CRA at the 5th Legislative Summit 2025: Leading the Conversation on Revenue Sharing
The Commission on Revenue Allocation (CRA) played a critical role in the 5th Legislative Summit, held from March 14-20, 2025, at The Edge Convention Center, Nairobi City County. As one of the key stakeholders involved in the planning of the Summit, CRA facilitated dialogue on equitable resource allocation by engaging critical stakeholders through both a formal presentation and a panel discussion.
The Summit, organized by the County Assemblies Forum (CAF), provided a platform for deliberations on governance and fiscal matters under the theme: Championing Accountability: Strengthening Oversight for Transparent Leadership Through Legislative and Policy Reforms.
About the Legislative Summit
The Legislative Summit is a forum that convenes Members of County Assemblies (MCAs), Senators, the Executive, and other stakeholders in devolution to discuss and enhance legislative processes and fiscal governance. It fosters dialogue, knowledge sharing, and collaboration to advance devolution and improve service delivery.
CRA’s Participation in the Summit
CRA’s role in the Summit was twofold: planning the event as a key stakeholder and engaging decision-makers on its Recommendations for the Fourth Basis for Revenue Sharing Among County Governments, which was submitted to Parliament for consideration.
- Presentation by Hon. Fatuma Gedi, C.B.S.
During General Session III on the morning of Tuesday, March 18, 2025, Hon. Fatuma Gedi, Chairperson of CRA’s Revenue Allocation Committee, delivered a presentation titled: “The 4th Generation Revenue Sharing Formula: Fair Share or Flawed Model?”
This session provided a platform for CRA to directly engage MCAs, policymakers, and other stakeholders on its revenue-sharing recommendations, which have been submitted to the Senate for review to guide the determination of the Fourth Basis for Revenue Sharing Among County Governments.
The panelists and participants critically examined the proposed revenue-sharing framework, analyzing its implications for county allocations and addressing key concerns raised by stakeholders.
The discussion centered on:
- The legal and constitutional basis for revenue allocation.
- A review of the Third Basis and lessons learned.
- Stakeholder proposals for the Fourth Basis and CRA’s response.
- The framework and criteria used in determining the Fourth Basis.
- Implementation measures, including a stabilization factor to ensure counties do not receive less than their previous allocation.
Hon. Fatuma Gedi emphasized the significance of the Fourth Basis, stating, “Our goal is to ensure that no county is left behind. This formula incorporates a balance between equity and economic efficiency to support sustainable development across all counties.”
Commissioner Gedi further emphasized that in developing the Recommendations, CRA aimed to address the concerns of all stakeholders in the 47 counties of Kenya expressed during the Public Participation, as far as possible. These include those who wanted the formula to be determined on the basis of population alone (one man, one vote, one shilling) and others on geographical size of county (one man, one kilometre, one shilling).
“Being an equity Commission, we serve the entire country (Kenya) and we cannot blindly use one parameter that suits one part of a region at the expense of the entire region. So, we have to balance.”
She also noted that the Commission had recommended an additional Ksh.30 billion to ensure that the county governments get about Ksh. 417.425 Billion in the FY2025-26, which ensures no county gets less money than they received in the previous financial year.
Fourth Basis: Simulation at Ksh. 417.425 Billion
- Panel Discussion Featuring CRA’s Vice Chairperson
Later in the day, CRA actively participated in the General Session titled “From Control to Collaboration: Re-Thinking Budget Oversight for Better Service Delivery.”
Our Vice Chairperson, Commissioner Koitamet Ole Kina, joined a distinguished panel to discuss a presentation by FCPA Dr. Margret Nyakang’o, CBS, Controller of Budget of the Republic of Kenya. The session sparked a dynamic and highly interactive plenary discussion, with the audience engaging passionately on the shift from a control-driven to a collaborative approach to budget oversight.
Commissioner Ole Kina and fellow panelists delved into the evolving role of oversight in county governance, emphasizing the need for greater cooperation between county assemblies, the national government, and other oversight bodies to enhance service delivery and financial accountability. Key areas of the discussion included:
- Strengthening the role of county assemblies in financial oversight.
- Enhancing cooperation between counties and the national government.
- Effective collaboration between the counties and the Office of the Controller of Budget.
- Addressing budgetary constraints while ensuring efficient public service delivery.
During the discussion, CRA’s Vice Chairperson emphasized that the Formula serves as a guideline, not a budgeting tool, stating:
“It is upon County Assemblies to prioritize their needs in line with the Budget Expenditure Ceilings provided by the Commission. As a Commission, we cannot dictate how county governments utilize the funds allocated to them.”
He further highlighted the importance of an integrated county revenue management system, stressing that even if counties adopt in-house systems, they must be standardized to ensure seamless integration with national-level financial systems.
The Fourth Generation Revenue Sharing Formula: What It Means
The Fourth Basis for Revenue Sharing Among County Governments determines how nationally raised revenues allocated to the county governments are shared among counties for the 2025/26 – 2029/30 financial years. Guided by Article 203 of the Constitution, the formula aims to:
- Ensure counties receive sufficient funds to execute devolved functions.
- Promote equity and fairness by addressing economic disparities.
- Provide a stable and predictable allocation framework.
- Encourage counties to optimize their revenue generation capabilities.
The new formula has five parameters and incorporates:
- A Population-based index for services like health, roads and agriculture.
- Consideration for disadvantaged areas through affirmative action measures.
- Incentives for economic growth, fiscal effort and environmental performance.
In addition, a stabilisation factor, computed from the output of the five parameters used in the revenue sharing basis, has been inbuilt in the fourth basis to ensure no county government gets less than what they were allocated in FY 2024/25. Stability in revenue sharing is important to ensure county programmes and projects continue without disruption that may be occasioned by sudden budget cuts arising from change of the revenue sharing framework.
It is noteworthy that in the implementation of the Third Basis for Revenue Sharing Among County Governments, the Commission and its stakeholders observed that there was multiple use of population-based measures:
- Population index: (number of people)
- Health index: (in patients and out patients visits)
- Agriculture index: (rural households)
- Roads index: (population not accessing a motorable road within 2km)
- Poverty index: (number of poor people)
- Urban index: (urban households)
- Basic share index: One percent was based on inverse of county population
Thus, the Commission used a similar approach to developing the parameters used in the Second Revenue Sharing Basis, with adjustments based on the data available and stakeholder recommendations.
Key Takeaways from the Summit feedback
According to a participant from the county assemblies, “The CRA’s recommendations on the Fourth Basis present a balanced approach to revenue sharing. What remains is to ensure that counties utilize these allocations effectively.”
The Summit provided a vibrant platform for MCAs and other stakeholders to discuss revenue allocation and devolution challenges. Some notable observations included:
- The need for greater transparency in resource allocation to counties.
- Calls for reviewing data credibility to ensure accurate formula computations.
- The necessity of ensuring counties utilize funds efficiently for improved service delivery.
- Enhancing collaboration between the CRA, Senate and county governments to strengthen devolution.
Watch the CRA’s presentation and the panel discussion below..
Conclusion and Next Steps…
CRA remains committed to ensuring a fair and efficient revenue-sharing framework that supports inclusive economic development and better service delivery at the county level. Through active participation in planning the Summit and engaging key stakeholders, CRA reinforced the importance of evidence-based fiscal policies and strengthened county-level financial oversight. The Summit reaffirmed CRA’s leadership in shaping Kenya’s devolution agenda.
Stay updated on CRA’s Policy Recommendations and engagements by visiting our website and following our social media platforms.
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