The County Governments Additional Allocations Bill, 2026 THE COUNTY GOVERNMENTS ADDITIONAL ALLOCATIONS BILL, 2026 ARRANGEMENTS OF CLAUSES Clause 1 — Short title. 2 — Interpretation. 3 — Object. 4 — Additional allocations to county governments. 5 — Conditional and unconditional allocations 6 — Report on actual transfers. 7— Books of accounts to reflect national government transfers. 8 — Reporting. 9 — Financial misconduct. 10 — Exemption. UNCONDITIONAL ALLOCATIONS TO COUNTY GOVERNMENTS FROM COURT FINES AND 20% SHARE OF MINERAL ROYALTIES IN THE FINANCIAL YEAR 2026/27 SECOND SCHEDULE: CONDITIONAL ALLOCATIONS TO COUNTY GOVERNMENTS FROM THE NATIONAL GOVERNMENT’S SHARE OF REVENUE FOR THE FINANCIAL YEAR 2026/27 THIRD SCHEDULE: CONDITIONAL ALLOCATIONS FROM PROCEEDS LOANS OR GRANTS FROM DEVELOPMENT FOR FINANCIAL YEAR 2026/27 OF PARTNERS
The County Governments Additional Allocations Bill, 2026 THE COUNTY GOVERNMENTS ADDITIONAL ALLOCATIONS BILL, 2026 A Bill for AN ACT of Parliament to provide for the additional allocations to county governments for the 2026/2027 financial year; the responsibilities of the National Government and county governments pursuant to such allocation; and for connected purposes. ENACTED by the Parliament of Kenya, as follows— 1. This Act may be cited as the County Governments Additional Allocations Act, 2026. 2. In this Act — "Cabinet Secretary' means the Cabinet Secretary responsible for matters relating to finance; "additional allocations" means additional resources allocated to county governments from the National Government's share of revenue or in the form of loans and grants from development partners; and "county executive committee member" means the county executive committee member in charge of matters relating to finance. 3. The object of this Act is to— (a) provide, pursuant to Articles 190 and 202(2) of the Constitution, for additional allocations for the financial year 2026/27; (b) provide for additional allocations from proceeds of loans and grants from development partners; and (c) facilitate the transfer of conditional and unconditional allocations made to counties under this Act from the Consolidated Fund to the respective County Revenue Funds and special Short title. Interpretation. Object. 2
The County Governments Additional Allocations Bill, 2026 Additional allocations to county governments Conditional and unconditional allocations. Cap 306. purpose accounts. 4. (1) Additional allocations shall constitute funds agreed upon by the National Assembly and the Senate during the consideration of the Budget Policy Statement and shall comprise of— (a) additional allocations from the National Government and development partners required for functions transferred to counties from the National Government pursuant to Article 187 of the Constitution; (b) additional allocations provided for under Article 202(2) of the Constitution; and (c) additional allocations in the form of loans and grants from development partners. (2) Additional funds allocated under this section shall, except allocations under section 5(1)(a), be included in the respective county governments' appropriation bills. 5. (1) Unconditional allocations to the respective county government from the national government for the financial year 2026/27 shall be as set out in the First Schedule, comprising— (a) unconditional allocations being proceeds from court fines collected from the enforcement of county legislation as set out in Column B; and (b) unconditional allocations being proceeds from mineral royalties pursuant to section 183(5)(b) of the Mining Act, as set out in Column C. (2) Conditional allocations to each county government from the national government's share of nationally raised revenue for the financial year 2026/27 shall be as set out in Column F of the Second Schedule, comprising — (a) conditional allocations for the Community Health Promoters (CHP) project as set out in Column B; 3
The County Governments Additional Allocations Bill, 2026 Cap. 117A. (b) conditional allocations for the construction of county headquarters as set out in Column C; (c) conditional allocations for the County Aggregation and Industrial Parks (CAIP) programme as set out in Column D; (d) conditional allocations for the administration of the County Affordable Housing Committees under section 11(4)(c) of the Affordable Housing Act; (e) conditional allocations for the transition of Universal Health Coverage (UHC) Workers' salary to permanent and pensionable terms; and (f) a conditional allocation to the county government of Meru for the settlement of an outstanding arbitral award and accrued interest as set out in Column G. (3) Conditional allocations financed by proceeds of loans or grants from development partners to each county government for the financial year 2026/27 shall be as set out in Column R of the Third Schedule comprising — (a) conditional allocations financed by proceeds from an IDA (World Bank) loan to finance the Kenya Informal Settlement Improvement Project (KISIP II) as set out in Column B; (b) conditional allocations financed by proceeds from an IDA (World Bank) loan to finance Building Resilient and Responsive Health Systems (BREHS) as set out in Column C; (c) conditional allocations financed by proceeds from a KfW (German Development Bank) loan for cofinancing of FLLoCA — County Climate Resilience Investment (CCRI) Grant as set out in Column D;
