“This year, we are on the month of June but up to now, we have not received our share from the national government. The last time we received the funds was in March. April, May and now June, the whole quarter, we haven’t received the funds. This therefore hinders us from carrying out development projects and using this funds to do development for our citizens,” explained the governor.

According to Timamy, cumulatively, since the financial year 2017/18 to 2022/23, Lamu county has received a total of about Sh. 18 billion from the exchequer.

He emphasized the need for a revised allocation formula to account for unique challenges such as high development costs for island regions.

At the same time, a representative from the International Budget Partnership Kenya (IBP Kenya) emphasized progress in public finance management and transparency. He stated that the budget transparency index has improved to 56%, adding that IBP Kenya aims to have budget facilitators in all 47 counties by the end of the year. The organization continues to push for greater transparency and public involvement in financial matters.

On their part, CRA notes that some counties have not maximized their own-source revenue. Additionally, the recent county budget transparency survey by BAJETI HUB indicated that 38 counties have improved on the management of their resources.

However, for the year 2024, the CRA report recommends increasing county equitable share allocations from Sh. 370 billion to Sh. 407 billion.

Meanwhile, a mediation committee of the Senate and the National Assembly has agreed to have the 47 counties allocated Sh. 400.1 billion in the 2024/25 financial year, a deal that gives devolved units’ additional funds amounting to Sh. 15 billion compared to the current fiscal period.

In the fiscal year ending June 2024, counties were allocated Sh385 billion.

The shareable revenue for the next financial year is the highest ever since the advent of devolution, an agreement that was reached following a misunderstanding between the Senate and the National Assembly after they proposed different amounts.

The Senate has been advocating for counties to receive Sh. 415 billion whereas the National Assembly proposed an allocation of Sh. 391 billion for counties.

According to the controller of budget report, for the first 9 months of financial year 2024, the 47 counties approved a budget of Sh. 564.5 billion, with 36% allocated for development expenditure as 64% set for recurrent expenditure.

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