The Council of Governors has called on Parliament to fast-track the passage of the Public Finance Management (Amendment) Bill, 2025, warning that delays could disrupt the efficient management of conditional grants to county governments.
In a legislative memorandum submitted to the National Assembly of Kenya’s Finance and National Planning Committee, the Council emphasized the urgency of repealing Sections 191A to 191E of the Public Finance Management (PFM) Act, describing them as fundamentally flawed and impractical.
“The Public Finance Management (Amendment) Bill… is critical to the County governments as it seeks to enhance efficiency in the transfer and utilization of funds emanating from various conditional grants,” the memorandum states.
The Council, representing all 47 county governments, acknowledged the National Assembly’s efforts to engage stakeholders, noting its “renewed collaboration in ensuring matters affecting Counties and devolution are addressed.”
However, it highlighted persistent challenges in implementing the contested provisions, revealing that “the Council governments have, in collaboration with the National Treasury, attempted to implement the new Sections of the PFM Act unsuccessfully.” The provisions have since been suspended by Parliament for five consecutive financial years.
According to the memorandum, even a multi-agency taskforce established by the National Treasury recommended repealing the sections a position later endorsed by the Intergovernmental Summit.
The Council’s concerns is what it terms unnecessary duplication in intergovernmental processes. The memorandum argues that existing Intergovernmental Participation/Partnership Agreements (IPAs) already govern conditional grants, making additional agreements redundant.
“The requirement for the Intergovernmental Agreements is unnecessary and should be deleted,” the Council noted, adding that such duplication “would result to duplication of efforts leading to delays in project implementation.”
It further criticized provisions assigning oversight roles to the National Treasury, asserting that “the MDAs are responsible for setting the conditions precedent and the day-to-day monitoring as opposed to the National Treasury as Section 191A suggests.”
The Council also flagged procedural inconsistencies, particularly around public participation. It pointed out that the law requires public engagement after agreements have already been approved, which “negates the need for meaningful and qualitative public participation.”
The council has already raised issue of misalignment between the proposed agreements and the national budget cycle warning that required agreements to be signed after Parliament approves conditional allocations. At the same time, it has questioned the necessity of additional approvals, noting that county assemblies already review and approve all allocations through fiscal strategy papers and budget estimates.
The Council argued that the persistent failure to implement the provisions since the 2021/22 financial year “points to a fundamental flaw in the law that is incurable.”
“The Council therefore proposes that the Bill is passed by Parliament without amendments before the beginning of the FY 2026/27,” the memorandum urges.
The governors warned that failure to act swiftly could affect the disbursement and absorption of funds in the upcoming financial year, potentially stalling development projects across counties.
“The Council urges the National Assembly to consider the Bill expeditiously to ensure that the additional allocations of the ensuing FY are not affected,” the memorandum notes.
As debate on the Bill continues, the push from county leaders underscores broader tensions in Kenya’s devolved system, particularly around fiscal autonomy and coordination between national and county governments.
