The Division of Revenue Bill, 2023

SPECIALISSUE

Kenya Gazette Supplement No.32(National Assembly Bills No.9)

KENYA GAZETTE SUPPLEMENT

NATIONALASSEMBLYBILLS,2023

NAIROBI,20th March,2023

CONTENT

| Bill forIntroductioninto theNational Assembly | PAGE | |-------------------------------------------------|--------|

THEDIVISIONOFREVENUEBILL,2023 ARRANGEMENTOFCLAUSES

Clause

1-Short title

2-Interpretation

3-Objectandpurposeof theAct

4-Allocations to National Government and County Governments

5-Variation inRevenue

SCHEDULE

EQUITABLE SHARE OF REVENUE RAISED NATIONALLY BETWEENTHE NATIONAL

ANDCOUNTYGOVERNMENTSFOR THE FINANCIALYEAR2023/24

APPENDIX

EXPLANATORY MEMORANDUMTO THE

DIVISIONOFREVENUEBILL,2023

THEDIVISIONOFREVENUEBILL,2023

A Bill for

AN ACT of Parliament to provide for the equitable division of revenue raised nationally between the national and county Governments in 2023/24 financialyear,and for connected purposes.

ENACTEDbyParliamentofKenya,asfollows

• 1.This Act may be cited as the Division of Revenue

Act,2023.

• 2.In this Act,unlessthecontext otherwiserequires

"revenue" has the meaning assigned to it under section 2 of the Commission on Revenue Allocation Act, 2011.

• 3.The object and purpose of this Act is toprovide for the equitable division ofrevenue raised nationallybetween the national and county levels of government for the financialyear2023/24in accordancewithArticle203(2)of the Constitution.
• 4.Revenue raised by the national government in respect of the financial year 2023/24 shall be divided among the national and county governments as set out in
• theSchedule to this Act.
• 5.(l)If the actual revenue raised nationally in the financial year fallsshort ofthe expected revenue set out in the Schedule,the shortfall shall be borne by the national government.
• (2) If the actual revenue raised nationally in the financial year exceeds theprojected revenues set out in the Schedule,the excess revenue shall accrue to the national government, and may be used to reduce borrowing or pay debts.

Short title.

Interpretation.

No.16 of2011.

Object and purpose of the

Act.

Allocations to

national and county governments.

Variation in

revenue.

SCHEDULE

(s.4)

ALLOCATIONOFREVENUERAISEDNATIONALLYBETWEEN THENATIONALAND COUNTYGOVERNMENTSFORTHE FINANCIALYEAR2023/24.

| Type/level of allocation | Amount in KSh. | Percentage(%) of FY 2019/20 audited and approved Revenue i.e. KSh.1,673,715Million | |----------------------------|-------------------|--------------------------------------------------------------------------------------| | A.Total SharableRevenue | 2,571,159,000,000 | | | B.National Government | 2,177,365,426,000 | | | C.Equalization Fund | 8,368,574,000 | 0.5% | | D.County equitable share | 385,425,000,000 | 23.03% |

MEMORANDUM OFOBJECTSANDREASONS

The principal object of this Bill is to provide for the equitable division of revenueraised nationally among thenational and county levels ofgovernment asrequiredby Article 2i8 of the Constitution in order to facilitate the proper functioning of county governments and to ensure continuity of county services delivery to the citizens.

Clauses 1 and 2of the Billprovide forthe short titleof theBill and the interpretation of terms used in the Bill,respectively.

Clause 3 of the Bill contains the provisions on the objects and

purpose of the Bill.

Clause 4 of the Bill prescribes the allocations for the National Government and the County Governments from the revenue raised nationally forthefinancialyear2023/24.

Clause 5 of the Bill outlines the mechanisms for adjusting for variations in revenues emanating from revenueperformance during the financial year in which thisBill relatesto.

Dated the 16th March,2023.

NDINDINYORO,

Chairperson,Budget andAppropriationsCommittee.

