REPUBLIC OF KENYA COUNTY GOVERNMENT OF KAKAMEGA DEPARTMENT OF FINANCE, ECONOMIC PLANNING AND ICT MEDIUM TERM COUNTY FISCAL STRATEGY PAPER A wealthy and Vibrant County February, 2025 Page | ii 2025 County Fiscal Strategy Paper County Vision and Mission Vision Mission A wealthy and vibrant County offering high quality services to its residents To improve the welfare of the people of Kakamega County through formulation and implementation of all-inclusive multi- Sectoral policies Page | iii 2025 County Fiscal Strategy Paper Kakamega County Fiscal Strategy Paper, 2025. To obtain copies of the document, please contact Finance, Budget, Economic Planning and ICT Town Hall Building P.O BOX 36-50100 Kakamega, Kenya The document is also available on the official county website www.kakamega.go.ke http://www.kakamega.go.ke/ Page | iv 2025 County Fiscal Strategy Paper FOREWORD The County Fiscal Strategy Paper (CFSP 2025) is prepared as provided under section 117 of the PFM Act, 2012. It sets out the County Government’s priority Programmes to be implemented during the FY 2025/26 and over the Medium-Term Expenditure Framework (MTEF) period. The Preparation of this policy document has been undertaken through a collaborative effort reflecting the needs of the people of Kakamega County. The Paper has been aligned to key National and County policy documents which include but not limited to; the Kenya Vision 2030, Medium Term Plan (MTP IV 2023-2027), the Bottom-Up Economic Transformation Agenda (BETA), Kakamega County Integrated Development Plan (CIDP 2023-2027) and the County Annual Development Plan (C-ADP 2025/26) which have been aligned to the Governor’s six strategic development pillars. Over the medium term period, the County Government has continued to record positive economic development as a result of improved project and programme implementation strategies. To sustain this development pace, the County government’s main focus during the FY 2025/26 fiscal period will be geared towards: Enhancing access to quality and affordable Healthcare and Water services; sustained support to Wealth creation and Infrastructural development; improving Food security; enhancing quality education; facilitating Social Economic Development and Promoting Good Governance. Despite the incredible progress realized, the County Government is still faced with several challenges including; constrained financial resources, high unemployment rates and high level expectation on development projects. This policy document provides the strategies and measures aimed at addressing these challenges in order to foster service delivery and prosperity of the great people of Kakamega over the plan period. It also provides the ceilings for the FY 2025/26 budget and the over MTEF period which are consistent with the County and National Government priority programmes and policies. Dr. Lawrence Omuhaka, County Executive Committee Member, Department of Finance, Budget, Economic Planning and ICT Page | v 2025 County Fiscal Strategy Paper ACKNOWLEDGEMENT The development of the CFSP 2025 is a product of a collaborative effort by the County Departments and Agencies under the leadership and guidance of His Excellency the Governor, Hon. FCPA Fernandes Barasa, H.E the Deputy Governor Hon. Ayub Savula, the County Executive Committee Member for Finance, Budget, Economic Planning and ICT Dr. Lawrence Omuhaka. I wish to acknowledge the input and support provided by all other County Executive Committee Members as well as the respective Chief Officers for coordination during preparation of this Paper. In addition, I appreciate the Commission on Revenue Allocation (CRA), The National Treasury, The Office of the Controller of Budget (OCOB), County Budget and Economic forum (CBEF) members among other stakeholders who were very instrumental in preparation of this Paper by providing important information in their policy documents and advisories. Lastly, I appreciate the technical team from the Finance, Budget, Economic Planning and ICT Department that coordinated the development of this Paper. It is my sincere hope and desire that the information contained in this paper will guide the next phase of budget preparation. Dr. Jeophita June Mwajuma Chief Officer, Finance and Budget Department of Finance, Budget, Economic Planning and ICT Page | vi 2025 County Fiscal Strategy Paper Table of Contents Table of Contents vi List of Tables viii List of Figures x ABBREVIATIONS AND ACRONYMS xi LEGAL BASIS FOR PUBLICATION OF THE COUNTY FISCAL STRATEGY PAPERxii RESPONSIBILITY PRINCIPLES IN THE PUBLIC FINANCIAL MANAGEMENT LAWxiii OUTLINE OF THE COUNTY FISCAL STRATEGY PAPER FY 2025/2026 xiv INTRODUCTION AND BACKGROUND INFROMATION 1 1.1 Building a Wealthy and Economically Vibrant County 1 1.2 The County’s Broad Strategic Priorities 2 1.3 Strategies for achieving a wealthy and Vibrant County 3 RECENT ECONOMIC DEVELOPMENT AND POLICY OUTLOOK IN 2023/24 7 2.1 Review of Recent Economic Performance- 7 2.2 National Government Revenue - 18 2.3 Comparison of Yearly Revenue receipts from the National Government - 20 2.4 County Government Expenditure for FY 2023/2024 21 2.7 Major Programmes and Projects implemented in the period 2021/22 – 2023/24 28 2.7 Implementation of FY 2023/24 Budget and Emerging Fiscal Challenges 39 2.8 Revised budgets 40 2.9 Risks to the outlook 40 FISCAL POLICY AND BUDGET FRAMEWORK 41 3.1 Overview 41 3.2 Legal Framework 41 3.3 Adherence to Fiscal Responsibility Principles 41 3.4 Fiscal structural reforms 42 3.5 Deficit Financing Policy 43 3.6 Expenditure Forecasts 43 3.7 The FY 2025/2026 Budget framework 43 file:///C:/Users/PC/Desktop/3.0%20CFSP%202025%20%20Revised%2027th%20Jan%202025.docx%23_Toc189001910 file:///C:/Users/PC/Desktop/3.0%20CFSP%202025%20%20Revised%2027th%20Jan%202025.docx%23_Toc189001911 Page | vii 2025 County Fiscal Strategy Paper MEDIUM-TERM EXPENDITURE FRAMEWORK 45 4.1. Division of Revenue Raised Nationally 45 4.2. County Governments Allocation 45 4.3. Additional Allocations 46 4.4. Kakamega County Resource Envelope 48 4.5. Spending Priorities for FY 2025/26 – FY 2027/28 MTEF Budget 49 4.6. Medium Term Expenditure Estimates 50 4.7. Proposed Expenditure by Economic Classification 50 4.8. Baseline Ceilings 56 4.9. Details of Department Priorities - 57 4.9.1. Agriculture, Livestock, Fisheries and Cooperatives Development - 57 Sector Strategic Priorities 58 4.9.2. Roads, Public Works and Energy 61 4.9.3. Health Services 62 4.9.4. Education, Science and Technology - 66 4.9.5. Trade, Industrialization and Tourism – 68 4.9.6. Social Services, Sports, Youth, Gender and Culture 71 4.9.7. Water, Environment, Natural Resources and Climate Change 73 4.9.8. Lands, Housing, Physical Planning and Urban Areas 76 4.9.9. Public Service and County Administration - 79 4.9.10. Office of the Governor 81 4.9.11. The County Assembly 82 4.9.12. The County Public Service Board 83 4.9.13. Finance, Budget, Economic Planning, ICT, e-Government and Communication 84 5. CONCLUSION 87 Page | viii 2025 County Fiscal Strategy Paper List of Tables Table 1: Interest Rates for Selected Currencies, 2017-2022 ........................................................... 10 Table 2: Average Foreign Exchange Rates for Selected Currencies, 2019-2024 ............................. 11 Table 3: Summary of Revenue performance ................................................................................... 15 Table 4: Detailed Own Source Revenue Performance for FY 2023/2024 ........................................ 17 Table 5: Summary of Transfers from National Government FY 2023/2024 .................................... 18 Table 6: Comparison of Annual Revenue receipts from national Government over the period 2016/17 to 2023/24 ........................................................................................................................ 20 Table 7: Economic Classification of Expenditure for FY 2021/22 -2023/24 ................................... 21 Table 8: Departmental Expenditure for the Period Ending 30th June 2024...................................... 23 Table 9: Additional Allocation to County Governments ................................................................. 47 Table 10: Revenue resource envelope ............................................................................................. 48 Table 11: Baseline Ceilings for FY 2024/25 – 2026/27 .................................................................. 50 Table 12: Programme 1: Agricultural Extension and Research ...................................................... 58 Table 13 : Programme 2: Livestock development ........................................................................... 59 Table 14 : Programme 3: Smallholder Irrigation and drainage Programme .................................... 59 Table 15 : Programme 4: Cooperative’s development ..................................................................... 