The government is set to increase county allocations by Sh17.6 billion in the 2025/26 financial year, bringing the total equitable revenue share to Sh405.06 billion, a 4.5 per cent rise from the current Sh387.4 billion.

The National Treasury projects that total allocations will rise from Sh2.5 trillion to Sh2.83 trillion, with Sh2.41 trillion directed to the national government and Sh10.6 billion earmarked for the Equalization Fund.

Despite this 10.1 per cent increase, the Treasury warns that revenue growth may decline further due to unmet targets.

It also raised issues with a underperformance in ordinary revenue which has left the national government shouldering budget shortfalls, while counties continue to receive their full allocations regardless of revenue gaps.

“The national government continues to bear the shortfalls in revenue each financial year, whereas county governments receive their full allocation despite budget cuts at the national level,” a Treasury statement noted.

The national government’s share of total revenue stands at 85.3 per cent, while counties receive 14.3 per cent. Over the past three fiscal years, county allocations have averaged slightly above 15 per cent. The highest adjustment was in the 2021/22 financial year, with a Sh53.5 billion increase, followed by the proposed Sh17.6 billion increment for 2025/26.

The growing county allocation, now projected at 25 per cent of shareable revenue, has raised concerns, as it surpasses the 15 per cent constitutional threshold. Treasury Cabinet Secretary John Mbadi acknowledges the crucial role of counties in service delivery but argues that inefficiencies and corruption hinder the intended benefits of devolution.

Mbadi pointed to the persistent issue of ghost workers, which has inflated county payrolls and drained resources meant for public services. “If we had 14 counties, with resources directly devolved to the grassroots, service delivery would be more effective. Instead, you see convoys of campaign vehicles packed with youths—half of them are on county payrolls, despite past administrations leaving behind bloated workforces,” he remarked during a meeting with the National Assembly Finance Committee.

Due to these inefficiencies, Mbadi is pushing for the scrapping of the Equalization Fund, arguing that funds intended for marginalized areas are being misused.

“The fund had a sunset clause for a reason—it was meant to uplift disadvantaged counties. Now, it has become a joke, with funds spread thinly over small projects that have little impact. It is no longer serving its purpose,” he stated.

Despite being closer to the people and crucial to economic development, county governments often fall short due to misplaced priorities and resource mismanagement. Ghost workers and unproductive employees continue to weigh down operations, further complicating service delivery.

“We have individuals in the system who are aggressive about securing jobs but not about working. That’s why you visit government offices and find coats hanging on chairs while employees disappear for hours. When the clock hits five, they rush out without having achieved much,” Mbadi noted.He also called for increased capitalization of public financial institutions like the Kenya Industrial Estates (KIE) and Kenya Development Corporation (KDC) to provide long-term, single-digit interest loans, acknowledging the capital-intensive nature of manufacturing.