President William Ruto has assented the Division of Revenue (Amendment) Bill (National Assembly Bill No. 38 of 2024).

The Division of Revenue (Amendment) Bill now Act seeks to address the country’s revenue shortfall and ensuring county governments receive their fair share of funding for the financial year 2024/2025.

The law, sponsored by the Chairperson of the Budget and Appropriations Committee, Hon. Ndindi Nyoro, MP, was first tabled in the National Assembly on July 24, 2024, and passed without amendments on August 7, 2024. Following Senate amendments on October 3, 2024, a mediation process under Articles 112 and 113 of the Constitution reconciled the differences between the two Houses. Both Houses ultimately approved the mediated version of the Bill by late November 2024.

The newly signed law comes against the backdrop of a Kshs. 346 billion shortfall in national revenue, attributed to the rejection of the Finance Bill, 2024. This shortfall necessitated budgetary adjustments, including reductions in national government spending by Kshs. 145 billion, split between development (Kshs. 105 billion) and recurrent (Kshs. 40 billion) expenditures.

The Division of Revenue (Amendment) Act introduces an equitable revenue share of Kshs. 387.425 billion for county governments, up from the initial Kshs. 380 billion proposed. This allocation represents 24.67% surpassing the constitutional minimum threshold of 15% under Article 203(2) of the Constitution of Kenya.

County governments will now receive Kshs. 2 billion more than the Kshs. 385 billion allocated in the 2023/2024 financial year. Additionally, the Equalization Fund is allocated Kshs. 8 billion, including Kshs. 147.185 million for unreleased balances.

Once enacted, the legislation will pave the way for the conclusion of the President’s reservation on the County Allocation of Revenue Bill, 2024, which is an important legislative instrument for unlocking the much-required resources for County Governments.

The National Assembly and the Senate are also presently undertaking mediation on the County Governments Additional Allocations Bill, 2024 in seeking to provide additional allocations to County governments.