President William Ruto has assented to the County Allocation of Revenue Bill 2026, paving the way for the distribution of Sh488 billion among Kenya's 47 counties under a new revenue-sharing framework aimed at strengthening devolution and improving accountability in the management of public funds.
The President signed the legislation at State House, Nairobi on Monday, formally operationalising the Division of Revenue Act 2026 and setting the legal basis for how county governments will receive and manage their share of nationally raised revenue in the new financial year.
According to details presented during the ceremony, the county allocation represents 29% of the most recent audited revenue for the 2022/23 financial year, exceeding the constitutional minimum threshold of 15% required under Article 203 of the Constitution.
Officials said the new law distributes an equitable share of Sh488 billion among all 47 counties using the fourth determination revenue-sharing formula approved by Parliament in June 2025 under Article 217 of the Constitution.
Under the formula, the first Sh387.425 billion will be allocated based on baseline allocations derived from county funding levels in the 2024/2025 financial year. The remaining amount will then be shared using specific criteria including a basic equal share component of 35%, poverty levels at 12%, geographical size at 8%, and population at 45%, with some parameters subject to limits.
The law also outlines responsibilities for both national and county governments regarding the management and use of allocated resources.
In addition to revenue allocation, the legislation introduces expenditure controls for county governments by establishing recurrent expenditure ceilings for county executives and county assemblies.
The Bill further creates a framework governing functions transferred between the national and county governments under Article 187 of the Constitution. Under the provisions, county executives will be required to determine the cost of transferred functions in consultation with national authorities, while county assemblies must approve allocations not lower than those provided in previous financial years.
New accountability measures have also been introduced to improve oversight and transparency in county funding.
National government entities handling transferred functions will now be required to submit quarterly implementation reports to both the Senate and relevant county assemblies.
The law further compels the Cabinet Secretary responsible to publish monthly reports on actual fund transfers, while county treasuries must formally record and report all funds received in quarterly and annual financial reports under the Public Finance Management Act of 2012.
The measures are expected to strengthen transparency by ensuring both levels of government account for public resources transferred during each financial year.