APPENDIX

EXPLANATORYMEMORANDUM TO THEDIVISION OF REVENUEBILL,2023

Background

• 1.This memorandum has been prepared as an attachment to the
• Division of Revenue Bill (DoRB),2023 in fulfilment of the requirements ofArticle 218(2)of the Constitution and section191of thePublicFinance ManagementAct,2012.
• 2.Article 218 (2) of the Constitution requires that the Bill be submitted to Parliament every year together with a memorandum explaining:
• (a)theproposed revenue allocation set out in the Bill;
• (b) the extent to which the Bill has taken into account the provisions ofArticle203(1)oftheConstitution;and
• (c) any significant deviations from the recommendations of the Commission on Revenue Allocation (CRA).
• 3.Section 191 of the Public Finance Management Act,2012
• requiresthattheBillbeaccompanied byamemorandumwhichexplains:
• (a)the extent,ifany,of deviation from therecommendations of the Intergovernmental Budget and Economic Council;and
• (b) any assumptions and formulae used in arriving at the respective allocations proposed in theBill.

Explanation of the Allocations to the National and County

Governments as Proposed in the Bill

County Governments'Equitable Share

• 4.The Bill proposes to allocate County Governments KSh. 385.425 billion for the financialyear2023/24 asequitableshareofrevenueraised nationally.The equitable share allocation hasbeen proposed to increase from a baseofKShs.370 billionallocated inthefinancialyear2022/23,to an allocation of KSh.385 billion in FY 2023/24.The equitable share allocationin thefinancialyear2023/24hasalsobeenproposed toinclude KSh.425 million as attendant resources for the pay roll relating to the library services transferred from the Kenya National Library Services. Library services is a devolved function asprovided for under Part HI of the Fourth Schedule to the Constitution.

• 5.The rationale for the proposed County Governments'equitable revenue share allocation is:
• (a)Theproposed equitable share of KSh.385.425 billion in the FY 2023/24isequivalentto24.5percentofthelastaudited accounts (KSh.1,673,715 Million for FY 2019/20) and as approvedby Parliament.Theproposed allocation therefore meetsthe requirementofArticle203(2) of the Constitution;
• (b)High level of debt financing as well as elevated debt risk;
• (c) Financing constraints due to limited access to finance in the domestic and international financial markets. As a result,the National Treasury did not disburse KSh.29.6 billion to County Governments in theFY2021/22 due to financial constraints;
• (d)The Governmentisalso implementinga fiscal consolidationplan soas tolowerthefiscal deficit and slowdown debt accumulation. To reflect this fiscal tightening,the National Government recurrent ceiling growth has been restricted, declining from a growth of 10.3 percent in FY 2017/18 to 1.2 percent in FY
• 2023/24.
• (e)The fact that the National Government continues to solely bear shortfalls in revenue in any given financial year,while County Governmentsreceive their full allocation despite the budget cuts affecting theNational Government entities.
• 6.The above proposed Equitable Share for FY 2023/24 of
• Ksh.385.425 billion is equivalent to 23.03per centof the last audited accounts(KSh.1,673,715 Million for FY 2019/20) and as approved by Parliament. The proposed allocation meets the requirement of Article 203(2)of the Constitution that equitable share allocation to Counties should not be less than fifteen (15)per cent of thelast audited revenue raised nationally,asapproved by the National Assembly.
• 7.The County Governmentsequitable share of revenue raised nationally for the financialyear2023/24 isarrived atby growing the County Governmentsequitable sharefor2022/23ofKsh.370billionbya resources for transferred Library Services (see Table 1). This growth has takeninto consideration performance ofrevenuein thepast which hasnot
• growth of KSh. 15 billion and additional KSh. 0.425 billion as attendant been on target.

Table1:Equitable Revenue Share AllocationtoCounty Governments,FY2023/24

| BUDGETITEM | AMOUNT(KSH. MILLION | |---------------------------------------------------|-----------------------| | CountyEquitableRevenueShareforFY2022/23 | 370,000 | | Add: | | | Adjustment forRevenue Growth | 15,000 | | Transfer of Library Services | 425 | | Equitable Revenue Share allocation for FY 2023/24 | 385,425 |

Source:National Treasury

Evaluation of the Bill against Article 203(1) of the Constitution

• 8.Article 218(2)of the Constitution requires Division of Revenue between thetwo levelsofgovernmentandacross CountyGovernments to take into account the criteria set out in Article 203(1)of the Constitution. The criteria include factors such as:national interest,public debt and other national obligations and needs of the disadvantaged groups and areas, among others.
• 9.Table 2 provides an assessment of the extent to which the requirementsofArticle203(1) of the Constitution havebeenincorporated in estimating the Division of Revenue between the National and County levelsof Governmentin thefinancialyear2023/24.

