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A Senate Committee has started considering a Bill that will provide a legal mechanism for the allocation of conditional grants between the national government and 47 county governments.

This is after Senators amended the Division of Revenue Bill, 2021, during debate on the Bill on Tuesday and removed the provision on all reference to conditional and unconditional grants amounting to Sh40 billion.

The draft Conditional Grants Bill, 2021, which will be introduced in the House when senators return from recess on May 10 provides for a framework for the management, control and accounting for both the conditional and unconditional grants.

The bill will provide for a legal mechanism to enable the transfer of Sh40 billion to respective County Revenue Funds (CTFs), withdrawal from CRFs by county governments and mechanisms of their oversight by the Senate.

“The bill should also provide a framework for the management, control and accounting for conditional and unconditional grants,” the report on the Division of Revenue tabled by Senate committee on Budget and Finance reads.

“The proposed nascent legal instrument will address the modalities of allocation, expenditure and reporting on conditional grants to county governments,” it says, adding that the bill will be within the purview of article 110 (4) of the Constitution.

The bill is in compliance with the ruling in the High Court Petition No 252 of 2016, where the court held that it cannot be permissible to provide for conditional grants in the Division of Revenue act and therefore it follows that cannot be proposed in Division of Revenue Bill.

The Division of Revenue Bill, 2021, had proposed to allocate counties Sh409.9 billion in the 2021/22 financial year.

The allocation comprised of Sh370 billion as equitable share and a total of Sh39.88 billion as conditional grants out of which Sh7.5 billion was from the national government and Sh32.3 billion as proceeds from loans and grants from development partners.

However, during the debate on Tuesday, senators upheld the judgement of the court in which Justice Wilfred Okwany had found that it is not permissible to provide for conditional grants in the Division of Revenue Bill.