Government plans to add Ksh67b to counties

The government plans to allocate Ksh67 billion to county governments in the 2025/26 fiscal year to support their functions, despite concerns about their spending habits.
This allocation will be financed by Ksh12.89 billion from the National Government’s revenue share and Ksh55.07 billion from loans and grants from development partners.
“In the 2025 Budget Policy Statement, the National Treasury proposes to allocate Sh 67.97 billion as additional allocations (conditional and unconditional) to County Governments,” reads the proposal in part.
The Constitution allows for additional funds to be allocated to counties, either conditionally or unconditionally, to enable them to fulfill their responsibilities. The funds will be used for various purposes, including the payment of overdue salaries for county health officials and health promoters, the construction of county headquarters, and the County Aggregation and Industrial Parks program (CAIPs) which is budgeted at Sh9.9 billion. The remainder will go toward food programmes, climate-related projects, and development initiatives funded by global partners like the World Bank.
National budget
If approved, the total allocation to counties would rise to Sh473.03 billion from the national budget estimated at Sh4.4 trillion. This increase reflects a consistent rise in county funding over the years. The additional allocations, though mostly conditional, aim to accelerate government priorities and fulfill international obligations, which reduces the National Government’s share of national revenue.
While the additional funds are expected to enhance county performance, concerns have been raised regarding the misuse of funds. Reports from the Controller of Budget show that counties have been wasting resources or spending on inappropriate priorities, leading to stalled development projects and poor service delivery.
Moreover, experts say that the pending bills for counties, currently at Sh91.17 billion, could increase further.
Economics professor Samuel Nyandemo says poor expenditure management is the biggest obstacle to development, stressing the need for careful allocation of funds.
“The focus should be on where the government is directing the funds. Are they directed towards the right priorities? If this factor can be well addressed, then the country can do well even without the need for external loans,” he said.
Key stakeholders, including the Kenya Private Sector Alliance (KEPSA), have called for the establishment of a technical team at the National Treasury to monitor the spending of funds by counties and government ministries.