Urban counties still dominate Kenya’s own-source revenue (OSR) collections, but arid and semi-arid land (ASAL) counties are recording faster growth rates, pointing to a gradual rebalancing in local revenue mobilisation as national reforms take hold.
- •According to the Draft 2026 Budget Policy Statement, county governments raised Sh67.3 billion in OSR in FY 2024/25, representing 76.8% of the Sh87.7 billion target.
- •While this marks an improvement from the previous year, performance remains uneven across the 47 devolved units.
- •As of June 30, 2025, county pending bills stood at Sh176.9 billion, equivalent to 29% of approved county budgets.
Nairobi remains the single largest OSR contributor, drawing stable income from property rates, parking fees, business permits and service charges. However, Treasury data shows the capital’s year-on-year OSR growth remained in the low double digits, reflecting its already large revenue base rather than weak collection effort.
ASAL counties including Turkana, Wajir, Mandera, Garissa, Samburu and Tana reported growth, largely driven by digitisation of revenue systems, tighter enforcement and standardisation of fees.
Overall, 20 counties recorded OSR growth of more than 50% between FY 2023/24 and FY 2024/25, Treasury data shows, reinforcing what officials describe as a two-speed devolution model, urban counties generating large but slower-growing revenues, while ASAL regions post rapid gains as previously untapped revenue streams are brought into the net.
Key reforms already in place include the National Rating Act, 2024, development of a model tariffs and pricing policy, and the proposed County Governments (Revenue Raising Process) Bill, which is now at the Second Reading stage in the Senate. The Bill seeks to standardise how counties introduce taxes, fees and charges to ensure predictability and compliance with the Constitution.
Treasury is also finalising an Integrated County Revenue Management System (ICRMS) and a national revenue forecasting model to improve target-setting and accountability.
Despite the OSR gains, counties continue to grapple with mounting pending bills, which Treasury warns could undermine fiscal sustainability. Nairobi alone accounts for Sh86.77 billion, or 49% of the total stock.
