Kisumu, Nairobi among worst users of development funds

Embu, Narok, Wajir, Kitui and Kilifi are the best performing counties, with their adherence to the fiscal responsibility principle indicating significant shifts in county fiscal performance compared to the last financial year.

This is in accordance with the report by the Parliamentary Budget Office (PBO) released yesterday, which reflected both improvements in fiscal discipline and persistent challenges in certain counties.

On the other hand, PBO Director Dr Martin Masinde, who presented the findings of the County Fiscal Performance Measurement Index (CFPMI), said that counties that were ranked lowest included Kisumu at position 47, followed by Kakamega, Busia, Bomet, Nairobi, and then Baringo.

“The report was based on performance indicators of budget implementation efficiency, development expenditure, county expenditure on wages and benefits, county assembly expenditure ceiling, own-source revenue (OSR), pending obligations, audit outcomes, and actual county personnel emolument, among others,” Masinde said.

The high-performing counties absorbed their budgets effectively with the “A” performer Turkana absorbing 97 per cent, maintaining strong fiscal discipline.

Additionally, 19 counties including Wajir, Mandera, Marsabit, Embu, Kitui, Makueni, Nyeri, Kirinyaga, Murang’a, West Pokot, Trans Nzoia, Elgeyo/Marakwet, Nandi, Baringo, Laikipia, Narok, Vihiga, Bungoma, and Migori scored a “B”, with each recording an absorption rate exceeding 80 per cent.

“Notably, Turkana emerged as a new “A” performer, while Wajir, Taita /Taveta, Isiolo, Busia and Garissa all, Financial Year 2023/24 top performers, dropped off the high-performance list in 2024/25. These shifts highlight both the dynamic nature of county performance and the importance of consistent budget execution practices.”

On the overall, he said the Financial Year 2024/25 results reflect a gradual but positive trend towards improved fiscal prudence, with 35 counties achieving the “C” grade, which suggests that targeted capacity-building efforts and stronger budget execution measures are beginning to yield tangible results across the county system.

On budget implementation, 12 counties:  Kajiado, Mombasa, Nyandarua, Machakos, Nairobi City, Kilifi, Kisii, Kwale, Uasin Gishu, Murang’a, Kisumu, and Nakuru fell within the “D” performance category, marked by budget absorption rates below 76 per cent.

Despite that, some counties remain unchanged, signalling persistent structural, governance, and resource management constraints that continue to undermine fiscal discipline.

He also said a majority of counties continue to fall short of allocating at least 30 per cent of their actual budgets to development expenditure, with performance in development spending during the Financial Year 2024/25 remaining below the legal benchmark.

Masinde noted that the mean score stood at 0.373, down from 0.447 in Financial Year 2023/24, reflecting a further decline and indicating that some counties digressed toward balancing recurrent and capital expenditures.

“The minimum score of 0.061 shows that a few counties still allocated very minimal resources to development, while the maximum score of 1.000 demonstrates that some counties fully met or exceeded the legal threshold. Though the standard deviation decreased from 0.215 to 0.213, this suggested continued disparities in performance among counties,” the report states.

Seven counties including Marsabit, Homa Bay, Narok, Mandera, Kilifi, Siaya and Turkana, stood out as excellent performers scoring an “A” grade.

The counties demonstrated strong development prioritisation, sustained investment in infrastructure and service delivery and signified a well-balanced approach to budget allocation and performance.

According to Section 107(2)(b) of the Public Finance Management (PFM) Act, county governments are required to allocate at least 30 per cent of their total budgets to development expenditure, a move intended to ensure that a significant portion of county resources is directed toward projects and programs that foster sustainable economic growth and improve service delivery.

The report has also shown that the Financial Year 2024/25 shows a drop at the top performance level, with 12.77 per cent of counties achieving an “A” rating.

However, 57.45 per cent of counties still scored a “D” and 14.89 per cent a “E”, meaning that more than half continued to fall short of the development spending target, with only 14.89 per cent attaining “C” grade.

While the Financial Year 2024/25 results demonstrate notable progress among the best-performing counties, they also highlight the widening gap between strong and weak performers.

Overall, Masinde said a declined mean score and a higher share of average-performing counties, development spending performance remains uneven across counties.