60 Table 16 : Programme 5: Fish Farming Productivity ..................................................................... 60 Table 17 : Programme 5: Crop Production and Management services ............................................. 60 Table 18 : Programme 1: Roads Infrastructure Development ......................................................... 62 Table 19 : Programme 2: Energy Reticulation ................................................................................ 62 Table 20 : Programme 3: Public works Management ..................................................................... 62 Table 21 : Kakamega County Health Facilities ............................................................................... 63 Table 22 : Programme 1: Promotion of Curative health services ..................................................... 64 Table 23 : Programme 2: Preventive and Promotive Health care services ....................................... 64 Table 24 : Programme 3: General Administrative, Finance and Support Services ........................... 65 Table 25 : Programme 1: County Polytechnic Improvement ........................................................... 67 Table 26 : Programme2: Early Childhood Development Education (ECDE) ................................... 67 Table 27 : Programme 3: Education Support Programme ............................................................... 68 Page | ix 2025 County Fiscal Strategy Paper Table 28 : Programme 1: Trade and enterprise development ........................................................... 69 Table 29 : Programme2: Weights and measures ............................................................................. 69 Table 30 : Programme 3: Industrial development ........................................................................... 70 Table 31 : Programme 4: Tourism promotion ................................................................................. 70 Table 32 : Program 1: Gender Development and Support to Vulnerable Groups ............................. 71 Table 33 : Program 2: Children Services ........................................................................................ 72 Table 34 : Programme 3: Youth Empowerment, Sports Development and Library Services ........... 72 Table 35 : Program 4: Culture and Heritage.................................................................................. 73 Table 36 : Programme 1: Water Service Provision and Management ............................................. 74 Table 37 : Programme 2: Sanitation Service Provision and Management ........................................ 74 Table 38 : Programme 3: Environmental Protection and Conservation ........................................... 75 Table 39 : Programme 4: Natural Resource Management ............................................................... 75 Table 40 : Programme 5: Climate Change, Mitigation and Adaptation ........................................... 76 Table 41 : Program 1: Land Management Services ......................................................................... 77 Table 42 : Programme 2: Public Housing Development Services.................................................... 77 Table 43 : Program Name: Urban Development Services- Mumias Municipality............................ 78 Table 44 : Program 1: Urban Development Services- Kakamega Municipality ............................... 79 Table 45: Programme 1: General Administrative and support services .......................................... 80 Table 46 : Programme 2: County Administration services .............................................................. 80 Table 47 : Programme 3: Sub County and Ward Administration .................................................... 81 Table 48 : Programme 1: Management and Administration of County Functions ............................ 82 Table 49 : Programme 2: support, Coordination and Service Delivery ............................................ 82 Table 50 : Programme 1: County Assembly Infrastructure Improvement ........................................ 83 Table 51 : Programme 1: General Administration and support services .......................................... 84 Table 52 : Programme 1: Public Finance Management .................................................................. 85 Table 53 : Programme 2: Economic policy formulation and management ....................................... 85 Table 54 : Programme 3: Investment Promotion and facilitation ..................................................... 85 Table 55 : Programme 5: ICT Infrastructure Development ............................................................. 85 Table 56 : Programme 6: Adoption of e-Government Services ....................................................... 86 Page | x 2025 County Fiscal Strategy Paper Table 57 : Programme 7: County Information Management and Awareness ................................... 86 List of Figures Figure 1: Trends in Annual GDP Growth Rates 2016-2023 ......................................................... 8 Figure 2: Annual Inflation Rate .................................................................................................... 8 Figure 3: Kakamega GCP Contribution in Millions to National GDP, 2018-2023 .................... 12 Figure 4 : Comparison of Lake Region Economic Bloc Counties in Average GCP (2018-2022) ..... 13 Figure 5: Average Contribution of main sectors to National GDP in Percentage, 2018-2022 .. 13 Page | xi 2025 County Fiscal Strategy Paper ABBREVIATIONS AND ACRONYMS ASDSP Agricultural Sector Development. Support Programme ATVET Agricultural Technical and Vocational Education and Training BPS Budget Policy statement CADP County Annual Development Plan CBROP County Budget Review Outlook Paper CFSP County Fiscal Strategy Paper CIDP County Integrated Development Plan CRA Commission on Revenue Allocation CTRH County Teaching and Referral Hospital ERP Enterprise Resource Planning FY Financial Year GDP Gross Domestic Product HELB Higher Education Loans Board ICT Information Communication & Technology IFMIS Integrated Financial Management Information System KALRO Kenya Agricultural Livestock Research Organization KES Kenya Shillings KCSAP Kenya Climate Smart Agriculture Program KDDC Kakamega Dairy Development Corporation KNBS Kenya National Bureau of Statistics KYISA Kenya Youth Inter County Sports Association MSME Micro Small and Medium Enterprises MTEF Medium Term Expenditure Framework MTP Medium Term Plan NEMA National Environmental Management Authority ODF Open Defecation Free OVOP One Village One Product PFM Public Financial Management SDG Sustainable Development Goals UNICEF United Nations International Children's Emergency Fund Page | xii 2025 County Fiscal Strategy Paper LEGAL BASIS FOR PUBLICATION OF THE COUNTY FISCAL STRATEGY PAPER The County fiscal strategy paper is prepared in accordance with Section 117 of the Public Financial Management Act, 2012. The law states that: (1) The County, Treasury shall prepare and submit to the County Executive Committee the County Fiscal Strategy Paper for approval and the County Treasury shall submit the approved Fiscal Strategy Paper to the county assembly, by the 28th February of each year. (2) The County Treasury shall align its County Fiscal Strategy Paper with the national objectives in the Budget Policy Statement. (3) In preparing the County Fiscal Strategy Paper. The County Treasury shall specify the broad strategic priorities and policy goals that will guide the county government in preparing its budget for the coming financial year and over the medium term. (4) The County Treasury shall include in its County Fiscal Strategy Paper the financial outlook with respect to county government revenues, expenditures and borrowing for the coming financial year and over the medium term. (5) In preparing the County Fiscal Strategy Paper, the County Treasury shall seek and take into account the views of (a) The Commission on Revenue Allocation; (b) The public; (c) Any interested persons or groups; and (d) Any other forum that is established by legislation. (6) Not later than fourteen days after submitting the County Fiscal Strategy Paper to the county assembly, the county assembly shall consider and may adopt it with or without Page | xiii 2025 County Fiscal Strategy Paper RESPONSIBILITY PRINCIPLES IN THE PUBLIC FINANCIAL MANAGEMENT LAW In line with the Constitution, the new Public Financial Management (PFM) Act, 2012, sets out the fiscal responsibility principles to ensure prudency and transparency in the management of public resources. The PFM law (Section 107 (b)) states that: 1) The county government’s recurrent expenditure shall not exceed the county government’s total revenue. 2) Over the medium term, a minimum of 30% of the County budget shall be allocated to development expenditure. 3) The County government’s expenditure on wages and benefits for public officers shall not exceed 35 percent of the County government revenue. 