The County Governments Additional Allocations (No. 2) Bill, 2025

Background

The County Governments Additional Allocations (No. 2) Bill, 2025 is introduced to provide additional financial allocations to Kenya's 47 county governments for the financial year 2025/26. Pursuant to Articles 190(1) and 202(2) of the Constitution, these allocations comprise unconditional allocations, conditional allocations from the National Government's share of revenue, and conditional allocations from loans and grants from development partners.

Key Amendments

While this is a standalone allocation Act rather than an amending Act, it establishes specific allocation schedules for the 2025/26 financial year:

• First Schedule (Unconditional Allocations): Directs court fines and 20% mineral royalties under Section 183 of the Mining Act (Cap. 306) to counties.
• Second Schedule (Conditional Allocations): Funds specific national-level priority programs executed by counties, such as doctors' salary arrears (KSh 1.75 billion), Community Health Promoters (KSh 3.23 billion), and County Aggregation and Industrial Parks (KSh 4.5 billion).
• Third Schedule (Road Maintenance): Allocates KSh 13.11 billion from the Road Maintenance Fuel Levy Fund.
• Fourth Schedule (Development Partners Loans and Grants): Directs over KSh 56.9 billion in development partner funds (including World Bank IDA, KfW, and IFAD) to specific climate resilience, water, and urban support programs.

New Obligations

The Bill imposes several reporting and bookkeeping obligations on county and national government officials:

• Quarterly Reporting: Under Clause 7, the Cabinet Secretary for Finance must publish a quarterly report on actual transfers of additional allocations in the Gazette within 30 days after the end of each quarter.
• County Books of Accounts: Under Clause 8, county treasuries must explicitly reflect all national government transfers of conditional allocations in their books of accounts.
• Consolidated Reporting: County treasuries must include information on actual transfers, expenditures, compliance with allocation conditions, and material challenges in their quarterly and annual reports submitted under the Public Finance Management Act (Cap. 412A).

Penalties

To ensure strict adherence to the allocation conditions:

• Financial Misconduct: Clause 10 dictates that serious or persistent noncompliance with the Act constitutes an offence of financial misconduct under Section 197 of the Public Finance Management Act.
• Punishment: Individuals convicted of financial misconduct under this Act face a fine not exceeding KSh 10 million, imprisonment for a term not exceeding five years, or both.