How we fund counties will kill or build our devolution dream

Celebrations over the progressive decision by the High Court in the Road Maintenance Levy Fund case were brought to a crashing halt by the Court of Appeal last week. Though what was issued was an interim order, staying the decision of the High Court for one year, the court’s decision raises concerns for those desiring a more empowered devolved system.

Since 2013 when devolution commenced, the National government has used all possible weapons to claw back towards a more centralised system of allocating and managing resources. It is reflected firstly in the continual reduction of equitable revenue allocated to county governments as a fraction of national revenue.

Between 2013 and 2024 the equitable allocation, the portion that county governments are allowed to budget at their discretion, has moved from a high of 11 per cent of the national budget in 2014 to 9 per cent in 2025. So, while the National government argues that it has raised revenue allocations to county governments, increasingly the enhancement of allocations relates to conditional allocations. The “big brother” Nation government retains discretion over how county governments use these allocations, much like the good old days of county councils which were managed from the Ministry of Local Government. Never mind that the National government’s use of its own portion of revenue is sometimes disastrous. The other consistent challenge, notable in the ten Jubilee years, was the slow disbursements to county governments of allocated revenue. By the end of any year, there would always be funds not released to county governments. Sometimes the funds would be released on the last week of June, by which time there was no opportunity to spend, or IFMIS would conveniently have downtimes causing delays in spending.

To its credit, the Kenya Kwanza government has improved on this score and with a few exceptions, expenditure releases are not the challenge they used to be. The other challenge has been retention of what are clearly devolved functions at the national level. In several studies by the Council of Governors, the International Budget Partnership and other entities, there is consistent evidence that the National government retains between Sh80 billion and Sh100 billion of monies meant for county governments yearly.

Most of these monies are allocated to parastatals carrying out functions that should be devolved. It will be remembered that as early as October 2013, the Presidential Taskforce on Parastatal Reforms, the “Abdikadir TaskForce” had made far reaching recommendations on aligning these state organs with the new constitutional architecture and particularly with the devolved system.

This issue was placed on the backburner in 2013. Commitments have been made as recent as 2024 when the Summit announced resolved to conclude the transfer of these functions and accompanying funds. One hopes for speedy implementation of this resolution. In the meantime, prejudice continues on the county governments which have to make do with reduced resources.

It is against this and similar schemes to disempower county governments that the RMLF issue must be viewed. It is not simply a dispute over who should get road maintenance money. It is a more fundamental play for soul of the devolved system by disabling their ability to thrive.

Consequently, any court required to make decisions on the devolved system must approach the matter from a broader perspective, the kind Justice Willy Mutunga asked of the courts in his opinion in the Supreme Court Advisory relating to the Division of Revenue Act in 2014.

Such perspective asks the why of the devolved system, reviews the history of Kenya’s recentralisation and does everything to capture dreams of citizens who wanted more resources spread to all parts of the country, not managed from Nairobi.

To their credit, the courts have rendered progressive judgements on the devolved system and this Court of Appeal decision is at most an outlier. Ultimately, one believes the courts will be faithful to dreams and aspirations of the people. Without comingling the issue, one also hopes that those at the county governments tasked with managing the funds will also be faithful to these dream and aspirations. Devolution, warts and all, remains the hope for retaining a united Kenya in diversity.

The writer is an advocate of the High Court of Kenya.