Kenya’s counties raised more of their own money in 2025/26 than ever before and still missed their targets. Beneath the total, the gaps between counties owe more to economic structure and collection systems than to effort.

By Our Staff Writer

Kenya’s 47 counties collected KSh97.55 billion in own-source revenue in 2025/26, against a combined target of KSh108.40 billion, or 89.99 per cent. That is about 45 per cent more than the KSh67.3 billion collected a year earlier (our arithmetic). Fifteen counties beat their own targets, and twelve fell below 70 per cent.

The headline number needs careful reading. When the Controller of Budget, Margaret Nyakang’o, explained the previous year’s jump, she listed underbudgeting, “a complete lack of budgeting for the Facility Improvement Fund”, revamped streams and automation. Facility Improvement Financing (FIF) is money that county hospitals collect and keep, largely from insurers. This year’s report again credits FIF, Social Health Insurance Fund reimbursements, revenue arrears and tourism-related receipts for part of the rise. So the total mixes three different things: local taxes and fees, hospital income, and old debts finally paid. Only the first shows how well a county taxes its own economy.

That is why the Ledger proposes a three-part Devolution Test for each county. It asks whether the county collects what its economy can plausibly yield, whether it keeps what it bills, and whether what it keeps reaches services or goes on wages.

What the economy hands a county

Counties start from different bases. Nairobi collected KSh15.54 billion against a target of KSh21.58 billion, or 72 per cent. Over the first nine months, land rates were its largest source, at KSh2.82 billion. A capital city’s property stock and business density give it a base that no arid county can match.

Other counties lean on a single asset. In 2024/25, the Controller reported that Tana River’s strong showing came from gypsum extraction, while Narok and Garissa drew most of their revenue from tourism and health facilities. Revenue like this depends on one quarry, one park or one hospital. It says little about administrative skill, and it can fall if the asset does.

Turkana shows the other end. It collected only 14 per cent of its annual target in the first nine months of 2025/26. Yet it is the second-largest cumulative recipient of national transfers since devolution began, with KSh138 billion to 2024/25, behind Nairobi’s KSh195.6 billion. A thin local base paired with a large transfer is a result of how the allocation formula works. It is not, on its own, evidence of poor governance.

Keeping what is billed

The sharpest divide is between billing and collecting. Counties were owed KSh113.29 billion in revenue arrears at 30 June 2026, more than a full year’s collections. Nairobi’s share was KSh59.09 billion, 52.15 per cent of the total. Nakuru’s was KSh16.64 billion, more than three times the KSh5.4 billion it collected in the year, up from KSh3.6 billion. Nairobi’s arrears are about 3.8 times its annual collection (our arithmetic). Large arrears can reflect old bills that will never be paid as easily as lax enforcement, so they need an ageing analysis before anyone reads them as failure.

Mombasa shows what automation can do, and what it can disguise. It reached 251.8 per cent of its annual target, though from arrears of previous years, and the Controller noted it had automated all its revenue streams. Yet it still held KSh13.68 billion in outstanding revenue, including KSh11.8 billion in unpaid land rates. In June 2026, a Senate committee urged the county to fix weaknesses in land rates, business permits and cess collection. Governor Abdulswamad Nassir pointed to digitised land records, work with the Registrar of Lands and a review of land valuation. The committee also noted that the county had targeted KSh780 million in cess but collected KSh520 million. A county can beat its annual target by clearing old debts while a current stream, here cess, falls short.

Targets, wages and what is left

Weak targets compound the problem. The Controller said 20 counties collected less than 75 per cent of approved targets and urged “realistic and evidence-based Own Source Revenue targets that are achievable”. Devolution Principal Secretary Teresia Mbaika told a revenue conference that most counties have historically collected about 65 per cent of projections, citing “unrealistic revenue targets, and weak enforcement mechanisms”. A target set too high lets a county budget for money it never receives, and unpaid bills follow.

Even strong collectors fund a small share of their budgets. The Ministry of Devolution says equitable-share transfers make up about 80 per cent of county revenues and own-source income only 13 per cent. What counties do with the money varies. Development spending was KSh126.69 billion, 25.51 per cent of total expenditure, and wage bills took the highest shares of revenue in Homa Bay (56.21 per cent), Nyeri (52.14 per cent) and Taita-Taveta (49.23 per cent). Wage ratios are not a verdict on their own, because counties run hospitals and large staffs, and responsibilities differ. Even so, a county that collects well and spends most of it on pay may deliver less than one that collects poorly but spends carefully.

What the numbers cannot yet say

Ranking counties by collection or by share of target would mislead. Nairobi’s size, Narok’s tourism and Tana River’s gypsum make totals incomparable. Applying the Test properly would take four further measures: collection per head against estimated potential, the age and recoverability of arrears, the cost of collecting a shilling, and whether clinics, water points and roads improved where revenue rose. None of these has yet been assembled for this story.

What to watch

The first test is whether 2026/27 targets sit closer to what counties actually collect, as the Controller has asked. The second is how long FIF reimbursements keep growing. The third is whether Mombasa’s automation reaches land rates, the stream its own committee calls weakest. Collecting more is the easy part to measure. The harder part is whether the money reaches a clinic, a road or a water point.