4) Over the medium term, the County government’s borrowings shall be used only for the purpose of financing development expenditure and not for recurrent expenditure. 5) Public debt and obligations shall be maintained at a sustainable level as prescribed by the executive and approved by the County Assembly. 6) Fiscal risks shall be managed prudently. 7) A reasonable degree of predictability with respect to the level of tax rates and tax bases shall be maintained, taking into account any tax reforms that may be made in the future Page | xiv 2025 County Fiscal Strategy Paper OUTLINE OF THE COUNTY FISCAL STRATEGY PAPER FY 2025/2026 This paper contains six sections as summarized below; Section I Provides the county strategic blueprint which is to have a wealthy and economically vibrant County and further explains how the County Government intends to transform its economy. Section II Outlines the economic context in which the 2025/2026 MTEF budget is prepared. It provides an overview of the recent economic developments and the macroeconomic outlook covering the National Government and County level. Section III Outlines the fiscal framework that is supportive of growth over the medium term, while continuing to provide adequate resources to facilitate service delivery and execute the policy priorities of the County Government. Section IV Provides a framework of managing the County Government’s administrative units and the budgetary allocation of the County revenue among its departments. Section V Presents the resource envelope and spending priorities proposed for the FY 2025/2026 MTEF Budget. Sector achievements and priorities are also reviewed for the FY 2021/22 – 2023/24 MTEF period. Section VI Provides the conclusion. 2024 County Fiscal Strategy Paper Page | 1 INTRODUCTION AND BACKGROUND INFROMATION The County Fiscal Strategy Paper (CFSP 2025) covers the MTEF period 2025/2026 –2027/2028. The Paper has been prepared as provided for in Section 117 of the PFM Act, 2012 and sets out the broad priority programs and projects to be implemented in the FY 2025/2026 and over the MTEF period. The implementation of the priority programs and projects over the medium term is expected to achieve the Government vision of, “a wealthy and economically vibrant County”. The priorities to be pursued are in line with Kenya Vision 2030, MTP IV, Bottom-up Economic Transformation Agenda (BETA), Sustainable Development Goals (SDGs), the Governor’s Manifesto (six-point agenda), the County Integrated Development Plan (CIDP) 2023-2027, County Annual Development Plan (C-ADP) 2025-2026 among other policy documents. There exists a strong collaboration between the national government and the county government of Kakamega in the integration of the BETA model and six-point agenda to realize growth in respective sectors. Partnerships with other development partners plays a crucial role towards achieving key milestones for international and national development plans, including the SDGs and Vision 2030. The goal of these priority projects is to raise living standards by boosting socioeconomic growth and generating jobs. In order to account for shifts in financial and economic trends, the paper includes the latest national economic outlook. Preparation of this Paper has also taken into consideration the National Budget Policy Statement (BPS) 2025 to align the County’s priorities to the National economic policy principles. 1.1 Building a Wealthy and Economically Vibrant County The County has elaborate plans and strategies towards strengthening the framework upon which a wealthy and economically vibrant County would be built. Riding on the high resource potential in Page | 2 County Fiscal Strategy Paper 2025 agricultural viability, infrastructure development, human capital, strong governance and administrative structures, cultural tourism, forestry and mining, the county presents broad opportunities for investment and economic development. The County's development agenda has been affected by a number of issues such as low levels of own source revenue collection, low commitment from development partners, delays in the National Government's funding disbursement, pressures on expenditures related to employee emoluments, and rising operating costs, The County Government is focused on addressing these challenges and ensure optimal service delivery and economic development. 1.2 The County’s Broad Strategic Priorities The County’s broad strategic priorities are drawn from Kenya Vision 2030, MTP IV, Bottom-up Economic Transformation Agenda (BETA), Sustainable Development Goals (SDGs), the Governor’s Manifesto, the County Integrated Development Plan (CIDP)2023-2027, County Annual Development Plan (C-ADP) 2025-2026 among other policy documents. The strategic priorities of focus will be: 1) To enhance access to quality and affordable healthcare and water services; 2) To support wealth creation and infrastructural development; 3) To improve food security; 4) To enhance quality education; 5) To facilitate social economic development; and 6) To promote good governance. The County’s undertaking is to drive inclusive and sustainable development, reduce poverty, and improve the overall quality of life for residents. To achieve this, the County Government acknowledges the need to partner with other stakeholders in its implementation. This Paper therefore articulates priorities for economic policies and expenditure programs to be implemented during the MTEF period 2025/2026 - 2027/2028 in order to achieve the County transformative agenda. Page | 3 County Fiscal Strategy Paper 2025 1.3 Strategies for achieving a wealthy and Vibrant County 1.3.1 Strategic priority I: Access to quality health, water and sanitation:- ⮚ Improving access to health services through health infrastructure development through construction, expansion, operationalization, renovation and equipping health facilities to improve service delivery; ⮚ Strengthen community health strategy through training of CHPs and equipping them with kits; ⮚ Strengthen County medical supply chain by ensuring adequate, timely and constant supply of essential drugs and non-pharmaceuticals to all health facilities; ⮚ Prioritize public healthcare by investing in promotive and preventive health services; ⮚ Ensure adequate and motivated healthcare personnel through recruitment, training and promotions. ⮚ Upscale Universal Health Care through enrollment to Social Health Authority (SHA) and operationalization of Primary Care Networks. ⮚ Implementation of Barasa Care Programme to enhance maternal and child health, immunization and skilled deliveries. 1.3.2 Strategic priority II: Promote wealth creation and infrastructural development;- ⮚ Development of industrial parks and aggregation centers by promoting industrialization and enhancing a vibrant service sector in Southern, Northern and Central regions of the County. ⮚ Create and grow the “Barasa Economic Empowerment Program” for the residents to participate in income generation, gainful employment and contribute to the growth of the county economy. ⮚ Decentralize services of Kakamega Micro-Finance to the Community areas. Page | 4 County Fiscal Strategy Paper 2025 ⮚ Establishment of special economic zones and further provide innovation and incubation services to SME’s. ⮚ Business environment promotion- Enhance continuous engagements with the private sector to eliminate red tape for business to thrive in the county through establishment of a unified business permit; ⮚ Support the sugar sector and establishment of new industries; ⮚ Establish market and technological linkages to effectively link cottage industries to the export market to drive their growth via outsourcing; ⮚ Offer incentives to those who would wish to invest in the hospitality industry, housing and manufacturing through hospitality industry and manufacturing promotion; ⮚ Facilitate the establishment of the motorcycle assembly plant to offer affordable boda-boda to riders in the County and beyond, and further support the boda-boda riders through their cooperatives to set up three mega spare parts shops in strategic areas of the County; ⮚ Complete the valuation roll to enhance own source revenue generation to support the County development agenda; ⮚ Ensure coordinated development through establishing of a GIS based County Spatial Plan; ⮚ Enhance access to transport, ICT and energy infrastructure; 1.3.3 Strategic priority III: Modernize and commercialize agriculture towards achieving food and nutrition security ⮚ Work with KALRO, Bukura Agricultural College and Masinde Muliro University of Science and Technology (MMUST) to improve on agricultural practices and diversify farming to commercialize new and adaptable breeds in crops, livestock and fisheries; ⮚ Enhance agricultural extension services across the county through recruitment, training and equipping extension officers; ⮚ Provide farmer incentives to increase yield and value by developing agro industrial zones and reducing post-harvest losses through commodity exchange and value addition; ⮚ Initiate and support farmers’ cooperatives to form and engage in guaranteed contract farming for export markets by giving farmers forward contracts in the commodities market; Page | 5 County Fiscal Strategy Paper 2025 ⮚ Enhance access to farm inputs like certified seeds, fertilizers, subsidized A.I. services and farm mechanization; and ⮚ Provide incentives for the establishment of a dairy processing plant with value addition and other milk products. 