A new bill before Parliament could dramatically alter the way county governments access conditional grants, removing the National Treasury from the disbursement process. Sponsored by National Assembly Majority Leader Kimani Ichung’wah, the Public Finance Management (Amendment) Bill, 2025 seeks to scrap sections of the current law that require intergovernmental agreements before counties receive additional allocations.
The proposed amendment targets Sections 191A to 191E of the Public Finance Management Act, which mandate formal agreements between the Treasury and counties, public participation, county assembly approvals, and gazettement before any funds are released. According to Ichung’wah, these provisions introduce unnecessary bureaucracy and delays, limiting the effectiveness of conditional grants.
“These provisions create duplication in the management of additional allocations,” the bill’s memorandum states, arguing that delays in fund disbursement have stalled critical projects, including construction of county headquarters and payments to community health promoters.
If passed, the bill would eliminate Treasury mediation, allowing counties faster and more direct access to funds. This would significantly impact how counties implement development projects such as industrial parks and healthcare facilities, often reliant on earmarked grants and donor funding.
The proposed change comes amid increasing friction between national and county governments over fiscal autonomy. Governors have long complained about the national government’s grip on devolved functions and delayed disbursements. As of May 2025, counties claimed they were owed Sh75 billion in pending allocations.
However, critics warn that eliminating oversight mechanisms could increase the risk of mismanagement. Conditional grants are typically tied to specific uses, and some lawmakers argue that safeguards—like formal agreements—are essential to ensure funds are spent appropriately.
The National Assembly’s Budget Committee recently approved Sh50 billion in additional allocations to counties, underscoring the urgency of resolving inefficiencies in the current disbursement process. The bill now awaits debate in Parliament, where legislators will have to weigh the benefits of streamlined funding against the need for accountability.
As counties push for greater control over resources, the outcome of this legislative proposal could redefine the power dynamics in Kenya’s devolved governance system.
