What you need to know:
- It will take effect next year and run through to the 2025/26 FY.
- The Senate developed a revenue allocation ratio, which is pegged at Sh316.5 billion, and will be first used to share the Sh370 billion that the counties will receive in the next financial year.
The controversial third basis revenue-sharing formula has finally come into effect after the Senate received it yesterday from the National Assembly, which approved it last week without amendments.
The formula, which was a basis of a paralysing debate in the Senate, will take effect next year and run through to the 2025/26 financial year.
Senate Deputy Speaker Margaret Kamar communicated to the House the National Assembly’s decision and added that the formula will be in operation until a new one is adopted.
The formula has eight parameters – population index whose weight is placed at 18 per cent, Health (17 per cent), Agriculture (10 per cent), urban services (5 per cent), Roads (8 per cent), Poverty (14 per cent) Basic share (20 percent) and Land area (8 per cent).
It will use data from the 2019 population census and the 2015/16 Kenya Integrated Household Budget Survey poverty index.
The Senate developed a revenue allocation ratio, which is pegged at Sh316.5 billion, and will be first used to share the Sh370 billion that the counties will receive in the next financial year.
The ratio is the Sh158 billion, which translates to half of the Sh316.5 billion, the amount the counties have received in the 2019/20 and 2020/21 financial years.
The ratio has been ring-fenced to ensure that starting next year each county will be guaranteed at least half of the figure it received in the 2019/20 and 200/21 financial years.
The balance of Sh212 billion will then be subjected to the eight parameters in a delicate balancing act that senators said is meant to ensure that no county loses out on the allocation each one of them received this financial year.
With the new formula, Nairobi has emerged the biggest gainer with an additional Sh3.3 billion and its allocation will shoot from Sh15.9 billion to Sh19.2.
Nakuru will gain Sh2.5 billion, Kiambu Sh2.2 billion, Turkana Sh2 billion, Kakamega Sh1.9 billion, Bungoma Sh1.7 billion, Uasin Gishu Sh.6 billion, Nandi Sh1.5 billion, Kitui Sh1.5 billion and Kajiado Sh1.4 billion.
Those gaining but on the bottom of the log are Tharaka Nithi (Sh289 million), Nyamira (Sh324 million), Vihiga (Sh414 million), Isiolo (Sh469 million), Kwale Sh479 million and Marsabit Sh503 million.
The Senate adopted the formula on September 17, and it was submitted to the National Assembly for concurrence.
The National Assembly agreed with the Senate and adopted the formula on September 24, before it was returned to the Senate yesterday.