The report has since called for the strengthening of planning, procurement, and budget absorption capacities, which will be essential to ensure that all counties meet the 30 per cent development expenditure threshold and deliver sustainable, impactful outcomes aligned with national and county development priorities.

The report has also shown that counties underperform in revenue mobilisation, with the mean score of 0.400 in Financial Year 2023/24, reflected over projections, potential revenue leakages, or limited capacity and effort to generate own revenues.

With a low minimum of 0.140 and a standard deviation of 0.173, he said it is evident that many counties rely heavily on equitable share transfers from the national government, indicating a need for improved revenue policies and administration and innovative local revenue strategies.

This is further evidenced by grading results, which show that 27.7 per cent scored “C”, 51.1 per cent of counties scored a “D”, and 8.5 per cent got an “E”, indicating that eight in ten counties are significantly underperforming in local revenue generation.t

“Counties continued to underperform in revenue mobilisation in FY 2024/25, though there was a marginal improvement compared to FY 2023/24. The mean score of 0.473 indicated persistent challenges such as over-projections, potential revenue leakages, and limited institutional capacity to effectively generate and manage own revenues,” he said.

The report has also shown that pending bills remain a critical challenge in county public finance management, reflecting gaps in budget execution, revenue collection, and expenditure planning.

As of June 30, 2024, counties collectively held pending obligations amounting to Sh226.61 billion, posing significant fiscal risks and undermining service delivery.

As of June 30, last year, pending obligations stood at Sh217.68 billion, with the counties urged to work towards achieving sustainable financial health by prioritising timely settlement of obligations, enforcing commitment control systems, and strengthening budget credibility to prevent further accumulation of arrears.

In 2024/25, Kwale emerged as the overall top performer on CFPMI, showing leadership in sound fiscal management and strategic development spending, while Embu, a new entrant among the top-tier counties, ranked second, followed by Kericho, Mandera, Siaya and Uasin Gishu.

Turkana County stood out as the only good performer, collecting more than double its Own Source Revenue target at 200.1 per cent, a move which illustrates highly effective local revenue strategies and strong fiscal management.

Lamu, Kirinyaga, Vihiga, and Samburu showed commendable performance, with actual OSR collections exceeding targets.

Counties that had the lowest OSR included Nyandarua, Bungoma, Machakos, and Mandera, reflecting broader governance gaps beyond weak collection, such as poor transparency.

The Clerk of the Senate, Jeremiah Nyegenye, said one of the key responsibilities of the Senate, as provided under Article 96 of the Constitution, is to represent and protect the interests of counties and their governments.

He said that over the years, the Senate has discharged this mandate and has seen the equitable share allocated to counties has increased significantly, from Sh190 billion in the 2013/14 financial year to Sh428 billion in the current financial year.

“As the Senate continues to champion increased resources for counties, it is equally important to strengthen oversight of these resources to ensure their prudent utilisation and ultimately, the delivery of quality services to the people. Kenyans don’t just want to know how much money was sent to counties,” the Clerk said.

He said the initiative is significant since it will not only strengthen the Senate's oversight function but also assist counties in identifying institutional gaps, highlighting best practices and informing targeted policy interventions by county governments and other institutions charged with advancing devolution, including the Senate.

“It will enhance accountability and contribute to improved development outcomes by promoting a culture of performance-based governance across our counties. One of the most important aspects of this report is that the methodology used in developing the Index is anchored on publicly available data from key constitutional institutions including the Offices of the Auditor-General, the Controller of Budget, and the Commission on Revenue Allocation,” Nyegenye explained.

Speaker of the Senate Amason Kingi said there is now a practical, evidence-based instrument for assessing county governments' adherence to the fiscal responsibility principles enshrined in the Constitution, the Public Finance Management Act and the County Governments Act.

“Every financial year, the Senate determines the equitable allocation of nationally raised revenue  between the two levels of government and among the forty-seven counties through the Division of Revenue and County Allocation of Revenue Acts. Yet, since the advent of devolution, one of our greatest limitations has been the absence of a scientific and objective framework for measuring how counties perform against established public finance management indicators. Today, that gap has been decisively addressed,” said Kingi.