Rapidly expanding towns could get a stronger financial lifeline if a proposal by governors to set aside money for urban areas under the national revenue-sharing system is adopted.
The governors say municipalities are handling more responsibilities as towns expand, yet they remain dependent on county governments for funding to provide basic services and build the infrastructure needed to support growing populations.
Makueni Governor Mutula Kilonzo Jnr, who led the appeal, told the Senate Devolution and Intergovernmental Relations Committee that urban authorities should be given a clear place in the Division of Revenue Bill.
He said municipalities should not continue fighting for resources from the same limited pool allocated to county governments when they are expected to provide services that require large investments.
“If we can find in the Division of Revenue Bill a specific place where we can house municipalities, we ended up quarrelling for resources from a very small basket, and then the municipalities are not thriving,” Kilonzo said.
He proposed a separate funding kitty for urban areas, saying municipalities would be better placed to improve infrastructure and services if they had money that was set aside specifically for their needs.
“The Senate would find it reasonable to argue about urban areas and resourcing to urban areas as part of our revenue-sharing universe. You have a specific kitty reinforced for urban areas because it is a way to go,” he said.
The governor said giving municipalities reliable funding would also create a path towards financial independence.
He said urban authorities could gradually support their own operations if they were allowed to keep a portion of the money they collect instead of sending all the revenue to county headquarters.
According to Kilonzo, municipalities are responsible for services that require regular and predictable financing, including roads, drainage, street lighting, markets, water, sewerage and solid waste management.
His remarks came when the Senate committee visited Makueni to assess the implementation of the Urban Areas and Cities Act and examine how municipalities are operating.
The committee recognised Makueni for the progress it has made in establishing and running its municipalities, noting that implementation of the law remains a challenge in many counties.
Kilonzo said the county currently has three municipalities: Wote, Emali-Sultan Hamud and Mbooni-Kee.
He said Wote and Emali-Sultan Hamud have fully established boards and municipal managers, while Mbooni-Kee is still in its early stages.
The new municipality, which is less than six months old, has an acting manager and seven employees as the county continues to build its management structure.
Kilonzo also pointed to the performance of Emali-Sultan Hamud as evidence that municipalities can improve revenue collection when they are given responsibility over selected income streams.
He said the municipality emerged as Makueni's highest revenue collector in the 2025-26 financial year after the county transferred several collection duties to municipal authorities.
The revenue streams handed to the municipalities include parking fees, vehicle parking charges, bus park user fees, market fees, toll rent, market space charges and other related user fees.
However, Kilonzo said counties should not be left to decide independently how much of this money municipalities can retain.
He called for a common law or national framework that would establish the amount and percentage municipalities can keep to meet their expenses and fund local projects.
“What needs uniform legislation is what to retain and what percentage to retain for defraying expenses,” he told the committee.
The governor said different rules in different counties could result in municipalities receiving unequal treatment and could also lead to disagreements over revenue.
He explained that one county could decide to allow a municipality to retain 25 per cent of its collections, while another could set a completely different rate.
Makueni has already introduced its own administrative arrangement to test how municipal revenue retention can work.
Kilonzo said money retained under the arrangement is being directed towards roads and drainage, upgrading markets, sanitation, waste management and street lighting.
Other areas benefiting from the funds include beautification, enforcement and day-to-day municipal operations.
The governor said the approach is intended to prove that municipalities can turn locally generated income into better services rather than relying entirely on transfers from county governments.
The proposal for a national framework, however, drew a different view from Senate vice chairperson Catherine Mumma.
Mumma said there may be no need for Parliament to create another national law because counties already have powers to put in place administrative policies governing revenue collection and retention.
“I fall in the school of thought that doesn't think we necessarily need a new national law for the delegation of revenue collection to happen,” Mumma said.
She said county governments and assemblies can establish policies that allow municipalities to operate effectively without waiting for a new law to be passed.
Kilonzo, however, maintained that national guidance would help create consistency across the country.
He said a common framework would prevent counties from using different formulas when deciding what percentage of municipal revenue should remain at the local level.
The governor also linked the demand for more resources to the changing role of towns as centres of business and employment.
He used Emali as an example, saying improved lighting, security and sanitation had helped businesses operate for longer hours.
“Emali is the only town on Mombasa Road where people work in shifts. By evening, lights come up. The ones who are working during the day go home. The ones who have come for the night shift” begin work, he said.
Kilonzo said the example shows how investment in municipal services can have a direct effect on economic activity.
He warned, however, that urban growth can become a problem when development happens without proper planning and adequate infrastructure.
Industrial, residential and commercial developments, he said, should be guided by clear plans so that one type of development does not create problems for residents or interfere with other activities.
Makueni has prepared spatial plans for its municipalities to guide development and determine where different activities can take place.
“No industry will be started to the disadvantage of the residents. And in any event, if it is not in the plan, because all the municipalities have a spatial plan, then it will not be appropriate,” he said.
The governor also asked for increased national investment in water, sewerage and waste management systems in urban centres.
He said some towns are still dealing with infrastructure gaps that have existed for many years, making it difficult for county governments and municipalities to meet the needs of residents.
Wote, he said, does not have a comprehensive sewerage system, despite being a growing urban centre.
Kilonzo said counties should not be expected to meet the full cost of correcting such infrastructure gaps on their own.
He argued that national funding should supplement county efforts and give municipalities the capacity to undertake projects that require large amounts of money.
The governor said dedicated grants would also reduce dependence on the goodwill of individual county executives and create a more stable system for developing urban areas.
“If we want to accelerate these municipalities instead of relying on the goodwill of executives like myself and my colleagues, each of the municipalities must be given a grant to support urban development,” he said.
He further proposed that part of the equitable share sent to counties should be set aside for municipalities because counties are increasingly assigning responsibilities to urban authorities.
Kilonzo said giving municipalities access to predictable funding would allow them to improve services, develop infrastructure and make devolution more effective at the local level.