The latest report from the Controller of Budget on the first half of the 2025/2026 financial year reveals a stark reality: while the majority of Kenya’s 47 counties grapple with persistent revenue shortfalls, a select few are defying the trend through aggressive local mobilization. Controller of Budget Dr. Margaret Nyakang'o, in her comprehensive review released this week, identified a deepening chasm between revenue targets and actual performance, leaving many devolved units reliant on the national equitable share.

For the average Kenyan, this data point is more than just fiscal jargon—it dictates the availability of county-funded healthcare, the maintenance of rural roads, and the efficiency of agricultural support services. With county governments collectively struggling to reach their Own-Source Revenue (OSR) goals, the pressure is mounting on county executives to move beyond administrative rhetoric and implement sustainable revenue-generating mechanisms. The stakes are immense: budget deficits in the first half of the financial year have already forced the postponement of critical development projects in dozens of counties.

The Revenue Performance Paradox

According to the official data, the total funds available to county governments during the first half of the 2025/2026 fiscal year amounted to KSh 227.15 billion. This figure comprises KSh 172.73 billion in equitable share, KSh 26.40 billion in carried-forward cash balances, and a meager KSh 26.94 billion generated from local sources. While the national government continues to push for greater fiscal autonomy at the devolved level, the numbers suggest that the transition remains fragile.

Dr. Nyakang'o's report highlights that the primary challenge lies in the consistent inability of county governments to bridge the gap between their ambitious budget targets and their actual collection capacity. While the reliance on the equitable share remains a necessary lifeline, the lack of robust OSR generation is stifling the development mandate of devolved units.

• Total Available Funds (H1 2025/2026): KSh 227.15 billion
• Equitable Share: KSh 172.73 billion
• Carry-over Balances: KSh 26.40 billion
• Total Own-Source Revenue Collected: KSh 26.94 billion
• Facility Improvement Financing (FIF/A-I-A): KSh 12.70 billion

The Outliers: How Three Counties Defied the Trend

Amidst a landscape of underperformance, three counties stood out for exceeding the 50 percent mark of their half-year revenue targets. These outliers offer a case study in effective local revenue mobilization, often driven by a combination of digital automation and better oversight of high-yield sectors like tourism and healthcare facility fees.

Samburu County led the nation with a 79 percent performance rate, a feat largely attributed to strong revenue influxes from its tourism sector and improved collection systems. Garissa followed with a 71 percent performance, bolstered significantly by its management of health facility funding (FIF). West Pokot rounded out the top tier with a 54 percent performance rate, demonstrating that even arid and semi-arid lands (ASALs) can optimize revenue collection if administrative bottlenecks are minimized.

The Development Spending Crisis

Perhaps more concerning than the revenue shortfall is the low absorption rate of development funds. While recurrent expenditure remains prioritized to maintain the administrative machinery, capital investment—the engine of local economic growth—is faltering. The Controller of Budget reported that counties are currently failing to absorb development funds at the expected rate, with many departments barely crossing the 14 percent utilization threshold for capital projects during the six-month period.

This under-absorption creates a vicious cycle: stalled projects fail to stimulate local economic activity, which in turn suppresses the tax base for future local revenue collection. Economists at the University of Nairobi warn that without a concerted shift toward development-focused spending, the devolved units risk becoming merely conduits for administrative salaries rather than hubs of regional economic transformation.

The Path Ahead

The report serves as a diagnostic tool for governors and county assemblies as they prepare for the supplementary budget cycle. The message from the Office of the Controller of Budget is clear: institutionalizing revenue collection through the automation of services, rather than relying on manual, cash-based systems that are prone to leakage, is no longer an option—it is an existential imperative.

As Kenya approaches the second half of the fiscal year, the disparities between the top performers and the laggards must force a broader conversation about fiscal federalism. The success of Samburu and Garissa proves that geography is not an automatic barrier to fiscal viability rather, it is the quality of administration and the integrity of collection systems that define success in the devolved era. For the citizens of the 44 counties that failed to hit the halfway mark of their revenue targets, the hope remains that the lessons from these outliers will translate into better service delivery before the next fiscal cycle begins.