Budget controller flags counties over Sh192B expenditure

The Controller of Budget, Margaret Nyakango, has revealed that 47 County Governments spent Sh192.59 billion, consisting of Sh160.10 billion for recurrent activities and only Sh32.49 billion for development initiatives in the first half of the financial year 2025/26.

The County Governments Budget Implementation Review Report showed that counties' recurrent budget expenditure accounted for 41 per cent of the annual recurrent budget, which includes Sh115.39 billion spent on employee compensation and Sh44.71 billion on operations and maintenance.

The Controller of Budget in her latest report stated that during the period under review, four counties demonstrated recurrent budget absorption rates of 50 per cent or more, while 22 counties reported absorption rates below 50 per cent.

“The total approved budgets for the County Governments for Financial Year 2025/26 amount to Sh 619.87 billion, with Shs228.20 billion (37 per cent) earmarked for development expenditure and Sh391.67 billion (63 per cent) for recurrent expenditure. The expenditure so far represents 31 per cent of the County Governments’ overall annual budget,” said Dr Nyakango.

The Controller of Budget revealed that five counties having achieved an overall absorption rate of 40 per cent or more, 21 counties recorded rates between 20 and 39 per cent and 21 counties had rates below 19 per cent with high-performing counties included Bungoma (45 per cent), Marsabit (43 per cent), Machakos (41 per cent), Meru (41 per cent) and Tharaka Nithi (40 per cent)

She revealed that in the first half of Financial Year 2025/26, development expenditure translated to an absorption rate of only 14 percent of the total annual development budget of Sh228.20 billion and that alarmingly, 45 counties reported development absorption rates below 29 per cent with only two counties exceeding 30 per cent, namely Marsabit (32 per cent) and Mandera (30 per cent).

To finance the 2025/26 budget, the County Governments projects revenues of Sh415 billion from the equitable share of nationally raised revenues with Sh99.73 billion from ordinary own sources which includes Sh29.47 billion from the Facility Improvement Fund (FIF) and Appropriation in Aid (A-I-A) Sh71.90 billion in additional (conditional) allocations from the National Government and Development Partners; and Sh33.24 billion in unspent funds from Financial Year 2024/25.

“During the reporting period, County Governments generated Sh26.94 billion from own sources, which represents 27 per cent of the annual target of Sh99.73 billion with 3 counties, achieving an own-source revenue performance of over 50 per cent, 20 counties between 30 per cent and 49 per cent and 24 counties below 29 per cent with the top-performing counties in this regard being Samburu (79 per cent), Garissa (71 per cent) and West Pokot (54 per cent),” said Dr Nyakango.

In the rst half of Financial year 2025/26, the total funds available to County Governments amounted to Sh227.15 billion, comprised of Sh172.73 billion as the equitable share of national revenue, authorised for withdrawal from the Consolidated Fund to the County Revenue Funds (CRF) by the Controller of Budget (CoB) in accordance with Article 206(4) of the Constitution; Sh26.40 billion in cash balances carried forward from financial year 2024/25 and Sh26.94 billion generated from local revenue sources, including Sh12.70 billion from FIF/A-I-A.

As of December 31, 2025, the total outstanding revenue arrears stood at Sh143.04 billion, comprised of Sh101.54 billion from ordinary own source revenue arrears of Sh8.29 billion in Facility Improvement Financing arrears, and Sh33.20 billion regarding the December 2025 equitable share. This situation hinders liquidity and impedes the effective implementation of the Financial Year 2025/26 budget.

The Controller of Budget identified some challenges that hindered effective budget execution, which include delays by the National Treasury in disbursing the Equitable Share of revenue raised nationally and underperformance in the collection of Own-Source revenue.

“Overreliance on funding from Facility Improvement Financing, high levels of trade payables, and low expenditure on development programs and delays in the submission of financial and non-financial reports to the Controller of Budget are some of the challenges,” said Dr Nyakango.

To enhance budget implementation at the county level for the remainder of Financial Year 2025/26, the Controller of Budget recommends National Treasury ensure that disbursements to County Revenue Funds are made by the 15th of each month.

Further, County governments should strengthen their revenue collection efforts, reduce reliance on single revenue streams, prioritise settling trade payables, increase development expenditure, and comply with legal requirements for submitting financial and non-financial reports to the Controller of Budget.

The Controller of Budget said that implementing these measures will collectively improve effective budget execution and foster county development.