Proposed formula of sharing revenue unfair to Coast counties

As Kenya edges closer to adopting a new revenue-sharing formula for the next five years, we find ourselves once again confronted by the enduring question of how best to balance equity with efficiency. The Fourth Basis for Revenue Sharing, as proposed by the Commission on Revenue Allocation, represents a commendable attempt to align constitutional principles with data-driven policy. Yet even as the formula strives to reflect service delivery needs across the country, it unintentionally risks repeating a familiar pattern: Rewarding population concentration while overlooking the complex realities faced by counties that are geographically vast, economically vulnerable, or carrying strategic burdens on behalf of the nation.

No two counties in Kenya are exactly alike. Our counties differ not only in population size but in geography, infrastructure, economic structure, and vulnerability to shocks. That’s why it’s concerning that the population parameter has once again been elevated to 42 per cent in the proposed formula, reversing the gains we made when it was reduced to 18 per cent under the Third Basis. A formula that leans too heavily on population can quickly transform from a measure of fairness into one of neglect. Population matters; it captures the scale of service demand. But when it overshadows other equally critical factors, such as structural underdevelopment, remoteness, or environmental risk, it inadvertently privileges the already-advantaged and penalises the historically underserved.

Coastal counties offer a clear example of the gaps in the current revenue-sharing formula. These regions host critical national infrastructure—ports, ferry systems, mining sites, and marine ecosystems—that power the broader economy, yet they receive no additional support for the burdens they carry. Cities like Mombasa and Lamu must manage congestion, pollution, and urban strain, while counties like Kwale bear the environmental and social costs of mining without retaining a fair share of the revenues, which are collected and shared at the national level. Despite repeated calls to recognise these roles, the Fourth Basis remains silent. For devolution to be truly equitable, the formula must reflect the strategic functions some counties perform for the nation as a whole.

Across the globe, governments have recognised that equity must consider more than just people—it must also factor in place. South Africa, for example, assigns only a small portion of its equitable share to basic population numbers, and instead weights its formula towards sectoral needs and spatial inequality. Uganda goes further by incorporating historical conflict and poverty indices. Kenya, too, must take bold steps to evolve its framework if it is to deliver justice through devolution.

One such step could be the introduction of a County Needs Index. This would allow us to consider infrastructure gaps, access to basic services, climate vulnerability, and historical marginalisation in a structured and transparent way. It is an idea whose time has come, particularly as we grapple with the realities of climate change and rising inequality. A modest weighting—say five percent—could help us bridge the gap between counties that are chronically underserved and those with deeper fiscal muscles.

One of the lesser-known but important features of the proposed formula is the stabilisation factor—a mechanism designed to ensure that no county receives less than it did in the previous financial year. This cushion helps protect counties from sudden funding drops, especially in cases where data changes might otherwise reduce their allocations. While the intent is sound, the way this factor is applied remains opaque. Without clarity on how it is computed or any legislative anchoring, it leaves the door open to arbitrary or inconsistent adjustments in the future. If we are to inspire lasting trust in the revenue-sharing process, we must ensure this mechanism is transparent, predictable, and fair—ideally by embedding it in law and linking it to a rolling average of past allocations.

We also need to think differently about what counties really need to deliver services. The use of Gross County Product per capita as a measure of local capacity, though well-intentioned, risks misrepresentation. Many coastal counties, for example, appear wealthy on paper due to activities like port handling, extractives, or tourism—yet the actual fiscal benefits from these activities often accrue elsewhere. Meanwhile, informal economies, which sustain millions, go unrecorded. A refined approach—one that disaggregates sectoral data, accounts for informality, and incorporates vulnerability scores—would allow for a truer picture of fiscal reality and need.

Kenya’s future depends not just on how much money we share, but how wisely we do it. If our formulas fail to recognise special functions and structural disadvantages, they will perpetuate the very inequalities devolution was designed to reverse. The coastal counties, rich in heritage and critical to national development, deserve a framework that sees them—not as peripheral beneficiaries—but as equal partners in the republic. Their challenges are not unique to them; they represent the broader struggle of regions that contribute greatly to the country but receive little in return.

Ultimately, this is not merely a coastal issue—it is a Kenyan issue. Equity must be understood not as charity, but as the infrastructure of nationhood. When a child in Lamu has to travel by boat each morning just to attend school, when a health facility in Tana River is hours from the nearest tarmac road, when saline intrusion ruins farmlands in Kilifi, or when farmers in Taita Taveta cannot transport their produce due to deteriorating roads, we are not just failing a county—we are failing our promise to ourselves as a country. 

The Senate now has the opportunity to rise to this moment. By revisiting the weight of population, introducing a needs-based index, clarifying the stabilisation mechanism, recognising the unique economic and environmental functions of counties like those on the Coast, it can help forge a revenue-sharing framework that is not just balanced, but visionary.

In doing so, we would not only uphold the letter of Article 203 of our Constitution—we would affirm its spirit.