County Equitable Share Revenue slashed by Ksh.20B as Mbadi seeks to amend Bill

National Treasury Cabinet Secretary John Mbadi on Monday said the government has no money and revenue collection has fallen short from projected Ksh.2.9 trillion to Ksh.2.6 trillion this year.

Senate committee on Finance and Budget insisted that counties should get Ksh.400 billion while the National Treasury defended the reduction to Ksh.380 billion since the country is facing fiscal challenges.

Mbadi had a difficult time explaining to the Senate Finance and Budget Committee why the government was keen on reducing the budget despite an agreement between members of the Senate and National Assembly.

Senate Chief Whip Boni Khalwale said the National government should cut the huge expenditure going to unconstitutional offices such as the office of the First Lady, office of the Spouse of the Deputy President and Prime Cabinet Secretary and doing away with advisors to senior government officials.

“We should not massage the egos of some people in government, let us stop funding this unconstitutional offices, why do we need all these advisors in government, the counties are already straining and it would be unfair to reduce their shareable revenue allocation,” said Khalwale.

Migori Senator Eddy Oketch asked Mbadi to explain loopholes causing fiscal constraints in the country, saying counties should get the full amount allocated.

Oketch said that there are several leakages in government where procurement officers were inflating figures leading to the government losing more than Ksh.300 billion annually and that should be addressed instead of reducing the county allocation amount arrived at following a mediation process.

The Migori Senator sought to know why the equalization fund was in arrears since 2014 with the figure having reached Ksh.52 billion asking when the government intends to honour the allocation which was to run for 20 years in efforts to ensure that the less privileged counties were at the same level with others.

“It is immoral to give counties less funds than they had been allocated since they are already struggling, the Cabinet Secretary should tell us why the government has not honoured the allocation for equalization fund to marginalized counties,” said Oketch. 

Senate and the Council of Governors had arrived at and that it would unfair to give a lesser amount than what they got before.

The Division of Revenue (Amendment) Bill, 2024 proposes to allocate County governments equitable share of Ksh.380 billion from the shareable revenue raised nationally, reflecting a reduction in the Division of Revenue Act, 2024.

Mbadi told the committee chaired by Mandera Senator Ali Roba that this was occasioned by the fact that the projected revenue raised nationally for the financial year 2024/25 dropped from Ksh. 2.9 trillion to Ksh. 2.6 trillion due to the revised revenue raising measures.

“However, the National Treasury has made further fiscal adjustments that have reduced the shortfall from Ksh. 346 billion to Ksh. 316.72 billion, the revised ordinary revenue for financial year 2024/25 is, therefore, projected at Sh 2.6 trillion, note that this happened during the finalization of the Supplementary Budget Estimates No. 1 for Financial Year 2024/25 which was after the submission of the Division of Revenue (Amendment) Bill, 2024,” said Mbadi.

The Cabinet Secretary said that in the revised fiscal framework for Financial year 2024/25, Equalisation Fund has an allocation of Ksh.8 billion, out of which Ksh.7.85 billion is the allocation for Financial year 2024/25 and Ksh.147.19 million will go towards payment of arrears as indicated in the proposed new Schedule.

Mbadi said that in order to bridge the financing gap of Ksh.316.72 billion as well as enable the National Government to provide resources towards critical expenditure areas, it is proposed that Ksh.2.2 trillion is allocated to the National Government, while Ksh.380.00 billion is allocated to County governments.

“The shortfall in the share of National Government revenue has been partly covered by adjustment of budgetary allocations to the Executive, the Legislature, the Judiciary and constitutional commissions in the Financial Year 2024/25,” said Mbadi.