Kenya's National Assembly and Senate have finally resolved a months-long budget standoff after approving a mediated allocation of Sh428 billion for the country's 47 county governments in the 2026/2027 financial year.
The agreement ends a prolonged dispute over the Division of Revenue Bill, 2026, clearing the way for counties to access funds ahead of the start of the new fiscal year and averting fears of disruptions to devolved services.
The breakthrough was reached after an 18-member Mediation Committee conducted seven intensive negotiation sessions to bridge the gap between the two Houses. The National Assembly had initially proposed an equitable share allocation of Sh420 billion, while the Senate pushed for Sh454.7 billion, arguing that counties required additional resources to meet growing service delivery demands.
The committee ultimately settled on a compromise figure of Sh428 billion, which received approval from both Houses of Parliament.
The allocation represents an increase of Sh13 billion from the Sh415 billion allocated to counties in the 2025/2026 financial year, providing devolved units with additional resources to fund healthcare, agriculture, infrastructure, water services, and other county functions.
To secure the final agreement, lawmakers approved adjustments within the national government's recurrent expenditure budget. The additional Sh2 billion required to raise the county allocation was sourced from reductions in administrative spending, travel expenses, and other recurrent costs.
Notably, Parliament agreed to shield the national development budget from any cuts, a move aimed at ensuring that ongoing infrastructure and development projects remain on track.
Under the approved revenue-sharing framework, the national government will retain Sh2.464 trillion from the total Sh2.901 trillion in nationally raised revenue. Counties will receive Sh428 billion as their equitable share, while Sh10.25 billion has been allocated to the Equalisation Fund to support historically marginalized areas.
Leaders from both Houses welcomed the compromise, describing it as a victory for intergovernmental cooperation and a demonstration of Parliament's ability to resolve contentious fiscal matters through dialogue.
County governments are expected to use the increased allocation to strengthen service delivery and implement development programmes, although governors have continued to argue that devolved units require even greater funding to match their expanding responsibilities.