1.3.3 Strategic priority IV: Improve education standards;- ⮚ Improve the quality of ECDE education in the county through various stakeholder engagements on best practices; ⮚ Promote curriculum implementation; ⮚ Hire more ECDE teachers and polytechnic instructors; ⮚ Provision of training infrastructure and resources; ⮚ Support partnerships between universities and industry for incubation and commercialization of innovation; and ⮚ Enhance access and equity to quality education through provision of bursaries. 1.3.4 Strategic priority V: Social Development to empower communities  Build cultural and community multipurpose halls to promote culture, creative arts, traditions and heritage;  Scale up security and street lighting through the Nuru Gizani project;  Fast-track the completion of Bukhungu Stadium and upgrade other mini- stadia;  Establish sports academies to identify, nurture and expose raw talents in football, athletics, Rugby, table tennis, swimming and volleyball, and further link them to local and international platforms; and  Support youth, women and people with disabilities owned businesses with affordable credit. 1.3.5 Strategic priority VI: Promote Good Governance ⮚ Create Kakamega leaders caucus of elected leaders, National Government officials and private sector players to address cross-cutting issues such as security, investment and progressive development; Page | 6 County Fiscal Strategy Paper 2025 ⮚ Establish an annual interdenominational prayer breakfast spearheaded by the clergy to intercede for the county together with elected leaders; ⮚ Entrenching and strengthening devolution up to the village level and creating a strong working relationship with the national coordination at all levels; and ⮚ Establish the Ward based programmes to ensure equitable development in all the 60 wards. ⮚ Promote collaboration with the National Government Agencies during project and programmes implementation Page | 7 County Fiscal Strategy Paper 2025 RECENT ECONOMIC DEVELOPMENT AND POLICY OUTLOOK IN 2023/24 2.1 Review of Recent Economic Performance- 2.1.2 Economic Growth The Economic Survey Report, 2024 by Kenya National Bureau of Statistics (KNBS) indicates that the economy expanded in the period 2023-2024 at a considerably faster pace than the 4.9 percent recorded in 2022. The economy grew by 5.6 percent in 2023-2024 period supported by supported by favourable weather conditions and timely implementation of fertilizer and seed subsidy programme. The economy is projected to maintain at 5.9 percent in 2024-2025, reinforced by the Government’s Bottom - Up Economic Transformation Agenda geared towards economic turn around and inclusive growth as shown in figure 1. In 2023, majority of the economic activities registered positive growths save for Mining and Quarrying, which contracted by 6.5 percent. The contraction in mining and quarrying was reflected in decline in production of most minerals such as titanium, soda ash and gemstone. Economic growth in 2024 was brought about by improved performance in key sectors of the economy including; Financial and Insurance (10.1%), Transportation and Storage (6.2%), Information and Communication (9.3%), Real Estate (7.3%), and Accommodation & Food Service (33.6%) activities. In contrast to dry weather conditions that characterized the better part of 2022-2023 which adversely affected agricultural production, production of key food crops such as maize, beans, and potatoes increased significantly during the review year Page | 8 County Fiscal Strategy Paper 2025 Figure 1: Trends in Annual GDP Growth Rates 2016-2023 Source: Budget Policy Statement, 2024 2.1.3 Inflation Rate The year-on-year inflation rate increased for the third consecutive month in December 2024 while still remaining below the 7.5 percent upper bound target. Inflation rate increased to 3.0 percent in December 2024 from 2.8 percent in November 2024 due to an increase prices of commodities under Food and Non Alcoholic Beverages (4.8%); and Transport (0.2%) between December 2023 and December 2024.. However, this inflation rate was lower than the 6.9 percent recorded in January 2024 as shown in figure 2. Figure 2: Annual Inflation Rate 6.30 8.00 4.70 5.30 5.40 6.10 7.70 7.70 0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 2016 2017 2018 2019 2020 2021 2022 2023 G D P (% ) Page | 9 County Fiscal Strategy Paper 2025 Source: Kenya National Bureau of Statistics The Food and Non-Alcoholic Beverages Index increased by 0.7 per cent between November 2024 and December 2024. In particular, prices of maize flour-sifted, fortified maize flour and maize flour-loose rose by 7.0, 5.8 and 1.8 per cent, respectively, between November 2024 and December 2024, which provides national average prices of selected items. Prices of mangoes, potatoes (Irish) and cabbages dropped by 6.2, 5.0 and 2.8 per cent, respectively, between November 2024 and December 2024. The Housing, Water, Electricity, Gas and Other Fuels’ Index increased by 0.2 per cent between November 2024 and December 2024. The increase was attributable to a rise in price of 50 kWh and 200 kWh of electricity by 0.6 per cent and 0.5 per cent, respectively, between November 2024 and December 2024. Prices of kerosene/paraffin, however, declined by 2.0 per cent in the same period. The Transport Index increased by 1.8 per cent between November 2024 and December 2024, mainly due to a surge in fares of country bus/matatu in some routes by up to 50.0 per cent, in the month of December. Prices of diesel and petrol, however, declined by 1.8 per cent and 2.4 per cent, respectively, between November 2024 and December 2024. 6.6 6.9 6.3 5.7 5.0 5.0 4.6 4.3 4.4 3.6 2.7 2.8 3.0 - 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 IN F L A T IO N R A T E MONTH Page | 10 County Fiscal Strategy Paper 2025 2.1.4 Interest Rate Interest rates have begun to decline as a result of the easing of the monetary policy, reducing borrowing costs and freeing up fiscal space for growth-enhancing initiatives by businesses. Interbank rate declined to 11.4 percent in December 2024 from 11.7 percent in December 2023 in line with the easing of the monetary policy. The 91-day Treasury Bills rate declined to 10.0 percent in December 2024 from 15.7 percent in December 2023. Table 1: Interest Rates for Selected Currencies, 2017-2022 YEAR MONTH Interbank Rate 91-Day Tbill Central Bank Rate 2022 Nov 4.61 9.19 8.75 2022 Dec 5.39 9.33 8.75 2023 Jan 5.89 9.44 8.75 2023 Feb 6.42 9.62 8.75 2023 Mar 7.05 9.76 9.5 2023 Apr 8.55 10.04 9.5 2023 May 9.36 10.47 9.5 2023 June 9.55 11.49 10.5 2023 July 10.34 12.12 10.5 2023 August 12.57 13.25 10.5 2023 September 12.36 14.38 10.5 2023 October 12.7 14.96 10.5 2023 November 11.32 15.32 10.5 Source: Central Bank of Kenya 2.1.5 Kenya Shilling Exchange Rate In the period under review, the Kenya Shilling continued to weaken against currencies of key trading countries. This was reflected in the Trade Weighted Index (TWI) which worsened from 123.8 in 2022 to 138.3 in 2023. The Kenyan Shilling appreciated against key currencies such as the US dollar, Euro, Sterling pound, Swiss franc, UAE dirham, Indian Rupee, Chinese Yuan and Japanese Yen by 7.5, 11.2, 6.7, 8.4, 7.5, 10.6, 10.2 and 17.4 Page | 11 County Fiscal Strategy Paper 2025 percent, respectively. Likewise, the Kenyan Shilling deteriorated against the Ugandan Shilling and Tanzanian Shilling, by 6.1 and 9.3 percent, respectively. Table 2: Average Foreign Exchange Rates for Selected Currencies, 2019-2024 Currency Exchange Rate against KES 2019 2020 2021 2022 2023 2024* 1 US Dollar 101.99 106.47 109.65 117.87 139.85 129.29 1 Euro2 114.18 121.65 129.75 124.19 151.25 134.28 1 Pound Sterling 130.18 136.73 150.85 145.80 174.01 162.26 1 Swiss Franc 102.62 113.61 119.98 123.52 155.87 142.66 1 UAE Dirham 27.77 28.99 29.85 32.09 38.08 35.20 1 Indian Rupee 1.45 1.44 1.48 1.50 1.69 1.51 1 Chinese Yuan 14.76 15.45 17.00 17.53 19.73 17.71 100 Japanese Yen 93.59 99.80 99.94 90.15 99.48 82.11 1 SA Rand 7.06 6.51 7.42 7.23 7.58 6.87 TSh/Ksh 22.63 21.76 21.12 19.74 17.36 18.98 USh/Ksh 36.32 34.93 32.72 31.30 26.76 28.40 100 Rwanda Francs 8.82 8.86 9.13 11.39 12.05 10.72 Source: Central Bank of Kenya 2.1.6 Kakamega Gross County Product Page | 12 County Fiscal Strategy Paper 2025 According to KNBS, Gross County Product Report 2024, the GCP was