The County Governments Additional Allocations Bill, 2026 (d) conditional allocations financed by proceeds from an IDA (World Bank) loan for the FLLoCA -County Climate Resilience Investment (CCRI) Grant as set out in Column E; (e) conditional allocations financed by proceeds from an IDA (World Bank) loan for the Food Systems Resilience Project (FSRP) as set out in Column F; (f) conditional allocations financed by proceeds from an IDA (World Bank) Loan for the National Agricultural Value Chain Development Project (NAVCDP) as set out in Column G; (g) conditional allocations from an IDA (World Bank) loan to finance Water and Sanitation Development Project (WSDP) as set out in Column H; (h) conditional allocations financed by proceeds from an IDA (World Bank) Loan for the Kenya Urban Support Project (KUSP) -Urban Institutional Grant (UIG) as set out in Column I; (i) conditional allocations financed by proceeds from an IDA (World Bank) Loan for the Kenya Urban Support Project (KUSP) -Urban Development Grant (UDG) as set out in Column J; (j) Conditional allocations financed by proceeds from an International Fund for Agricultural Development (IFAD) loan for the Kenya Livestock Commercialization Project (KeLCoP) as set out in Column K; (k) conditional allocations financed by proceeds from a KfW (German Development Bank) Loan for the Drought Resilience Programme in Northern Kenya (DRPNK) as set out in Column L; (1) conditional allocations financed by proceeds from an IFAD (International Fund for Agriculture Development) loan for the Integrated Natural Resources Management Programme (INReMP) as set out in 5
The County Governments Additional Allocations Bill, 2026 Column M; (m)conditional allocations financed by proceeds from an IDA (World Bank) loan for the Kenya Devolution Support Programme (KDSP) II Level I as set out in Column N; (n) conditional allocations financed by proceeds from an IDA (World Bank) loan for the Kenya Devolution Support Programme (KDSP) II Level II as set out in Column O; (0) conditional allocations financed by proceeds from an IDA (World Bank) loan for the Kenya Water, Sanitation and Hygiene (K-Wash) Program as set out in Column P; and (p) conditional allocations financed by proceeds from an IDA (World Bank) loan for the Kenya Watershed Services Project (KEWASIP) as set out in Column Q. (4) Conditional allocations under subsection (3)(d) and (e) shall be allocated among county governments on the basis of the following criteria — (a) the accounting officer responsible for the conditional allocation shall, in each eligible county government, carry out or cause to be carried out, an assessment to determine the eligible county governments' performance score for purposes of determining the performance of the County Climate Resilience Investment (CCRI) grant allocation for the Financial Year 2026/27; (b) the first fifty percent of the total allocation shall be transferred on the basis of factors that reflect relative expenditure needs for climate action, including the variables of a fixed share at 33.3 percent, rural population at 30 percent, rural area at 13.3 percent, and poverty at 23.3 percent, whereby the weights are based on the formula for allocating the share of the national revenue among counties; (c) the second fifty percent of the total allocation shall be on 6
The County Governments Additional Allocations Bill, 2026 the basis of the scores for the performance measures, weighted with the basic allocation; and (d) the Cabinet Secretary shall publish, by notice in the Kenya Gazette, the allocations determined in terms of paragraph (b). (5) The conditional allocation under subsection (3)(h) shall be allocated among the county governments on the basis of criteria to be determined as follows— (a) each of the eligible forty-five counties will access the UIG, set at a flat rate and made available for the first three years of the Program as follows— (i) US$250,000 (approximately KSh. 35,500,000) in year 1; (ii) US$200,000 (approximately KSh. 26,000,000) in year 2; and (iii) | US$100,000(approximately KSh. 14,200,000) in year 3; (b) for Window for Host Communities and Refugee (WHR), the grant will be allocated at a flat rate of US$ 500,000, equivalent to KSh. 65,000,000 annually for five years; (c) county governments shall not access the grant unless they comply with the WHR UIG_ minimum conditions; and (d) failure to satisfy any of the minimum conditions shall disqualify a county from accessing the WHR UIG Grant. (6) The conditional allocation under subsection (3)(i) shall be allocated among the county governments based on the financing agreement between the IDA (World Bank) and the Government of Kenya, on the basis of the following criteria- (a) UDG performance allocation of KSh 2,340 per 7
