County governments in Kenya rely on multiple revenue sources to fund their operations, deliver services, and support development projects. These revenue sources are drawn from national government transfers, local revenue collection, external sources, and investments.
π Key Sources of Revenue for County Governments
1οΈβ£ Equitable Share
β Largest source of county revenue from the national government.
β Derived from ordinary tax revenues collected by the national government.
β Senate allocates the funds using a revenue-sharing formula developed by the Commission on Revenue Allocation (CRA).
β The Constitution guarantees counties at least 15% of national revenue (based on the latest audited accounts by the Auditor General).
β Unconditional allocation β counties can use the funds as they see fit.
2οΈβ£ Own Source Revenue (OSR)
β Counties generate revenue locally through:
- Property rates
- Single business permits
- Parking fees
- Market fees and cess
- Billboards and advertisement charges
- Liquor licensing fees
β These charges and levies are outlined in the County Finance Act.
3οΈβ£ Conditional Grants
β Additional allocations from the national government for specific purposes.
β Restricted use β counties must use funds for the intended projects.
β Examples:
- Equalization Fund (for marginalized counties).
- Health grants for Level 5 hospitals.
- Agriculture & water sector development grants.
β Some grants require counties to match a percentage of the funding.
4οΈβ£ Loans & Borrowing
β Counties can borrow from:
- Foreign lenders (e.g., IMF, World Bank).
- Local financial institutions (e.g., commercial banks).
β Conditions for borrowing: - National government must guarantee the loan.
- County Assembly must approve the loan.
- Loan limits are set to prevent excessive borrowing.
5οΈβ£ Donor Funding & Development Partners
β Counties receive grants & aid from international donors and development agencies.
β Examples of donors:
- World Bank
- Danish International Development Agency (DANIDA)
- African Development Bank (AfDB)
β Funding may be direct to counties or channeled through national government ministries.
β Some grants require counties to improve financial accountability & governance.
6οΈβ£ Investments & Public Enterprises
β Counties can invest in businesses & public projects to generate revenue.
β Possible investments:
- County-owned properties & real estate.
- County transport & parking services.
- Revenue-generating public utilities (markets, slaughterhouses, bus parks, etc.).
β Investments should be sustainable and efficiently managed.
π Summary
β Counties rely on multiple revenue sources to fund their budgets.
β Equitable share is the largest revenue source, followed by own-source revenues.
β Conditional grants, loans, donor funding, and investments supplement county budgets.
β Counties must maintain fiscal responsibility to ensure proper financial management.
π‘ A well-funded county ensures efficient service delivery and sustainable development!