estimated at KES 291,817 Million which is 2.2 per cent of the national GDP in 2023 (KES 13,891,146 million). The average GCP contribution of the County to the National GDP in current prices is estimated at 2.2 per-cent in the five period. Figure 3 shows the county’s GCP estimates over the period 2019-2023. Figure 3: Kakamega GCP Contribution in Millions to National GDP, 2018-2023 Source: Gross County Product Report, 2023 2.1.7 Comparison of GDP of Lake Region Economic Bloc Counties The increase in GCP from 2022 to 2023 was principally attributed to increased agricultural production, accelerated sustained growth in transportation and vibrant service sector activities. The average GCP across all Counties is approximately 1.54%. Figure 4 compares the GCP of the Lake Region Economic Bloc Counties as shown in figure 203238 214365 245607 271571 291817 0 50000 100000 150000 200000 250000 300000 350000 2019 2020 2021 2022 2023 C u rr en t P ri ce s( M il li o n )s Year Page | 13 County Fiscal Strategy Paper 2025 Figure 4 : Comparison of Lake Region Economic Bloc Counties in Average GCP (2018- 2022) Source: Gross County Product Report, 2023 2.1.8 Contribution of Main Sectors to National GDP Kakamega County was ranked ninth in agricultural activities among the 47 counties, hence, the sector significantly contributed to the Kakamega GCP. Other sectors that contributed to growth include; manufacturing industries, other industries and service sector as shown in figure 5 Figure 5: Average Contribution of main sectors to National GDP in Percentage, 2018- 2022 0.8 0.9 1.1 1.2 1.3 1.2 1.5 1.6 1.7 1.5 2 2.1 2.2 2.5 0 0.5 1 1.5 2 2.5 3 G C P i n % COUNTIES Page | 14 County Fiscal Strategy Paper 2025 Source: Gross County Product Report, 2023 2.1.9 Economic Effect as a result of General Election Election years in the country have largely been characterized by higher debt levels, reduced revenues, the slowdown in business capital expenditure, postponement of regulatory decisions as well as decreased lending activity. The 2022 general elections particularly the delayed Kakamega Gubernatorial impacted negatively on county own source revenue thus creating pending bills. 2.1.10 Update on Fiscal Performance and Emerging Challenges The fiscal performance for FY 2023/2024 was dependent on revenue mobilization and timely disbursement of funds by the national treasury. The county government has been improving on tax collection, but challenges persist with underperformance in revenue Agriculture, Forestry and Fishing 45% Manufacturing 24% Other Industries 7% Services 24% Page | 15 County Fiscal Strategy Paper 2025 targets due to weak tax compliance and enforcement. Government spending has increased and recurrent expenditure remains high in the midst of constrained funds. The county faces several hurdles in maintaining fiscal stability due to constrained budget and inadequate resource allocation from the national treasury to Counties. The county has not met its potential for own source revenue collection thereby putting pressure on attaining its development priorities. To address these challenges, the County government is enhancing tax collection to meet own source revenue targets, fostering private sector investment to boost economic growth and wealth creation as well as expanding social safety nets to cushion vulnerable populations from economic shockwaves. 2.1.11 County Revenue Performance for Financial Year 2022/2023 The total local revenue collection was KES 1.349 Billion compared to the target of KES 2.2 Billion. This represents revenue shortfall of KES 850 Million or 38.65 %. This was mainly attributed to delayed reimbursement from NHIF and unmet disbursement from contribution in lieu of rates from the National Treasury. The National Government disbursements amounted to KES 13.31 Billion. This amount consisted of conditional grants amounting to KES 691 Million and equitable shareable revenue of KES 11.879 Billion. The actual revenue for spending therefore was KES 14.69 billion. These funds included the transfers from the National Government and the balance brought forward from the FY 2022/23 of KES. 745 Million for equitable shareable revenue. Table 3: Summary of Revenue performance Revenue Item Amount disbursed (KES) 2022/2023 2023/2024 Equitable shareable revenue 13,380,565,143 11,879,634,559 Balance brought forward 745,076,680 SIDA Agricultural Sector Development Support Programme II (ASDSP II) 1,254,212 Danida grant -primary health care in devolved context 18,999,750 KELCOP 28,269,536 National Agricultural Value Chain Development Project (NAVCDP) 191,274,891 (Ida) World Bank Credit-Financing Localy Led 303,132,837 Page | 16 County Fiscal Strategy Paper 2025 Revenue Item Amount disbursed (KES) 2022/2023 2023/2024 Climate Programm (FFLOCA) ccis grant 22,000,000 World Bank-THS-UCP - World Bank-KUSP(Development) - Kenya Devolution Support Programme (KDSP) Level 2 - Kenya Devolution Support Programme (KDSP) Level 1 3,534,474 National Agricultural Value Chain Development Project (NAVCDP) 67,192,729 World Bank Kenya Climate Smart Agricuture KCSAP released 99,110,439 Others 8,337,106 Universal Healthcare in Devolved Units Programme(DANIDA)-UHDSP released 33,447,791 (Sida) Agricultural Sector Development Support Programme II (ASDSP II) released 11,287,905 Kenya Informal Settlement Improvement Project (KISIP 11 50,000,000 140,000,000 Total 13,667,138,481 13,315,979,571 Source: CBROP, 2024 2.1.12 Own Source Revenue The County Revenue collection performance marginally improved in FY 2023/24 compared to FY 2022/23. In the FY 2022/23, own source revenue was KES 1.335 Billion against the approved budget of KES 2.2 Billion compared to the FY 2023/24 where 1.349 Billion was collected against an approved budget of KES 2.2 Billion. While the actual revenue collected in the FY 2023/24 represented 61.35 per cent of the approved revenue target compared to 60.70 per cent of the FY 2022/23. Page | 17 County Fiscal Strategy Paper 2025 Table 4: Detailed Own Source Revenue Performance for FY 2023/2024 Total Revenue Actual Receipts (KES) Approved Budget (KShs.) Revised Budget (Kshs) Actual Receipts (KShs.) Financial Years 2021/2022 2022/2023 2023/2024 Farm Input Subsidy 325,176,669 342,285,124 270,000,000 270,000,000 305,148,320 NHIF 205,755,000 230,739,969 470,000,000 470,000,000 286,620,678 Hospital User Fees 201,203,002 214,063,104 300,000,000 300,000,000 234,478,833 Single Business Permit 130,976,710 170,248,245 163,804,946 163,804,946 184,505,972 Advertisement Fees 50,251,669 48,408,453 60,959,134 60,959,134 64,962,889 Cess from Sugar Factories - 54,046,909 90,084,167 90,084,167 43,182,264 Property/Land Rates 29,981,964 25,071,740 87,314,663 87,314,663 32,037,761 Plan Approval Fees 26,147,961 23,045,518 39,388,137 39,388,137 29,750,061 Bus Park Fees 30,504,150 40,918,352 66,776,762 66,776,762 29,373,674 Public Health Services 20,524,270 19,918,536 70,000,000 70,000,000 26,288,334 Open Market Fees 15,671,606 13,176,103 22,352,090 22,352,090 24,253,668 Liquor Licensing 18,967,411 15,005,000 141,700,000 141,700,000 22,855,676 Cess from other Agricultural Produce 58,265,921 23,934,563 18,074,240 18,074,240 12,199,676 Street Parking Fees 14,572,310 12,916,252 23,722,047 23,722,047 9,837,654 Disposal of County Assets 30,589,738 - 75,000,000 75,000,000 6,939,115 Slaughter House Fees 3,376,950 6,601,907 9,992,917 9,992,917 5,745,394 Market Stall Fees 3,011,925 4,824,259 5,181,251 5,181,251 5,143,655 Stock Sale Fees 7,428,095 5,536,585 11,045,668 11,045,668 3,088,654 Motor Bike Stickers 1,100,500 3,212,000 4,052,475 4,052,475 2,552,421 Bukura ATC fees 3,639,176 3,548,368 11,725,000 11,725,000 2,527,262 Veterinary Services 9,476,125 2,720,495 11,112,067 11,112,067 2,365,861 Kiosk Fees 4,676,533 1,633,900 2,384,700 2,384,700 2,293,795 Fire Compliance Fees 2,147,880 2,147,175 2,322,688 2,322,688 2,016,685 Commissions 12,956,749 5,495,909 17,587,500 17,587,500 1,795,893 Impounding Fees 1,657,468 1,449,455 220,000 220,000 1,356,395 Cess from Murram 2,270,080 7,414,451 11,338,812 11,338,812 1,185,050 Bukhungu Stadium 2,843,770 1,338,000 3,694,075 3,694,075 1,094,940 Red Cross fees 402,500 377,600 1,000,000 1,000,000 978,500 Weights &Measures 427,380 590,050 2,870,304 2,870,304 856,570 Hire Fees 413,250 549,200 1,202,975 1,202,975 738,525 Page | 18 County Fiscal Strategy Paper 2025 Total Revenue Actual Receipts (KES) Approved Budget (KShs.) Revised Budget (Kshs) Actual Receipts (KShs.) Survey Fees 294,650 471,288 2,303,292 2,303,292 735,080 Noise Control 836,486 569,580 1,179,518 1,179,518 674,900 Fish and Poultry Fees - 2,378,710 8,207,500 8,207,500 605,318 House Rent 2,347,297 2,749,999 3,624,209 3,624,209 594,637 Public Toilet 2,740,600 1,139,730 1,144,076 1,144,076 429,340 Land Transfer Fees - 185,670 200,000 200,000 262,760 Registration of Groups 268,650 108,285 352,787 352,787 156,386 Dividends from Golf Hotel - 2,585,000 - - 37,250 Farm Mechanization 6,900 - 14,070,000 