The 2021 Division of Revenue Act allocates the county governments an equitable share of Ksh. 370 billion in the financial year 2021/2022. The allocation is an increase of Ksh.53.5 billion from the Ksh. 316.5 billion allocated to the counties during the 2020/2021 financial year.
The Equitable Share allocation to the counties of Ksh. 370 billion for the financial year 2021/22 is equivalent to 27.3 per cent of the last audited accounts (Ksh. 1,358 billion for FY 2016/17) and as approved by Parliament. The allocation, therefore, meets the requirement of Article 203(2) of the Constitution that equitable share allocation to counties should not be less than 15 per cent of the last audited revenue raised nationally, as approved by the National Assembly.
How was Ksh.370B Arrived At?
In order to arrive at Ksh. 370 billion allocation as equitable share to county governments, both the Commission on Revenue Allocation (CRA) and the National Treasury recommended conversion of four conditional grants namely; Road Maintenance Levy Fund (RMLF), the grant to level-5 hospitals, the compensation for user fees foregone and the rehabilitation of village polytechnics grants, amounting to Ksh. 17.4 billion into equitable share.
CRA further recommended that an additional Ksh. 36.48 billion, be raised from harmonization of functions of National Government MDAs which may be carrying out concurrent functions or performing devolved functions in line with the Fourth Schedule and Article 187(2) of the Constitution. These are in the functional areas of: Health; Agriculture (crop, livestock and fisheries development); Water, Irrigation, Sanitation and regional development.
How will the Ksh.370B be Shared?
The financial year 2021/2022 equitable share of Ksh. 370 billion will be shared among the county governments based on the Third Basis for revenue sharing approved by Parliament under Article 217 of the Constitution in September 2020.
The approved basis provides for a baseline allocation pegged on 50 per cent of each county’s equitable share allocation for FY 2019/20. This amounts to Ksh. 158.25 billion. The remaining balance from netting out Ksh. 158.5 billion from the equitable share of Ksh. 370 billion, resulting in Ksh.211.75 billion is allocated among the county governments using the Third Basis formula as follows:
=0.18* Population index + 0.17 * Health index + 0.10 * Agriculture index + 0.05 * Urban index+0.14*poverty index+0.08*Land Area index+0.08*Roads index+0.20*Basic Share index