Table 2:Evaluation of the Bill against Article 203 (1) of the Constitution

| | ITEMDESCRIPTION (KSh.Millions) | FY2019/20 | FY2020/21 | FY2021/22 | FY2022/23 | FY2023/24 | |----|------------------------------------------------------------------------------------------------------|-------------|---------------------|-------------|-------------|-------------| | | ORDINARYREVENUE (EXCLUDING AIA) | 1,673,715 | 1,574,009 1,775,624 | 2,141,584 | 2,571,159 | | | | National Interest[Article 203(1)(a) | 94,168 | 86,753 | 83,197 | 90,727 | 92,466 | | | Enhancementofsecurity operations(police vehicles,helicopters, defense etc.) | 27,974 | 24,816 | 22,261 | 25,967 | 24,299 | | | National irrigation | 11,103 | 11,375 | 11,199 | 14,676 | 16,800 | | | YouthEmpowerment | 16.226 | 16,127 | 14,548 | 14,364 | 15,290 | | A | Nationalsocialsafety net for older persons,OvC, childwelfare,presidential bursary,severe disability) | 26,362 | 28,832 | 29,286 | 29,817 | 31,074 | | | Primary SchoolDigital Literacy Program | 8,400 | 1,500 | 1,800 | 1,385 | | | | SchoolExaminationFees (KSCE&KCPE&Grade 6(CBCExamination) | 4,103 | 4,103 | 4,103 | 4,523 | 5,003 | | B | Public debt (Art.203 | 538,802 | 829,906 | 1,174,013 | 930.354 | 1,250,735 | | | Other National obligations(Article.203 | 483,507 | 518.356 | 557,863 | 595,269 | 674,864 | | | Pensions,constitutional salaries&other | 109,526 | 124,451 | 136,978 | 145,951 | 199,015 | | | Constitutional commissions(Art.248(2)) ie.,CRA,SRC,NLC, NPSC,IEBC,TSC | 261.387 | 281,099 | 299,333 | 321,968 | 331,309 | | | Independentoffices(Art. 248(3))-i.e.,AG&CoB | 6,336 | 6,295 | 6,499 | 6,981 | 8,521 | | | Parliament | 36,240 | 36,222 | 37,883 | 50,220 | 40,402 | | | Otherconstitutional institutions-StateLaw Office andDPP | 8,765 | 8,154 | 8,371 | 8,713 | 9,968 | | | Otherstatutory bodies (eg.,EACC,RPP,WPA, CAJ,IPOA,NGEC) | 5,937 | 6,674 | 7,036 | 8,462 | 9,123 |

| | ITEMDESCRIPTION (KSh.Millions) | FY2019/20 | FY2020/21 | FY2021/22 | FY2022/23 | FY2023/24 | |------------------------------------------------------------------------------|----------------------------------|-------------|-------------|-------------|-------------|-------------| | Judiciary | 14,437 | 14,150 | 17,918 | 18,297 | 22,994 | | | Earmarked Strategic Interventions | 40,879 | 41,311 | 43,845 | 46,420 | | 53,532 | | Emergencies [Art.203 (1)(k)] Contingencies | 6,418 | 5,000 | 5,000 | 5,000 | | 4,756 | | | 5,000 | 5,000 | 5,000 | | 5,000 | 4,756 | | Strategic grainreserve | 1.418 | | | | | | | Equalization Fund [Art. 203(1)(g)and(h)] | 5,765 | 6,532 | 6,825 | | 7,068 | 8,368 | | BALANCE TO BE SHARED BY THE2 LEVELS OF GOVERNMENT | 545,055 | 127,462 | -51,274 | 501,418 | | 539,790 | | County Government allocation froim revenue raised nationally of which;- | 324,160 | 330.231 | 377,537 | | 375,654 | 396,441 | | a)EquitableShare of Revenue | 310,000 | 316,500 | 370,000 | | 370,000 | 385,425 | | b)Additional conditional allocations financed from revenues raisednationally | 14,160 | 13,731 | 7,537 | | 5,654 | 11,016 | | Balanceleftforthe National Government | 220,895 | -202,769 | -428,811 | | 125,764 | 143,529 |

• 10.National Interests: These are expenditures which relate to projects andprogrammes that:
• (a) are critical to the achievement of the country's economic development objectives;
• (b)potentially will have significant impact on social well-being of citizens;
• (c)are anchored in theVision 2030 and theMedium-Term Plan IV (2022-2027);
• (d) have significant resource investment requirements;and
• (e)have been specified in the 2023 Budget Policy Statement.

