Following the county shilling: From budget to service delivery

NAIROBI, Kenya, Sep 29 — County governments control hundreds of billions of shillings every year, funding everything from hospitals and roads to water projects, agricultural extension services and local markets.

Yet for many Kenyans, county budgets remain difficult to understand, raising a simple question: where does public money actually go?

For the 2025/26 financial year, the 47 counties were allocated Sh405.1 billion as equitable share from nationally raised revenue. They were also set to receive an additional Sh69.8 billion in conditional and unconditional allocations, including funds from external loans and grants.

The 2026 Economic Survey puts the counties’ projected total revenue for 2025/26 at about Sh543.86 billion, comprising equitable share, own-source revenue and conditional grants.

The figures are large, but the real issue for citizens is whether these resources translate into functioning health facilities, clean water, better roads, agricultural support and other services.

Where county money comes from

County finances are built around three main sources.

The first and largest is the equitable share, a constitutionally guaranteed transfer from nationally collected revenue. For 2025/26, the National Treasury proposed Sh405.1 billion.

The second is conditional and unconditional grants, which can support specific sectors and programmes.

The third is own-source revenue (OSR) generated by counties through property rates, business permits, parking fees, market charges, land rates and other fees.

But counties remain heavily dependent on money transferred from the national government.

A World Bank assessment found that own-source revenue accounted for only about 10 per cent of county expenditure during the period it examined, leaving counties highly dependent on transfers.

The World Bank described counties as “highly grant-dependent” and noted that weak county revenue administration had contributed to the problem.

More recent data show the challenge has not disappeared.

During the first quarter of FY2025/26, counties collectively collected Sh13.94 billion in own-source revenue, equivalent to only 15 per cent of their combined annual target of Sh93.89 billion.

Controller of Budget Margaret Nyakang’o said underperformance in revenue generation had led to budget shortfalls and hindered the full execution of planned activities.

She added that six county governments collected 10 per cent or less of their own-source revenue targets, while 31 collected between 11 and 19 per cent and 10 achieved 20 per cent or more.

So where does the money go?

Once revenue is available, county governments divide it broadly between recurrent expenditure and development expenditure.

Recurrent expenditure covers the day-to-day running of government — including salaries, operations, maintenance, utilities, supplies and other costs needed to keep services functioning.

Development expenditure finances longer-term investments such as roads, markets, water systems, buildings, equipment and other infrastructure.

This distinction is important for citizens because a county can have a large development budget without necessarily delivering an equivalent number of completed projects.

Similarly, money spent on salaries is not automatically money that has failed to benefit residents. Doctors, nurses, agricultural officers, engineers and other county employees are part of the workforce through which devolved services are delivered.

The key question is therefore not simply whether money was classified as recurrent or development expenditure, but what that spending ultimately produced for residents.

Salaries versus development

County governments employ doctors, nurses, agricultural officers, engineers, administrators and other workers needed to deliver devolved services.

But the law places limits on both the wage bill and development spending.

The Public Finance Management framework requires counties, over the medium term, to spend at least 30 per cent of their budgets on development programmes, while expenditure on wages and benefits is subject to a 35 per cent threshold of total county revenue.

The Controller of Budget has repeatedly urged counties to meet the development threshold.

In a statement on county planning and financing, Nyakang’o said county governments should prioritise and ensure that expenditure on development activities meets the minimum 30 per cent threshold.

The wage bill remains a separate pressure.

In early 2026, the Controller of Budget warned that continued use of manual payroll systems posed a risk to efforts to bring the wage bill within the statutory threshold.

She said the continued use of manual payroll systems posed a significant risk to government efforts to reduce the wage bill to the statutory threshold of 35 per cent of county government revenue.

This creates a balancing act. Health workers, engineers and other frontline employees are necessary for service delivery, but high recurrent costs can reduce the funds available for infrastructure, equipment and other development programmes.

What citizens should expect

For ordinary residents, county budgets are not simply financial documents.

Health allocations should ultimately support medicines, equipment and staffing.

Agriculture spending should support extension services, farmers and related programmes.

Infrastructure allocations should translate into roads, markets, water systems and other public facilities.

The Constitution also provides for public participation in county budgeting, giving residents an opportunity to influence priorities before budgets are approved.

The International Budget Partnership has spent years tracking this process through its County Budget Transparency Survey, which examines the availability and quality of budget information produced by Kenya’s 47 counties.

Its latest published survey gave Kenya’s counties an overall transparency score of 56 out of 100 for 2023, up from 41 in 2022.

The organisation’s work in Kenya has focused on helping citizens understand budgets and engage with government, including through budget cafes, budget champions and other mechanisms aimed at making county finances more accessible to citizens.

When the money does not arrive

Even when counties approve budgets, implementation depends on actual cash flows.

Delays in transfers can affect salaries, contractors, suppliers and planned projects.

The problem can become more acute when counties also fail to meet their own-source revenue targets.

In January 2026, the Controller of Budget reported that counties were struggling with cash shortages and had accumulated commercial bank loans of about Sh7.85 billion, with delayed Treasury releases and weak local revenue cited among the pressures.

Nyakang’o said the combination of erratic Treasury disbursements and underperforming own-source revenue had forced counties to borrow to maintain basic functions.

This illustrates why an approved budget does not necessarily mean that the money is immediately available for spending.

Budgets can also change

County budgets are not fixed for the entire financial year.

Counties can revise their spending through supplementary budgets when revenue projections change or new priorities emerge.

But revisions can make it harder for citizens to track whether the priorities approved at the beginning of the financial year remain the same.

The International Budget Partnership found that the number of counties publishing budget revisions increased from seven to 15, but the information score for supplementary budgets fell from 62 to 48 out of 100.

That makes access to clear and timely budget information important: citizens need to know not only what their county initially planned to spend, but also whether those plans changed during the year.

Following the money

County budgets may appear technical, but their consequences are visible in everyday life.

A health centre without medicine, a stalled water project, an unfinished road or a market without basic facilities can all be connected to decisions made through the county budgeting and implementation process.

The Office of the Controller of Budget publishes county budget implementation reports covering revenue, expenditure and implementation performance, providing one of the key sources through which citizens can follow what counties actually spend. The office has published quarterly, half-year, nine-month and full-year reports for FY2025/26.

The Controller of Budget’s role includes overseeing implementation of national and county budgets by authorising withdrawals from public funds.

The question for citizens, therefore, is not simply how much money their county receives.

It is whether they can trace that money from the revenue source, to the approved budget, to the actual expenditure and finally to a service or project delivered on the ground.

More than a decade after devolution, understanding that chain could be one of the most important ways for citizens to assess whether county governments are converting public resources into public services.