The County Governments Additional Allocations Bill, 2026 and is implementing an action plan to reduce the stock of pending bills and maintain it at minimal levels; (iii)DLI 5: Kenya Shillings ninety-seven million five hundred thousand for each county government that has integrated its human resource records, authorized staff establishment and payroll and uploaded cleaned payrolls in the human resource management information system; (iv)DLI 6: Kenya Shillings forty-five million for each county government that is enhancing accountability for results through an integrated performance management framework; and (v) DLI 7: Kenya Shillings sixty million for each county government with a PIM dashboard with citizen feedback mechanisms. (8) Conditional allocations under subsection (3)(0) shall be allocated to county governments based on Disbursement Linked Indicators (DLIs) and verified results in the approved Results Verification Report (RVR) by an_ Independent Verification Agent (IVA) hired by the Program, according to the following formula— (a) with respect to the allocation to the counties of Baringo, Bomet, Kericho, Kirinyaga, Kitui, Kwale, Makueni, Mandera, Migori, Murang'a, Nandi, Narok, Samburu, Tana River, Tharaka Nithi, Vihiga, and West Pokot, C= R; 938,000 S$ + 37.38Hy + 4,6900 + 28.14; + 1,876Vopr + 23,074.8Vews+ 11,256Vswsy (b) with respect to the allocation to Turkana and Garissa Counties, C = Ry 938,000S) + R2 46.62Hy + 7,6300 + 38.15Hs + 1,526Vopr + 15,260Vcws + 3,815Vswsy where —
The County Governments Additional Allocations Bill, 2026 (i) C is the county allocation (The sum of all 19 county allocations shall not be more than KES 4,282,086,900.00. If this amount is exceeded, rationalization will be applied to indicators under DLI/DLR 2, 3, 4, 10.1, 10.2, 11, 12.1, and 12.3.) (ii) S is a binary variable for DLI 1, S=1 if the strategy is verified by IVA as developed in the Approved Results Verification Report (RVR), otherwise S=0 (iii) Hy is the Number of households provided with access to improved water services as verified by IVA in Approved RVR (DLI 2 and DLR 10.1) (iv) Q is the number of sustainably functioning water schemes meeting standards as verified by IVA in Approved RVR (DLI 3 and DLI 11) (v) Hs is the number of Households provided with access to an improved sanitation facility as verified by IVA in Approved RVR (DLI 4 and DLR 10.2) (vi) Vopr is the number of villages that achieve ODF status as verified by IVA in Approved RVR (DLR 5.1 and DLR 12.1) (vii) Vews is the number of villages certified as achieving CWS status as verified by IVA in Approved RVR (DLR 5.2 and DLR 12.2) (viii) Vsws is the number of villages that sustain CWS status as verified by IVA in Approved RVR (DLR 5.3 and DLR 12.3) (ix) Ry is the exchange rate of Euro Foreign Currency to Kenya Shillings and R2 be the exchange rate of Special Drawing Rights (SDR) Currency to Kenya Shillings. (9) A county government's allocation under subsection (2) shall be transferred to the respective County Revenue Fund in accordance with a payment schedule published in the Kenya Gazette by the Cabinet Secretary in accordance with section 17 of the Public Finance Management Act. Cap.412A. 10
The County Governments Additional Allocations Bill, 2026 Report on actual transfers. Books of accounts to reflect national government transfers. Reporting. Cap.412A. (10) The county governments' allocations under subsections (1) and (2) shall, subject to subsection (11), be included in the budget estimates of the National Government and shall be submitted to Parliament for approval. (11) Allocations shall not be included in the budget estimates under subsection (10) unless, in the case of a loan or grant by a development partner, the Cabinet Secretary and the responsible development partner have agreed in writing that the funds shall be transferred to the county government. 6. The Cabinet Secretary shall publish, by the 15" day of each subsequent month, a monthly report on actual transfers of all additional allocations to county governments disbursed pursuant to this Act. 7. Each county treasury shall reflect all transfers of conditional allocations by the National Government to the respective county government in its books of accounts. 8. A county treasury shall, as part of its consolidated quarterly and annual reports required under the Public Finance Management Act, report on- (a) actual transfers received by the county government from the National Government, up to the end of that quarter or year, in the format prescribed by the Public Sector Accounting Standards Board or, in the absence of a format prescribed by the Board, in the format prescribed by the National Treasury; (b) the actual expenditure by the county government of the allocations made under section 5(1), (2) and (3); (c) the extent of compliance with the provisions of this Act and with the conditions of allocations as set out in the intergovernmental agreement entered into by the national government, the development partner and the county government; 11
The County Governments Additional Allocations Bill, 2026 a misconduct, (d) an explanation of any material problems in the expenditure of any allocations made under this Act or compliance with any conditions of allocations set out in an intergovernmental agreement; and (e) any other information that may be required by the relevant intergovernmental agreement. 9. Despite the provisions of any other law, a serious or persistent non-compliance with the provisions of this Act constitutes an offence under the Public Finance Management Act. Exemption. 10. The Cap. 412A. requirements under sections 191A, 191B, 191C, 191D and 191E of the Public Finance Management Act shall not apply with respect to conditional allocations under this Act in the financial year 2026/2027.
The County Governments Additional Allocations Bill, 2026 I certify that this printed impression is a true copy of the Bill as passed by the Senate on Wednesday, 17" June, 2026. Clerk ofitiie Senate Clerk ofitiie Senate Endorsed for presentation to the National Assembly in accordance with the provisions of standing order 161(1) of the Senate Standing Orders. PRINTED BY THE CLERK OF THE SENATE 27