These national interests include:activities aimed at enhancing security operations;national irrigation and fertilizer subsidy initiatives; Youth Empowerment; provision of national social safety net for vulnerable groups,and school examination fees subsidy. Revenue allocation for these programs is expected to increase slightly from KSh. 90.7billion in2022/23 toKSh.92.5billion in2023/24.

• 11.Public Debt:The Bill has fully provided for all public debt related costs: These comprise the annual debt redemption cost aswell as the interest paymentfor both domestic and external debt.Infinancial year 2023/24,therevenue allocation forpayment ofpublic debtrelated costs is expected to increase from KSh.930.4 billion allocated in financial year
• 12.Other National Obligations: As provided for under Article 203(1) (b)of the Constitution,the Bill has also taken into account the cost of other national obligations,such as,mandatory pension contributions and/or payments,financingforconstitutional offices,includingParliament as well as expensesrelating to other statutorybodies. These are estimated to cost KSh.673.9 billion in financial year 2023/24 up from KSh.595.3 billion allocated in thefinancialyear2022/23.
• 13.Fiscal Capacity and Efficiency of County Governments:Fiscal capacity for County Governmentsrefers to thepotential revenues that can begenerated from the tax bases assigned to the Counties when a standard averagelevel ofeffort is applied.In itsrecommendations toParliament on the Third Basis for Sharing Revenue among County Governments,the Commission on Revenue Allocation (CRA) included a'fiscal effort parameterwith a 2%weightintended to incentivize OsRcollectionby the Counties.This is consistent with the approach in other jurisdictions,where the formula for horizontal revenue distribution among subnational those ofexpenditure need.CRA's fiscal effort parameter was defined in terms of each County Government's actual revenue collection relative to the County's Gross County Product (GCP) as computed by the Kenya National Bureau ofStatistics(KNBS).

14. In approving CRA's recommendations however, Parliament did not include the fiscal effort parameter,effectively shifting the 2%weight to other parameters.The formulae,therefore,does not incentivize counties to strengthen their local revenue collection efforts. There is,therefore, need for County Assemblies,in conducting their oversightrole to ensure that County Governments enhance their own source revenue collection.It is expected that future revenue sharing formulae may considerreinstating

the fiscal effort parameter to incentivize counties to collectmore own sourcerevenues.

• 15.County Governments'ability to perform the functions assigned to them and meet other developmental needs of the County Governments:As explained above,the baseline for the equitable share allocation for thefinancialyear2023/24wasderivedfrom theDivisionof Revenue Act,2022.This base line is informed by costingof expenditure for devolved functions done at onset of devolution,which has been the basisfor equitableshare overtheyears.
• 16.County Governments are allocated equitable share of revenue which is an unconditional allocation to enable countieshaveautonomy to priorities and account for the same.In addition,Article 209 of the Constitution has assigned counties revenue raising powers and as such countiesare expected toimprove andmaintain sustained collectionof their own sourcerevenues.
• 17.Library being a devolved function as provided for under the Fourth Schedule of the Constitution,has been unbundled and attendant resources amounting to KSh.425 million identified and proposed to be fully transferred to County Governments aspart of the equitable share in FY 2023/24.ForFY 2023/24,theresourcesshould notbesharedusing the formulae and,therefore,counties should be held harmless. This amount will be included in the Equitable share allocation for the 33 County Governments inaphasedapproach starting fromFY 2023/24 at100%, 75%forFY2024/25(balanceof25%tobesharedasequitable)and25% forFY 2025/26(balanceof75%tobesharedasequitable)).From the fourth FY,that is FY 2026/27,the 33 County Government's will be required to integrate the salaries of these staff into their pay roll,after which the entire KSh.434 million will be available for sharing as equitable share among the 47 County Governments,in line with the principle of transferringresources to devolved functions.
• 18.Additionally,the equitable share to County Governments is proposed to increase fromKSh.370billionin FY2022/23toKSh.385.425 billioninFY2023/24,anincreaseofKSh.15.425billion,which ismeant tofacilitate County Governmentsenhance service delivery inperformance of their assigned functions under the second part of the Fourth Schedule of the Constitution.
• 19.It should also benoted that,in order to balance between priority development and performance of the assigned functions,the Third Basis formula is premised on eight parameters which relate to devolved functions assigned to County Governments inPart Hl of the Fourth

Schedule of the Constitution.Accordingly,countieswill have to allocate a prescribed minimum to specific functions contained in the Third Basis.

