(Nairobi) – Kenya’s counties face a looming cash crisis in January 2025 if Parliament fails to pass key funding bills, with the Treasury relying on temporary measures to avert immediate shortages.
Counties in Kenya risk running out of funds in early 2025 unless Parliament resolves a legislative impasse over the Division of Revenue (Amendment) Bill, 2024, and the County Allocations Bill, 2024, by the end of December. The National Treasury has relied on temporary measures to provide partial funding but warns that further disbursements will be impossible without the bills’ passage.
Treasury Cabinet Secretary John Mbadi confirmed that the government would transfer 50% of counties’ approved allocation for the 2023-24 financial year by December, amounting to KSh 192.5 billion ($1.29 billion). This leaves a funding gap of KSh 187.5 billion ($1.26 billion), as counties are entitled to KSh 380 billion ($2.55 billion) in equitable share transfers for the 2024-25 fiscal year.
| Allocation Period | Amount (KSh) | Amount (USD) |
|---|---|---|
| 50% Backstop (2023-24 Allocation) | 192.5 billion | 1.29 billion |
| Funding Gap | 187.5 billion | 1.26 billion |
| Total Entitlement (2024-25) | 380 billion | 2.55 billion |
So far, the Treasury has transferred KSh 127.1 billion ($854 million) to counties, following legal guidance from the Attorney General allowing temporary allocations outside the usual revenue-sharing framework. Additionally, KSh 30.8 billion ($207 million) has been disbursed as arrears for the previous financial year.
The Attorney General advised the Treasury to allocate up to 50% of the previous financial year’s approved funds to county governments as a temporary solution, enabling immediate disbursements while awaiting legislative action. Treasury officials have opted not to pursue legislative amendments to formalize the guidance, relying instead on existing mechanisms.
Mbadi highlighted the urgency of passing the pending bills to prevent a funding stalemate in the new year. “We still have about KSh 60 billion ($403 million) to transfer this month and next to meet the 50% threshold. After that, we cannot disburse any additional funds unless the bills are enacted,” he said.
The delay stems partly from the withdrawal of the Finance Bill, 2024, which forced a reevaluation of projected county transfers. This disruption has added pressure on Parliament to finalize the revenue-sharing bills before the end of December.
The Treasury’s stop-gap funding measures have temporarily eased cash flow challenges in the counties, but officials warn that the situation remains precarious without the legal framework for continued disbursements.