While counties have increasingly become notorious for mismanagement, corruption and blatant theft by top officials and their accomplices, they are not entirely to blame for their financial woes. Other shortcomings are stifling the devolution dream of boosting national development.
Some systemic bottlenecks at the national level are crippling county operations. The National Treasury, for example, routinely fails to release funds to the 47 counties on time, sometimes lagging by several months. Businesses, homes and individuals also owe the devolved units a total of Sh100.38 billion in unpaid levies and fees. This compounds cash-flow hitches, hampering service delivery.
The Controller of Budget’s office has revealed that Nairobi accounts for 58 per cent of the debt or Sh59.9 billion. Nakuru owes Sh12.57 billion or 12.5 per cent, and Kiambu accounts for the third-largest debt at 4.8 per cent or Sh4.82 billion.
Land rates are the most defaulted charge, with Nairobi grappling with unpaid rates of Sh51.34 billion from this key revenue stream. The other unpaid levies, including property rates, way-leave fees and advertisement fees, highlight the challenges counties face in generating revenue.
The defaults hamper the counties’ ability to deliver critical services. Indeed, most of the devolved units heavily rely on the National Treasury to fund their operations.
Counties collected Sh55.69 billion in own-source revenue in the year ended June 2026 against a target of Sh108.4 billion. The poor performance is due to inefficient revenue administration, weak enforcement of revenue laws and limited automation. Enhanced revenue collection systems can help cut the default rate, while also reducing revenue leakages.
This is crucial in reducing the counties’ overreliance on the National Treasury in running daily operations, paying staff, and delivering key services such as education and healthcare.
Counties must cut costs and devise effective debt collection strategies to boost revenue. Some have been giving incentives such as waiving some charges and reducing rates. More innovative measures are also needed to boost own-source revenue.
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