14,070,000 12,700 Tree/Flower Nursery Fees 1,000 2,800 12,000 12,000 5,000 Burial Fees - 30,250 - - 1,500 Contribution in Lieu Rates - - 174,000,000 174,000,000 - Direct credits 763,005 15,944,150 - - - Recoveries - 2,251,211 - - - IFAD - 14,731,858 - - - KEPI - 11,129,850 - - - Total Own Source Revenue 1,221,675,35 0 1,335,495,60 3 2,200,000,00 0 2,200,000,00 0 1,349,689,04 6 Source: CBROP, 2024 2.2 National Government Revenue - Revenue from the National Government consisted of equitable shareable revenue of KES 11.879 Billion and total Conditional grants of KES 691 million. The summary of transfers from the National Government is highlighted in table 5. Table 5: Summary of Transfers from National Government FY 2023/2024 Revenue Item Actual Receipts (KES) 2021/2022 2022/2023 2023/2024 Balance brought forward 1,719,735,907 991,152,975 745,076,680 Equitable Share 1,086,858,032 991,152,975 745,076,680 Conditional grant 632,877,875 - Page | 19 County Fiscal Strategy Paper 2025 Revenue Item Actual Receipts (KES) 2021/2022 2022/2023 2023/2024 Total Allocation from the National Government 11,749,721,876 12,675,985,506 12,570,902,891 Equitable share of revenue 11,398,259,193 12,389,412,168 11,879,634,559 Conditional Grants 351,462,683 286,573,338 691,268,332 SIDA Agricultural Sector Development Support Programme II (ASDSP II) - 1,254,212 Danida grant -primary health care in devolved context - 18,999,750 KELCOP 28,269,536 IDA World Bank National Agricultural Value Chain Development Project (NAVCDP) 191,274,891 (IDA) World Bank Credit-Financing Locally Led Climate Programme (FFLOCA) 1 CCIS grant 303,132,837 Others 8,337,106 DANIDA Grant 11,535,563 33,447,791 Agricultural Sector Development Support Programme (ASDSP) 16,539,198 11,287,905 Kenya Devolution support program Level 2 78,009,910 World bank-Universal Health Care Fund-THS 61,784,877 World bank-Kenya Climate Smart Agriculture)KCSAP 183,593,135 99,110,439 Kenya Urban Support Programme - 3,534,474 Page | 20 County Fiscal Strategy Paper 2025 Revenue Item Actual Receipts (KES) 2021/2022 2022/2023 2023/2024 Capital National Agricultural and Rural Value Chain Inclusive Growth Project (NAVCDP - 67,192,729 FLLoCA-(CCIS) - 22,000,000 Kenya Informal Settlement Improvement Project- (KISIP II) - 50,000,000 140,000,000 Total Revenue and Grants 14,691,133,133 14,976,818,380 13,315,979,571 Source: CBROP, 2024 2.3 Comparison of Yearly Revenue receipts from the National Government - Table 6 presents a comparison of annual revenue receipts from the National government for the period 2016/17 – 2023/24. Table 6: Comparison of Annual Revenue receipts from national Government over the period 2016/17 to 2023/24 FY Equitable share(KES) Conditional Grants(KES) Total(KES) 2016/2017 9,612,093,312 798,793,312 10,410,886,624 2017/2018 9,935,800,000 1,022,691,107 10,958,491,107 2018/2019 10,330,000,000 1,644,381,649 11,974,381,649 2019/2020 9,517,344,900 1,719,000,990 11,236,345,890 2020/2021 10,412,850,000 1,581,509,722 11,994,359,722 2021/2022 11,398,259,193 506,365,792 11,904,624,985 2022/2023 13,380,565,143 286,573,338 13,667,138,481 2023/2024 12,624,711,239 691,268,332 13,315,979,571 Source: CBROP, 2024 Page | 21 County Fiscal Strategy Paper 2025 2.4 County Government Expenditure for FY 2023/2024 Total expenditure in the FY 2023/24 amounted to KES 13.637 Billion against a revised target of KES 16.786 Billion, representing an under-spending of KES 3.149 Billion (18.76) percent deviation from the revised budget). The overall absorption rate was 81.23 per cent comprising of 92.54 per cent and 52.50 per cent for recurrent and development expenditure respectively. The overall recurrent expenditure amounted to KES 9.711 Billion, representing an under- spending of KES 2.184 Billion from the approved revised recurrent expenditure of KES 11.895 Billion. The under-spending was in respect to delayed disbursement of equitable shareable revenue from the National Government and the unmet target of own source revenue. Employee compensation was KES 6.638 Billion translating to 45.77 per cent of total revenues for the year which includes salaries for the County Assembly. Operation and Maintenance (O&M) was KES 4.086 Billion (29.96 per cent) 2.6.2 Expenditure by Economic Classification- Table 7: Economic Classification of Expenditure for FY 2021/22 -2023/24 PAYMENTS 2021/2022 2022/2023 2023/2024 Actual Approved budget Revised budget Actual Deviation KES KES KES KES KES KES 1. RECURRENT 9,627,952,723 10,948,458,821 11,368,039,953 11,895,111,215 9,711,420,216 (2,183,690,999) Compensation of Employees 5,298,343,908 6,380,895,060 5,950,000,000 6,020,603,738 5,624,458,149 (396,145,589) Operations and Maintenance - Executive 3,054,332,698 3,953,503,539 4,017,218,850 4,473,686,374 4,086,962,067 (386,724,307) County Assembly - Operations and Maintenance 1,275,276,117 614,060,222 1,400,821,103 1,400,821,103 1,400,821,103 - 2. DEVELOPMENT 4,706,935,588 3,707,539,951 6,320,790,865 4,891,316,789 2,519,249,803 (2,372,066,986) Development projects 4,706,935,588 3,707,539,951 6,320,790,865 4,891,316,789 2,519,249,803 (2,372,066,986) Page | 22 County Fiscal Strategy Paper 2025 PAYMENTS 2021/2022 2022/2023 2023/2024 Actual Approved budget Revised budget Actual Deviation KES KES KES KES KES KES TOTAL EXPENDITURE 14,334,888,311 14,655,998,772 17,688,830,818 16,786,428,004 13,636,919,254 (3,149,508,750) Source: County Treasury Table 7 groups the total county expenditures for the previous year into three main categories; i) Compensation of Employees; this includes basic salaries paid to permanent and temporary employees and personal allowances paid as part of salary among other related costs. ii) Operations/Use of goods and services; It includes utilities, supply and services, domestic travel and subsistence, and other transportation costs, training expenses, hospitality supplies and services, routine Maintenance among other related costs. iii) Development expenditures; these are the funding to the various capital projects and programmes in the county departments. 2.6.3 Expenditure by Departments Table 8 depicts the absorption rates for county departments for the FY 2023/24. Page | 23 County Fiscal Strategy Paper 2025 Table 8: Departmental Expenditure for the Period Ending 30th June 2024 DEPARTMENT Actual Budget Revised Budget Actual Absorption rate(%) 2021/2022 2022/23 2023/2024 KES KES KES EXPENDITURES 14,334,888,311 14,266,766,401 17,688,830,818 16,786,428,004 13,636,919,253 81.23 County Assembly 1,275,276,117 1,227,746,754 1,400,821,103 1,400,821,103 1,400,821,103 100.00 Recurrent 1,275,276,117 1,227,746,754 1,400,821,103 1,400,821,103 1,400,821,103 100.00 Development - - - - - - Agriculture, Livestock, Fisheries and Co-operatives 1,089,591,133 1,102,498,002 1,380,045,626 1,041,216,636 320,416,837 30.77 Recurrent 58,331,954 72,602,276 157,466,388 92,913,017 82,563,589 88.86 Development 1,031,259,179 1,029,895,746 1,222,579,238 948,303,619 237,853,248 25.08 Health Services 1,720,674,844 1,461,070,616 1,479,343,650 1,357,541,502 921,899,394 67.91 Recurrent 1,019,036,835 1,206,865,737 839,443,650 1,058,237,029 727,103,218 68.71 Page | 24 County Fiscal Strategy Paper 2025 DEPARTMENT Actual Budget Revised Budget Actual Absorption rate(%) 2021/2022 2022/23 2023/2024 KES KES KES Development 701,638,009 254,204,879 639,900,000 299,304,473 194,796,177 65.08 Education, Science & Technology 572,168,237 468,603,719 925,975,000 658,823,859 482,999,685 73.31 Recurrent 368,449,024 349,988,950 444,175,000 445,323,113 416,321,121 93.49 Development 203,719,213 118,614,769 481,800,000 213,500,746 66,678,563 31.23 Roads, Public Works & Energy 1,216,896,602 1,064,916,131 1,342,247,000 1,358,774,284 985,877,068 72.56 Recurrent 235,491,776 158,598,082 33,000,000 28,662,620 24,291,931 84.75 Development 981,404,826 906,318,049 1,309,247,000 1,330,111,664 961,585,136 72.29 Lands, Housing, Urban Areas and Physical Planning 611,351,053 341,530,402 774,964,627 659,612,093 415,103,965 62.93 Recurrent 169,931,600 181,269,226 260,000,000 249,092,307 233,329,020 93.67 Development 441,419,453 160,261,176 514,964,627 410,519,786 181,774,946 44.28 Page | 25 County Fiscal Strategy Paper 2025 DEPARTMENT Actual Budget Revised Budget Actual Absorption rate(%) 2021/2022 2022/23 2023/2024 KES KES KES Social Services, Youth & Sports 716,720,968 484,192,084 1,207,370,000 783,351,642 740,493,666 94.53 Recurrent 83,902,458 171,251,764 446,370,000 414,371,342 398,445,525 96.16 Development 632,818,510 312,940,320 761,000,000 368,980,300 342,048,141 92.70 Trade, Tourism & Industrialization 119,975,770 317,833,120 478,700,000 318,205,719 146,517,245 46.04 Recurrent 26,090,885 39,604,877 37,900,000 48,670,242 32,476,517 66.73 Development 93,884,885 279,228,243 440,800,000 269,535,477 114,040,728 42.31 Water, Environment and Natural Resource 391,007,109 295,933,459 513,523,237 690,341,059 174,053,434 25.21 Recurrent 19,966,599 31,573,069 64,023,237 49,148,558 48,253,924 98.18 Development 