• 20.Thus, the proposed vertical division of revenue proposed in the Division of Revenue Bill,2023,therefore,takes into account the cost of County Governmentsdevelopmental needs and it is expected that County Governmentswill have theability to perform thefunctions assigned and transferred to them ascontemplated underArticle203(1) (f).
• 21.Economic Disparities within and among counties and the need to remedy them:Allocation of the sharable revenue (i.e.,equitable share of KSh.385 billion) among counties is based on the Third-generation formula approved by Parliament inSeptember,2020pursuant to provisions of Article 217 and Section 16 of the Sixth Schedule of the Constitution.The Third Basis formula which should be applicable from FY 2020/21 to FY 2024/25 has taken into account the following parameters;(i)Population(18%);(ii)HealthIndex(17%);(iii) Agriculture Index (10%);(ii) Urban Index (5%);(iv) Poverty Index (14%);(v) Land Area Index(8%);(vi) Roads Index (8%),and;(vii) Basic Shareindex(20%).The horizontal distribution of County Governments equitable revenueshareallocation ofKSh.385 billion forFY 2023/24 shall be based on the Third Basis Formula.It should be noted that the Third basis formula applied in FY 2023/24,takes intoaccount disparities among counties and aims at equitable distribution of resources across counties.
• 22.Further,it should be noted that KSh.8.368 billion hasalso been setasidefortheEqualizationFundinFY 2023/24which translatesto0.5 per cent of the last audited revenue accounts of governments,as approved by the National Assembly. This Fund is used to finance development programmes that aim at reducing regional disparities among beneficiary counties.
• 23.Need for Economic Optimization ofEach County:Allocation ofresources to County Governments was guided by the historical costing ofexpenditures for functionsassigned to the County Governments.The equitable share of revenue allocated to County Governments in the financial year 2023/24 is KSh.385.425 billion,an allocation which is allocation which means that the County Governments can plan,budget and spend the funds independently.With the resources,therefore,County Governments are in a position to prioritize projects and consequently development.

• 24.Stableand Predictable Allocationsof County Governments? Vertical Share ofRevenue:The County Governments'equitable shareof revenue raised nationally has been protected from cuts that may be occasioned by shortfall inrevenue raised nationallymoreso in the advent of the effects ofprojected global economic downturn in 2023.According to clause 5of theDivision of Revenue Bill (DoRB)2023,any shortfallin revenue raised nationally is to be borne by the National Government,to the extent of the threshold prescribed in Regulations by the Cabinet Secretary.
• 25.Need for Flexibility in Responding to Emergencies and Other Temporary Needs:Included in the equitable share ofrevenue for the National Government is an allocationof KSh.4.O billion for the Contingencies Fund established pursuant toArticle2o8ofthe Constitution. This Fund will be used to meet the demands arising from urgent and unforeseen needsin all Counties that suffer from calamities in the manner contemplated under Section 2l of the Public Finance Management Act,2012.In addition,the PublicFinance Management Act, 2012and thePFM(County Governments)Regulations,2015requires each County Government to set up a County Emergency Fund. County Governments are expected toset asideat least 2%oftheir budget aspart of their allocationfor thispurpose.
• 26.It should be noted that after taking into account all the other factors contemplated under Article 203(1) of the Constitution,including the needs of County Governments,there is minimal resources left to finance other National Government needs, such as, defence,roads,energy etc.In fact,this leaves a balance of KSh. 143,529 million. This is not sufficient to finance the National Government functions such as defence, roads,energy and may occasion additional borrowing which may distort thefiscalframeworkalreadyset outinthe2023BudgetPolicyStatement.

