Counties are set to receive KES415 billion as their equitable share of government national revenue for the FY2025/26, reflecting an increase of KES27.6 billion from the previous year. 

The KES415 billion allocation is aligned with the Fourth-generation revenue sharing formula, which required at least that amount to cushion 12 counties through an affirmative allocation of KES4.46 billion shared equally.

This move follows the signing into law the Division of Revenue Bill 2025 by President William Ruto yesterday, officially paving the way for the distribution of KES2.835 trillion in nationally raised revenue between the National and County Governments for the current fiscal year.

The Equalisation Fund has also been allocated KES9.6 billion, bringing additional support to 34 marginalised counties. The fund is directed at boosting access to roads, water, health, and energy budget in historically underdeveloped regions, in line with Article 204 of the 2010 Constitution.

Meanwhile the National Government has now been allocated KES2.332 trillion. The overall revenue projection was also revised to KES2.756 trillion, reflecting economic conditions and past revenue performance.

The law, which sets out the equitable allocation of nationally raised revenue between the two levels of government for the current financial year, was sponsored by Uasin Gishu MP and Liaison Committee Chairperson Gladys Boss. 

First introduced in the National Assembly on March 14 2025, the Bill underwent a full legislative process that included passage in both Houses, amendments by the Senate, rejection by the National Assembly, and final approval through a Mediation Committee.

At the Senate, the Bill was revised to update the revenue base from FY 2020/21 to FY 2021/22 and to raise county allocations from KES405.1 billion to KES465 billion on May 28 but the National Assembly rejected these changes. This necessitated a mediation.

On June 18, the Mediation Committee settled on a compromise version that was adopted by the National Assembly on June 19, 2025 and by the Senate on June 30, 2025.

With the presidential assent, the Bill is now law and becomes the foundation for financial operations at both levels of government in the new fiscal year. These funds will support local development priorities in line with the Constitution.

Notably, the new law includes a safeguard under Clause 5 that protects county budgets from potential national revenue shortfalls. In such cases, the National Government will bear the deficit, ensuring uninterrupted county services and planning.

Thus the move paves the way for smoother budget planning and a boost in service delivery, especially at the grassroots level, with counties now expected to proceed with planning and budgeting, guided by the confirmed allocations. 

The legislation also seeks to strengthen Kenya’s fiscal framework by providing a timely and legally binding guide on how national revenues will be split, reducing conflict and uncertainty between the two levels of government.

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