371,040,510 264,360,390 449,500,000 641,192,501 125,799,510 19.62 Public Service and Administration 5,999,637,891 6,257,748,344 6,909,551,595 6,833,740,134 6,434,223,779 94.15 Page | 26 County Fiscal Strategy Paper 2025 DEPARTMENT Actual Budget Revised Budget Actual Absorption rate(%) 2021/2022 2022/23 2023/2024 KES KES KES Recurrent 5,826,270,822 6,201,131,895 6,719,551,595 6,692,075,000 6,354,627,462 94.96 Development 173,367,069 56,616,439 190,000,000 141,665,134 79,596,316 56.19 Office of the Governor 181,108,983 292,908,393 385,352,421 538,254,117 510,570,052 94.85 Recurrent 181,108,983 288,171,575 371,352,421 523,973,406 510,245,142 97.37 Development 0 4,736,818 14,000,000 14,280,711 324,910 2.28 County Treasury 362,210,406 847,393,598 680,936,559 1,006,519,595 1,000,657,211 99.41 Recurrent 330,162,390 621,417,687 528,936,559 842,519,595 842,478,930 99.99 Development 32,048,016 225,975,911 152,000,000 164,000,000 158,178,281 96.45 County Public Service Board 19,247,667 32,473,616 30,000,000 17,441,463 15,973,406 91.58 Recurrent 19,247,667 32,473,616 30,000,000 17,441,463 15,973,406 91.58 Page | 27 County Fiscal Strategy Paper 2025 DEPARTMENT Actual Budget Revised Budget Actual Absorption rate(%) 2021/2022 2022/23 2023/2024 KES KES KES ICT, E-government & Communication 59,021,531 71,918,152 180,000,000 121,784,798 87,312,409 71.69 Recurrent 14,685,613 26,530,941 35,000,000 31,862,420 30,738,562 96.47 Development 44,335,918 45,387,211 145,000,000 89,922,378 56,573,847 62.91 Source: The County Treasury-CBROP 2024 Page | 28 County Fiscal Strategy Paper 2025 2.7 Major Programmes and Projects implemented in the period 2021/22 – 2023/24 2.6.1 Agriculture, Livestock, Fisheries and Cooperatives Achievements  Increased in number of farm inputs supplied  Procured and distributed 359,882 bags of 25kgs Planting fertilizer  Procured and distributed 359,988 bags of 25kgs Topdressing fertilizer  Procured and distributed 309280 packets of 2kgs Maize Hybrid seeds  Increased maize production to 5.6 million bags  Distributed 6,000 Tissue Cultured banana seedlings  Procurement and delivery of 390,000 tea seedlings from Tea Research Foundation to promote tea production in the county  Distributed 24,000 day old chicks to farmer groups through KELCOP  Distributed 120 beehives to farmers through KELCOP  Establishment and operationalization of Khwisero Smart dairy farm with 26 bullying heifers  Establishment and operationalization of Malava Smart dairy farm with 26 bullying heifers  Initiated construction of Shibinga, Shitoli, Navakholo, Butere and Likuyani Smart dairy farm which are in different stages of completion.  Establishment of a legume fodder farm as alternative source of dairy animals protein at Likuyani Smart dairy farm  Establishment of 15 acres of fodder maize at Mumias west  Acquisition of two shredders and one harmer mill to enhance on animal feed proceeding  Renovations of Smart dairy farms (Matungu, Bukura, Kabras and Khwisero)  Fodder diversification in smart dairy farms Purchase of Fish feeds under the subsidy program Ksh.18,000,000  Constructed new fish ponds and rehabilitated non-operational fish ponds at Ksh.17,000,000  Purchased Fingerlings for stocking of fish ponds at Ksh.10,000,000  Purchased Fibre glass boat and Out board engine Impact These initiatives have improved County food security and enhanced people’s standards of living. Maize production has increased to 5.6 million bags while milk production has increased by 2 million litres over the same period. 2.6.2 Roads, Public Works and Energy Page | 29 County Fiscal Strategy Paper 2025  A total of 43.05 Km of gravel roads upgraded to bitumen standards and maintained 3km including (7.2Km, Bushiangala - Eregi Road(9.3km), Lumakanda - Mwamba Road(7km) and Otiende Water Access roads(0.34Km)) and ongoing Construction of Matungu - Ogalo Road(9.3km), Ombwaro - Manyulia Road (5.5km), Murrum – Shitirira and Malava –Tumbeni Roads (7.6km), Butali – Malekha(6Km), Ingotse – Navakholo – Chebyusi(11.54km), Harambee- Musamba- Khaunga Bridge(12.5Km) and Lumakanda Manyonyi(7Km), Malaha-Khaunga(8Km), Mumias-Matawa-Indangalasia(10Km) and Mahiakalo-Nyayo Tea Zones- Shikulu Mkt (6.2km)  Constructed and maintained 1400.8 km and 1085.03 km respectively of gravel roads;  Constructed 15 bridges and box culverts (Lumakanda bridge, Mutsembi Bridge, Majengo Bridge, Eshirumba Bridge, Mahira Bridge, Fesbeth Bridge, Chitechi Box Culvert, Lairi Box Culvert, Musembe Box Culvert, Musingu1, Musingu2, Petros Nyapora, Chevoso, Mulwanda Box culverts and Mulunyingo box culvert) across the County and Manda, Evihande, Kasaya, Namilimu, Indoli, Chali Kasinde Eluhali, Vihulu - Musingu and Tamanoni are still ongoing;  Installed 15 high mast floodlights have been erected in various trading centres across the County;  It has also installed 60 transformers and connected 1670 household to electricity across the county. This has improved trading environment and security. Impact Investment in the road sector, where 97% of the County roads are motorable has improved connectivity and accessibility. Moreover, installation of high mast flood lights has increased hours of doing business thus improved household incomes. 2.6.3 Health Services  In collaboration with Jacaranda Health, equipped various health facilities with assorted medical equipment to improve services;  Constructed and operationalized Mutaho Dispensary in Ikolomani Sub-County hence reducing the distance to the nearest health facility;  In collaboration with Jacaranda Health, constructed and operationalized the maternity block at Malava level IV Hospital to improve maternal and child health.  Established Kakamega County Health Services Fund (KCHSF) to provide legal framework for facilities and public health units to raise, retain and use funds received for delivery of effective and quality health services Page | 30 County Fiscal Strategy Paper 2025  In collaboration with Jacaranda Health, launched and operationalized Lumakanda level IV maternity and pediatric wards.  Installed the Oxygen generating plant at CGH.  Increased Community Health Promoters stipend from KES 2,000 to KES 2,500 and enrolled them to NHIF.  Completed Butere level IV Hospital, theatre at Makunga level IV Hospital, male and pediatric ward at Matete Hospital, morgue at Likuyani Hospital; awaiting equipping and operationalization.  Constructed pit latrines, waiting bays and renovated various health facilities across the county. Impact Infrastructure development has improved access to quality and affordable healthcare services, improved service delivery and reduced maternal and child mortality. 2.6.4 Education Science and Technology  Constructed 44 classrooms in 14 county polytechnics and further completed the construction of classrooms, pit latrines and installed 5000l water tank in nine (9) county polytechnics; Bunyala Central CP, Itumbu CP, Kisa West CP, Mabanga CP, Bunyala West CP, Indangalasia CP, Mwira CP, Masaba CP, Butsotso Central CP and Butali/Chegulo CP.  Acquired 7.5 Acres of land for establishment of a new Polytechnic in Bunyala West ward, Shinoyi Shikomari Isumeyia ward and Butali Chegulo ward; and 2.3 Acres of land for establishment of a new Polytechnic in East Wanga ward in Mumias East Subcounty  Developed and implemented the schemes of service for County Polytechnics’ instructors.  Provided tuition subsidy to all trainees in the 63 County Polytechnics  Acquired three (3) 32 seaters buses for County Polytechnics.  Established and operationalized new county polytechnic at Butali Chegulo CP  Provided tuition subsidy to all trainees in the 66 County Polytechnics  Provide ATVET training to 600 Students  Completed construction of 48 ECDE Centres and more 15 ECDE Centres; Lubambo ECDE, Mutaho ECDE, Eshibinga, Eshirotsa, Eshirali, Khwisero, Siyombe, Eshiyenga, Musidi, Mukhonje, Panpaper ECDE, Chenjeni ECDE, St. Christopher Nyapora ECDE, Koyonzo ECDE, Emurabe ECDE Page | 31 County Fiscal Strategy Paper 2025  Developed schemes of service for ECDE Teachers;  Provided tuition subsidy to all children in 916 ECDE centres  Acquired and distributed 22,044 and 3,340 child-friendly chairs and tables respectively to 334 ECDE Centres;  Nzoia CP supplied 78 tables and 624 chairs to ECDE Centres.  Developed and implemented a Scheme of service for all ECDE Teachers;  Renovated 6 ECDE Centres; Mutoto ECDE, Shisasari ECDE, Eshiruli ECDE Centre, Shanderema ECDE Centre, Ebubala ECDE Centre and Mukhweya ECDE Centre.  Implemented Schemes of service for ECDE Teachers;  Provided tuition subsidy of Kshs 59,500,000 to all children in 925 public ECDE Centres.  Completed construction of 4 Centres of Excellence (Electrical and Plumbing Works);  Undergraduate HELB Scheme disbursed funds to 1,743 students while Afya Elimu Fund disbursed to 517 students;  County Education Scholarship Scheme benefited 84 students; 72 students ongoing and 12 student new recruits studying in both local and international universities.  