Response to the Recommendations of the Commission on Revenue Allocation(CRA)

• 27.The Division of Revenue Bill,2023proposes to allocate County Governments an equitable share of KSh. 385.425 billion from the shareable revenue raised nationally.The CRA,on the other hand, recommends County Governments'equitable share of revenue of KSh. 407 billion as an unconditional allocation to be shared among County Governments on the basis of the formula for sharingrevenue approved by Parliament under Article 2i7 of the Constitution.The difference in the Commission on Revenue Allocation (CRA) recommendation and the DoRB 2023 proposal emanates from the different approaches used to

compute the County Governments'equitable share of revenue. These

include;

• (a) Use of different revenue adjustment factor:CRA adjusts the county equitable share (using a base of KSh. 370 billion)of revenue using the projected increase of revenue raised nationally of 17 percent from KSh. 2,192 billion in the financial year 2022/23 toKSh.2.571.2 billion inthe financialyear 2023/24. Informed by the performance of revenue,the Commission recommends an increment in the allocation to each level of government for the financial year 2023/24.Therefore,the national government allocation be increased from KSh.1,814.8 billion to KSh.2,150.3 billionand County Governments allocation be increased fromKSh.370 billion toKSh.407billion. However, the DORB 2023, proposes to adjust the county equitable share(using a base of KSh.370 billion) by KSh.15 billion,from anallocation ofKSh.370 billion in FY 2022/23 to KSh.385billion in FY 2023/24.Theadjustment by theDORB 2023is informed by:
• (i)High level of debt financing,and noting that the overdraft at the Central Bankis exhausted.The Government has already reduced borrowing by KSh.119 billion in FY 2022/23in order to ensure public debt is maintained at sustainable levels;
• (ii) Financing of Priority government expenditure relating to drought intervention,fertilizer subsidy and the Hustlers Fund;
• (ili) In the medium term, sharing of resources will be pegged on the financing constraints and not on the budget.Availability of resources is key and it should be noted that National Treasury did not disburse KSh. 29.6 billion to County Governmentsin theFY2021/22 due tofinancial constraints;
• (iv) The Government is also implementing a fiscal consolidation plan,which is expected to be shared between the two levels of government,so asto lower the fiscal deficit and slow down debt accumulation.To reflect this fiscal tightening,the National Government recurrent ceiling growth has been restricted,declining from a growth of 10.3percent in FY 2017/18to1.2percentin FY2023/24.Thefact that the growth in recurrent ceiling is below growth in wages, implies that the National Government is reducing its operation budget significantly;

• (vi) The fact that the National Government continues to solely bear shortfallsinrevenue in any given financialyear. County Governments continue to receive theirfull allocation despite the budget cuts affecting the National Government entities.; and
• (vi) The Consolidated Fund Services (CFS) budget for FY 2023/24hasbeenrevisedupwardsbyKSh.44.679billion.
• (b)Transferof library Services:-Additionally,the DORB 2023 proposes additional KSh.425 million as attendant resources for the pay roll of transfer of Library Services from the Kenya National LibraryServicesto County GovernmentswhereasCRA has not provided for the transfer of Library Services.Library servicesis a devolved function asprovided forunder Secondpart of theFourth Schedule of the Constitution.
• recommendations and the DoRB 2023,proposal on the Division of Revenuebetween thenational and CountyGovernmentsin FY 2023/24.
• Table 3:Comparison of approaches towards recommendations of the Commission on Revenue Allocation and the DORB 2023 on the equitable shareofrevenue proposed forFY2023/24

| Expenditure Item | CRA | DORB2023 | Variance | |-----------------------------------------------------------------------|------------|------------|-------------------| | | A(million) | B(million) | C=(A-B (million)) | | 1.Equitable Revenue Share in FY 2022/23 | 370,000 | 370,000 | | | 2.Adjustmentforrevenue growth inFY2023/24asdeterminedin the framework | 37,000 | 15,000 | 22,000 | | 3.Transfer oflibrary services | | 425 | -425 | | TOTALEQUITABLEOF REVENUE=(1+2) | 407,000 | 385,425 | 21,575 |

Source:National Treasury and Economic Planning

Conclusion

29. The proposals contained in the Bill take into account the fiscal framework setout in the 2023BPS and are intended to ensure fiscal sustainability specifically against the backdrop ofescalating expenditure

pressure on the fiscal framework occasioned by increase in Consolidated Fund Services (CFS) and the persistent under performance of the ordinary revenue.

30.The proposed equitable share allocated to County Governments in the Division of Revenue Bill,2023 has also taken into account the approved Third Basis for Revenue Allocation. The proposed KSh. 385.425billionallocation among County Governmentspursuant toArticle 217of the Constitution is equivalent to 24.5per cent of theFY 2019/20 revenue which is the most recent audited and approved revenue by the National Assembly.This is above the minimum threshold required under Article203(2)of the Constitution.