By Benadeta Mwaura - Reporter
Kenya, June 15, 2026 - Kenya's county governments are set to receive a record KSh502 billion in the 2026/27 financial year, even as the National Treasury prepares to overhaul how devolved funds are managed through the rollout of a Treasury Single Account (TSA) system.
Treasury Cabinet Secretary John Mbadi announced the reforms during his 2026/27 Budget Statement to the National Assembly, describing the new framework as a key step towards strengthening financial discipline, improving cash management and enhancing service delivery at the county level.
The total county allocation comprises three funding streams: an equitable share of KSh428 billion, KSh57.4 billion in loans and grants from development partners, and KSh16.6 billion in conditional allocations from the national government.
The funding package marks a significant increase from the KSh392.4 billion allocated to counties in the 2022/23 financial year.
"Since 2022, funding to county governments has steadily increased, with the equitable share to counties increasing from KSh370.0 billion in the FY 2022/23 budget to KSh428.0 billion in the FY 2026/27 budget," Mbadi told lawmakers.
"Total county allocations that include shareable revenue and additional allocations from the national government, as well as donor proceeds, have therefore increased from KSh392.4 billion to KSh502.0 billion over the same period."
Under the allocation framework, Nairobi County will receive the largest share at KSh22.1 billion, followed by Nakuru (KSh14.9 billion), Turkana (KSh14.3 billion), Kakamega (KSh14.1 billion) and Kiambu (KSh13.5 billion).
However, beyond the increased funding, the most significant change for county governments will be the introduction of the Treasury Single Account system from July 1, 2026.
The reform will require all 47 counties to migrate from multiple commercial bank accounts to a consolidated cash management platform linked to the Central Bank of Kenya.
Treasury officials argue that the current fragmented banking system has weakened oversight, created inefficiencies and contributed to the accumulation of pending bills across counties.
According to Controller of Budget Margaret Nyakang'o, county governments had accumulated KSh183 billion in pending bills by June 2025, leaving suppliers and contractors facing prolonged payment delays.
Under the new system, county payments will only be processed against verified obligations, reducing opportunities for duplicate claims, discretionary payment decisions and politically influenced prioritisation of suppliers.
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Mbadi said the government had already recorded significant gains after implementing the Treasury Single Account at the national level.
"Mr. Speaker, as I had informed this House in last year's Budget Statement, the Government has been implementing the Treasury Single Account Framework to strengthen cash management and improve efficiency of public financial operations," he said.
"Following the successful rollout of the Treasury Single Account to all ministries, the government has reduced the cost of overdraft financing from the Central Bank of Kenya by 61% in this financial year, translating into substantial savings."
The Treasury expects the county-level rollout to improve real-time monitoring of public funds, accelerate payments to suppliers and reduce reliance on emergency borrowing.
The reforms come as county governments continue to grapple with rising wage bills, weak absorption of development funds and persistent concerns over financial accountability.
In addition to the record allocation, counties will receive targeted support through the KSh10.3 billion Equalisation Fund, KSh10.5 billion under the Kenya Devolution Support Programme II, and additional funding for infrastructure, digital connectivity and institutional capacity building.
The Intergovernmental Budget and Economic Council has already approved corrective action plans aimed at strengthening county financial management ahead of the TSA rollout.
If successfully implemented, the Treasury argues, the reforms could mark one of the most significant changes to county public finance management since the introduction of devolution in 2013.