Kenya’s revenue allocation formula should reflect economic realities

The recent assembly of governors and senators from the Jumuiya ya Kaunti za Pwani (JKP) economic bloc in Mombasa has reignited the debate on equitable revenue allocation.

As they reviewed the Commission on Revenue Allocation’s (CRA) proposed fourth basis for sharing county funds, critical concerns emerged—particularly regarding the formula’s ability to address regional disparities and economic potential.

This debate presents a crucial opportunity to refine Kenya’s approach to equitable development.

At the heart of the discussion is whether the current parameters—33 percent for population, 26 percent for the basic share, and 23 percent for the poverty index—truly reflect the diverse needs of counties. While population size is an important metric, development cannot be based solely on numbers.

Geographic challenges, economic opportunities, and infrastructure gaps must also be key considerations. For example, only 10 percent for land size and four percent each for roads and economic activities may not sufficiently address the needs of counties with vast, underdeveloped areas or strategic economic assets.

The coastal region, which includes Mombasa, Kilifi, and Lamu, plays a critical role in Kenya’s economic engine, contributing significantly to trade, tourism, and the blue economy. Yet, inadequate infrastructure, climate risks, and environmental vulnerabilities threaten long-term prosperity.

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Revenue allocation must support sustainable development by factoring in key sectors such as marine resources, land management, and climate adaptation. Without targeted funding, counties facing high climate risks and economic constraints will struggle to develop resilience.

Concerns over data accuracy must be taken seriously. The JKP leaders rightfully emphasised the need for updated and verifiable data from the Kenya National Bureau of Statistics (KNBS) to guide revenue allocation.

Inaccurate land measurements, outdated water area statistics, and overlooked natural resources create a flawed basis for distribution, potentially disadvantaging regions that require greater investment.

A truly equitable revenue-sharing model must go beyond population numbers and integrate a development-based approach. This means recognising infrastructure deficits, economic contributions, and climate resilience as essential parameters.

The goal should not be a zero-sum game where some counties lose funding while others gain—it should be a framework that ensures every region, regardless of size or population, has the resources needed to thrive.

The way forward requires continuous engagement between national and county governments, economic experts, and local stakeholders. The JKP’s proactive stance in pushing for a fairer allocation model sets a strong precedent for regional advocacy.

However, meaningful change will only come if Kenya embraces a revenue-sharing formula that balances immediate service delivery needs with long-term economic growth and sustainability.

By refining this process, we can ensure that revenue allocation becomes a tool for national cohesion that empowers all counties to contribute to and benefit from Kenya’s collective progress.

The writer is an economist, business consultant and a corporate trainer