NAIROBI, Kenya – President William Ruto’s administration is seeking to overhaul how counties access additional allocations from the national government, in a move likely to reshape fiscal relations between the two levels of government.
A new bill before Parliament proposes the scrapping of a legal requirement that counties enter into intergovernmental agreements with the National Treasury before accessing conditional grants.
The change, backed by the National Assembly’s Majority Leader Kimani Ichung’wah, aims to eliminate what he terms “duplicated bureaucracy” that has slowed down development at the county level.
At the heart of the proposal is the Public Finance Management (Amendment) Bill, 2025, which seeks to repeal Sections 191A to 191E of the Public Finance Management Act.
These sections currently require counties to negotiate formal agreements, secure county assembly approval, and involve the public before funds earmarked for specific functions—such as health, agriculture, or infrastructure—can be released.
The law also mandates publication of the agreements in the Kenya Gazette, as well as scrutiny by the Senate and the Controller of Budget.
“These steps have led to unnecessary delays and inefficiencies in service delivery,” Ichung’wah, who is also the Kikuyu MP, argues in the bill’s memorandum. “The goal is to streamline access and reduce bottlenecks in managing additional allocations.”
County governments have long decried the red tape surrounding conditional grants, blaming it for stalled projects—including construction of county headquarters in at least five devolved units.
Contractors have in some cases abandoned sites, citing payment uncertainties triggered by bureaucratic hold-ups and budget cuts.
The funds in question also include money for flagship national programmes being implemented at the county level—such as aggregation and industrial parks and stipends for community health promoters.
Last month, Parliament approved an additional Sh50 billion to counties, but the National Assembly’s Budget Committee cautioned that the prevailing process threatens the sustainability of such projects.
“This financial uncertainty could undermine critical sectors, especially those dependent on external funding,” the committee noted.
If passed, the bill would allow counties to bypass Treasury-led agreements and receive conditional grants directly—raising fresh questions about accountability safeguards.
The current legal framework was designed to ensure that earmarked funds are used as intended, with built-in checks to prevent mismanagement or diversion.
Governors, who have been vocal in demanding more autonomy over devolved funds, have welcomed the push for less centralised control.
Through the Council of Governors (CoG), they have raised concerns over persistent delays in disbursements and the national government’s grip on funds tied to devolved functions.
As of May 2025, counties claimed to be owed Sh75 billion in pending disbursements, some of which had already been signed into law.
The CoG has demanded urgent consultations with Treasury officials over the delays.
But not everyone is on board. Lawmakers wary of corruption risks have insisted that removing Treasury oversight could open the door to misuse of funds.
The debate comes amid long-standing fiscal tensions between the national and county governments, particularly over the control and disbursement of donor funds and conditional grants.
