Kenya’s county governors are urging the government to include universal health coverage (UHC) funds in the equitable share allocation for the 2026/2027 financial year, rather than distributing them as conditional grants. This push aims to address significant delays in disbursement and improve healthcare service delivery across counties. The proposal, spearheaded by the Council of Governors (CoG) Chair Ahmed Abdulahi, was presented during a Senate Finance Committee session.

A Call for Structural Changes in Fund Allocation

During the Senate Finance Committee hearing, governors, alongside the Commission on Revenue Allocation (CRA), emphasized the inefficiencies brought about by conditional grants. According to the county leaders, delays in disbursing these grants have repeatedly triggered labor disputes among health workers, disrupting essential healthcare services.

The governors want UHC funds to be incorporated into the primary equitable share formula through the Division of Revenue Bill 2026. This approach, they argued, would ensure timely distribution and seamless payroll management, with salaries processed centrally under a unified system.

CRA also supported the governors' stance and proposed increasing the equitable share allocated to county governments to KSh 458.94 billion for 2026/2027. This sum includes adjustments for revenue growth and salary increments for existing county staff.

Revenue Allocation Dispute

A significant point of contention throughout the discussions was the national treasury's proposal of KSh 420 billion – a figure described as insufficient by the governors and CRA. Instead, the governors are calling for an even higher allocation of KSh 534.96 billion to effectively address local needs, particularly in the healthcare sector.

“We need equitable distribution of resources. County governments generate significant revenues through taxes, levies, and other contributions; however, most of it goes into a central basket controlled by the national government," said Ahmed Abdulahi.

The governors argued that the existing revenue-sharing structure unfairly favors the national government, leaving counties to rely on constrained budgets and occasional conditional grants. With UHC being a top national priority, they stressed the importance of predictable and sufficient funding.

Breakdown of Proposed County Needs

The CRA outlined a detailed analysis of county funding requirements:

• Increase in equitable share: The proposed KSh 458.94 billion includes an increase of KSh 43.94 billion from prior allocations.
• Salary adjustments: At least KSh 5.9 billion will be required to cover salary increments for existing staff.
• Healthcare priorities: UHC staff and services will require ring-fenced budgetary commitments to prevent disruptions.

The governors reiterated their confidence that incorporating UHC funds into the equitable share would eliminate delays and improve planning.

National and County-Level Tensions

Ahmed Abdulahi criticized the lack of consultation by the National Treasury in determining the proposed KSh 420 billion allocation. The governors argued that county governments bear the primary responsibility for implementing healthcare and other devolved functions, yet they remain underfunded.

“Counties shouldn’t simply be begging for funds. Their ability to generate revenue locally, through income tax and tourism levies, underscores their role as equal stakeholders,” Abdulahi pointed out. The Senate, on its part, acknowledged the governors’ concerns and promised to review the proposals alongside those of the national government.

Senate Committee’s Next Steps

The Senate Finance Committee is expected to deliberate further and meet with John Njuguna Ndung’u, Treasury Cabinet Secretary, to discuss these proposals. The meeting, scheduled for Thursday, could determine how UHC funding will ultimately be handled in the upcoming fiscal year.

The governors’ united stance signals a strong push for equitable resource distribution amid Kenya’s ongoing devolution efforts. Ensuring predictable funding mechanisms, particularly for critical sectors like healthcare, remains a crucial challenge for government agencies.

Practical Implications

1. Improved Healthcare Access: Incorporating UHC into the equitable share will likely stabilize healthcare worker payrolls and reduce interruptions in service delivery.
2. Enhanced County Planning: Predictable allocations enable counties to plan long-term projects without reliance on conditional grants, which have proven unreliable.
3. Strengthened Devolution: Addressing funding disparities is essential to empower counties and improve public confidence in the devolved government structure.

Conclusion

The allocation of universal health coverage funds remains a critical discussion point in Kenya’s fiscal planning for 2026/2027. While the governors and CRA are advocating for increased and equitable distribution, the National Treasury’s numbers fall short of meeting county needs. With healthcare services at stake, balancing national and county priorities will be key to achieving equitable development across the country.