Nairobi Gets Lion’s Share of Sh428 Billion County Allocation Funds

Nairobi secured the lion’s share of Sh22.1 billion under the newly enacted County Allocation of Revenue Act, 2026.

The capital leads the pack among the country’s 47 counties after President William Ruto signed the law, unlocking a record Sh428 billion for devolved units. Nakuru follows in second place with Sh14.9 billion, while Turkana takes Sh14.3 billion, Kakamega Sh14.1 billion, and Kiambu Sh13.5 billion.

President Ruto assented to the County Allocation of Revenue Bill, 2026, at State House, Nairobi, on Monday, marking the 11th presidential assent of 2026. This move gives legal effect to the distribution of county governments’ share of nationally raised revenue under the Division of Revenue Act, 2026.

The Sh428 billion total marks a Sh13 billion increase from the Sh415 billion allocated to counties in the previous financial year. This sum represents 20.9 percent of the most recent audited national revenue for the 2022/23 financial year, comfortably exceeding the constitutional minimum threshold of 15 percent.

President Ruto noted that the formula cushions devolution by giving counties a stable baseline allocation while distributing funds fairly based on equal share, population, poverty levels, and geographical size.

“The formula provides a stable baseline allocation while ensuring a fair distribution based on equal share, population, poverty level, and geographical size. The enhanced allocation will strengthen devolution by equipping county governments with the resources they need to fulfill their constitutional mandate and deliver quality services in line with their budgets and development priorities,” he said.

The new law clearly outlines how both the national and county governments must manage these allocated funds.

Sponsored by Senate Standing Committee on Finance and Budget Chairperson Ali Roba, the Bill moved quickly through parliament. The Senate passed the legislation with amendments on June 17, and the National Assembly approved it without further changes on June 25 before forwarding it to the President in line with Article 110(5) of the Constitution.

The legislation implements Parliament’s fourth revenue-sharing formula, which lawmakers approved in June 2025 under Article 217(7) of the Constitution. To protect devolved units from sudden funding drops, the framework distributes Sh387.43 billion through a Baseline Allocation tied directly to what counties received in the 2024/25 financial year.

The framework handles the remaining funds through targeted streams:

• Affirmative Action: Sh4.46 billion goes to 12 historically marginalized counties to help bridge development gaps.
• Weighted Distribution: The remaining Sh36.1 billion splits among counties using a formula that factors in population, poverty levels, income distance, and geographical size to direct cash where development needs run highest.

Looking closely at the weighted formula, 35 percent splits equally among all counties. Population dictates 45 percent of the funds, poverty levels determine 12 percent, and geographical size guides the final 8 percent, with land area capped at 10 percent.

Government officials noted that this approach shields counties from major budget disruptions while pushing more resources to areas facing heavy population pressure and widespread poverty.

To keep spending in check, the law introduces strict measures to improve financial management and accountability. It slaps budget ceilings on recurrent expenditure for county executives and assemblies, a move designed to contain rising wage bills and free up cash for development projects.

The legislation also rewrites the rules governing functions transferred between county and national governments under Article 187 of the Constitution. County executives must now work jointly with the national government to calculate the exact cost of any transferred functions. To avoid service disruptions, county assemblies must continue setting aside money for these transferred functions at a rate matching or exceeding the previous financial year’s allocation.

Furthermore, national government entities executing transferred county functions must submit quarterly progress and financial reports to both the Senate and the respective county assemblies.

The law places new demands on top financial officials as well. Treasury Cabinet Secretary John Mbadi must publish a schedule detailing transfers made to counties from the Consolidated Fund, alongside monthly disbursement reports. At the local level, county treasuries must record all incoming transfers and include them in quarterly and annual financial reports, keeping in line with the Public Finance Management Act, 2012.

The government expects this new framework to provide counties with highly predictable financing to support development programs that improve livelihoods, unlock economic opportunities, and expand access to public services. The rules will also tighten transparency, improve oversight of county funds, and promote prudent spending across devolved units.

This county allocation follows the earlier enactment of the Division of Revenue Act, 2026, which split a national revenue base of Sh2.46 trillion between the national and county governments alongside allocations for the equalization fund.

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