County Governments Yet to Receive Half of Equitable Revenue Share, Facing Cash Crunch

As of February 29, 2024, county governments in Kenya are facing a significant financial challenge as they are yet to receive nearly half of their equitable revenue share from the Treasury. The data published by the Treasury indicates that only Sh206.06 billion out of the allocated Sh385.424 billion has been released to the 47 counties. This delay in disbursements is exacerbating a cash crunch at the devolved units, making it difficult for them to effectively carry out their functions and provide necessary services to the citizens.

According to Article 202 of the Constitution, revenue generated nationally is supposed to be shared fairly between national and county governments. In addition to the equitable revenue share, county governments may also receive extra allocations from the national government, either with conditions attached or unconditionally. The County Governments Additional Allocations Act, 2024, outlines additional funds amounting to Sh46.362 billion for the financial year 2023/24, which will be distributed through various ministries, departments, and agencies. However, the delayed release of these funds is creating uncertainty and challenges for county governments in planning and executing their budgets.

The Treasury's cash crunch, attributed to lower-than-expected revenue collections, is further straining the situation. With the Kenya Revenue Authority (KRA) having collected only 55% of its Sh2.495 trillion target for the financial year, there is immense pressure to meet the remaining target by collecting Sh1.121 trillion between now and June. This situation not only affects the disbursements to county governments but also raises concerns about the overall financial stability of the national government. Senators have voiced their worries about the impact of these delays on the provision of services at the county level, indicating a potential risk of service paralysis if the situation persists.