Introduction: The Need for Equitable Revenue Sharing

Revenue sharing among counties is a cornerstone of Kenya’s devolution, ensuring that every region receives the resources needed for development and service delivery. As the Commission on Revenue Allocation (CRA) presents the Fourth Basis for Revenue Sharing (FY 2025/26 – 2029/30), it is crucial to assess whether the proposed formula truly upholds the principles of equity, fairness, and efficiency.

At Achievers Kenya, we commend the shift from a functional approach to expenditure proxies, aimed at making allocations more predictable. However, we believe critical adjustments are needed to ensure no county is left behind.

Key Concerns & Recommendations for a Fairer Formula

Population Weighting (42%) – A Balancing Act Needed

Concern: While population size is a major driver of resource needs, heavily populated counties receive disproportionate advantages, leaving sparsely populated, yet vast counties struggling with infrastructure and service delivery.

Solution: Introduce a balancing factor that considers both population density and geographical size to ensure fair distribution.

Equal Share Allocation (22%) – Rewarding Performance

Concern: A fixed equal share for all counties fails to address economic disparities and unique governance needs.

Solution: Modify this parameter to include a performance-based component, rewarding counties that demonstrate efficient service delivery and responsible financial management.

Geographic Size (9%) – Addressing the Cost of Service Delivery

Concern: Large counties, particularly in arid and semi-arid regions (ASALs), face higher costs for infrastructure and administration. A mere 9% allocation does not reflect this reality.

Solution: Increase this parameter to 12% to better support the unique challenges faced by expansive counties.

Poverty Parameter (14%) – Strengthening Social Equity

Concern: The current 14% allocation does not fully address deep-seated economic inequalities in high-poverty regions.

Solution: Increase the weight to 18% to provide more funding for education, healthcare, and social programs in the most vulnerable counties.

Income Distance (13%) – A More Holistic Economic Measure

Concern: The use of Gross County Product (GCP) alone does not accurately reflect a county’s financial needs and potential.

Solution: Incorporate unemployment rates, business activity levels, and local revenue collection capacity to create a more comprehensive economic disparity index.

Stabilization Factor – The Need for Flexibility

Concern: While ensuring that no county receives less than its previous allocation is important, a rigid stabilization factor may limit responsiveness to evolving economic and demographic shifts.

Solution: Introduce a mid-term review mechanism to allow adjustments based on changing county needs.

Conclusion: A Call for a More Inclusive Approach

The Fourth Basis for Revenue Sharing is a step forward, but without these adjustments, many counties may still struggle to meet essential service delivery demands. We urge the Senate and the Commission on Revenue Allocation to consider these proposed modifications before the formula is finalized.

At Achievers Kenya, we remain committed to advocating for a just and transparent revenue-sharing process that fosters inclusive development and equitable growth across all counties.