Disbursed bursaries worth Kshs 120 million in FY 2021/22, 120M in FY 2022/23 and 240M in FY 2023/2024 Impact There has been improved access to quality education and training in all learning institutions in the County witnessed through increased enrolment. 2.6.5 Trade Industrialization and Tourism  Constructed Dudi, Kipkaren, and Bukura Markets and ongoing construction of Lidambitsa, Shiatsala, Bungasi, Koyonzo and Shibinga open air markets. Renovation of Harambee and Shanda market ongoing  Constructed, Khuqueen, Khumukwea, Shibuli, Ivihiga, Shikoti, Malaha and Ingavira, Sabatia, Khwisero, Ejinja, Nangili, Sango, ablution blocks.  Constructed Koyonzo and Shinyalu stock rings with Kipkaren Ongoing  Operationalized 22 market committees Page | 32 County Fiscal Strategy Paper 2025  Renovated Butere Market and meter separation of Shianda Market.  Completed construction of 40 boda-boda sheds and 2 pit latrines on markets.  Successfully held Kakamega SME exhibitions in 2023 & 2024  Verified 4000 traders weighing and measuring equipment in the county  Calibrated the county weights and measuring working standards  Kakamega County Microfinance Corporation disbursed Kes. 57,740,000 loans and recovered Kes 88M earning interest of 2,165,230  Developed Electronic Loan Management System to enhance efficiency of loan management  Designated and gazetted five heritage sites (Nabongo Shrines, Ikhongo Murwi, Mawe tatu, Misango Hills, Mugai stones and caves and Kambiri hills) to promote tourism;  Organized tourism promotion and marketing events including Churchill Live Experience  Established digital tourism marketing ‘Manya Ingo’ platform  Organized three (3) day Kenya Cultural Tourism and Food Conference, Festival and Expo from the 16th - 18th March 2023 at Bukhungu Stadium in Kakamega town.  Developed Kakamega County Tourism Information Centre website as an avenue to enhance marketing and information dissemination.  Mapped and documented tourism attraction sites and facilities  Prepared a Master Plan for the Industrial Park  Construction of County Aggregation and Industrial Park (CAIP) has been initiated in Likuyani  Ongoing construction of Malava Dairy Factory. Impact The County initiatives have improved access to better business environment and improved incomes and revenues. 2.6.6 Water, Environment, Natural Resources and Climate Change  Drilled and equipped the following boreholes, Musamba Primary, Muhomo Primary, Chevoso dispensary, Chombeli Primary, Shianda Market, Ingavira Market, Kimang”eti Girls, Samitsi Market, Shamiloli Primary, Mukulusu Primary, Kilimani Girls, Ebululwe Church, Emukoye Girls, Ebukhokoro Primary, Makunga Health Center, Bulimbo Girls, Wanga TVC, among others.  Operationalized Musembe Dam water Project;  Implemented the last mile connectivity programme dubbed Amatsi Khumuliango where 7,450 households were connected; Page | 33 County Fiscal Strategy Paper 2025  Protected 500 springs:  Rehabilitated and augmented Ogalo, Nyapora, Misango, Imalava, Kuvasali, Matunda, Kilimani, Etenje, Samitsi, Marenyo, Handidi and Musembe Health Centre water projects, among others.  Solarized over 20 including Kongoni, Nangili, Makunga Health Centre, Eshisiru, Khwisero Girls, Munami Primary, Mabole, Eshimukoko Health Centre, Kholera, Makhokho, Emakale, Emasiba, Shamiloli, Shianda Market in Malava, Shianda Spring in Mumias East, Chekalini, Bendera, Kilimani Girls, Ogalo, Handidi, Lubao, Bukura Market and Mukulusu, among others  Completed construction of the following water projects i.e., Chekalini, Bendera, Emukoye, Mutaho/Shanavunga, Emahongoyo, Shamiloli, Bukura Ekaponje, Eshikholobe and Iranda dispensary among others.  Supplied pipes and fittings for the last mile water connectivity in all the 12 Sub-Counties.  Enhanced efficiency of KACWASCO as a water service provider through reduction of None Revenue Water (NRW) operating scheme in Kakamega, Mumias, Shinyalu, Butere, Navakholo, Malava and Lugari serving 33,936 households.  Operationalized Kakamega County Rural Water and Sanitation Company (KACRWASCO) serving 2,672 households;  Completed transformative water supply schemes including Lwakhupa in Navakholo, Lumino Dam in Lugari and in partnership with Kenya Red Cross, constructed Misango hills water supply project in Khwisero.  Established and operationalized Climate Change Unit and Governance Structure ensuring climate resilience at the grassroots;  Implemented Climate Change Projects through Financing Locally Led Climate Actions (FLLoCA) across the 60 Wards;  Conducted Ward Based Participatory Climate Risk Assessment that culminated in development of County Climate Change Action Plan;  Installed Automatic Agro-Meteorological weather station in Matungu and Likuyani Sub-Counties to enhance collection and dissemination of accurate tailor-made climate information to the residents;  Collaborated with partners to rehabilitate degraded landscape by planting 50,000 tree seedlings in the county in sites such as Shikusa Block, Nyayo tea zone, Misango Hills and public institutions;  Established 5 modern tree nurseries in Lurambi, Khwisero, Shinyalu, Lugari and Navakholo Sub Counties to support afforestation and re-afforestation of degraded landscapes.  Established an environmental demonstration plot for Ex-Situ biological diversity conservation at Bukura Agricultural Training Center.  Planted 1.5million tree seedlings under the County Greening Program in a bid to increase the County tree cover. Page | 34 County Fiscal Strategy Paper 2025  Completed installation of a Digital Billboard at Bukhungu Stadium to support dissemination of weather and climate information.  Established an Organic Fertilizer Plant in Mumias West Sub-County to address waste management in the County in collaboration with Regen Organics under a Public Private Partnership arrangement.  Erected an electric perimeter fence covering 17 km around Kakamega Forest to regulate access to forest products, promote natural regeneration of degraded landscape and restore ecological, socio- economic and cultural impacts of the natural treasure to both the environment and people. Phase II of the project covering 25km is ongoing. Impact The initiatives of the Sector have led to a clean and secure environment, reduced prevalence of waterborne diseases and improved access to clean and safe water. 2.6.7 Social Services, Youth and Sports  Constructed 1,440 shelter units for the vulnerable people in the county;  Constructed Bukhungu Stadium Phase II up to 51% level of completion;  Supported 470 persons with disability with assistive devices and food stuff;  Established and hosted Youth Kikao, an annual event enhancing good governance and participatory planning and development;  Completed and operationalized a Gender Based Violence (GBV) Centre in Shinyalu and initiated construction of a similar centre at Chekalini in Lugari Sub County;  Reintegrated over 134 teen mothers into secondary schools and TVETs;  Decreased teen pregnancies in Kakamega County from 14,000 in 2022 to the current 9,200;  Completed upgrading of 14 sports fields including Solyo, Mukumu, Emanani, St Teresa Primary, Pan Paper, Navakholo, Khwisero,Lumakanda,Khayega,Mung’ang’a,Musanda, Kakamega High,Bumwende and Matete Sports Fields;  Digitized and documented indigenous knowledge of the various communities in Kakamega County.  Stocked Lusumu and Kakamega Public library with assorted books to enhance the  reading culture of culture;  Promoting the County's rich cultural heritage as exhibited in music, dance and other performance arts at the National level as well as facilitating the Governor's Gala. Kakamega County is the reigning Champion of Kenya Music and Cultural Festival, having won the title since inception of devolution (from 2014).  Enhanced National cohesion through hosting and participation in Kenya Inter-County Sports and Cultural Association games (KICOSCA). Page | 35 County Fiscal Strategy Paper 2025  Empowered 3,600 Women and 1,800 Youth in the County Youth Service and Women Empowerment Programme;  Renovated Mumias Cultural centre  Constructed Khayega Art Gallery, Eshimuli Shrines Administration Block and Shinyalu Gender based Violence Rescue Center  Developed the County Youth, Children’s and Social protection Policies  Trained 1,200 bodaboda riders and issued them with road safety riding safety gears and driving licenses. Impact The County has improved the socio-economic situation of the disadvantaged members of the society, promoted social cohesion and enhanced the participation of youths in development activities and nurtured talents. 2.6.8 Lands, Housing, Urban Areas and Physical Planning  Renovated and fenced houses in Mudiri (6) and Malava (10)  Completed the Mumias Economic Stimulus Project (ESP) market and renovated Mumias Modern market  Completed drainage works in the central business district in Mumias municipality;  Completed construction of Mumias Modern Bus Park  Landscaped and rehabilitated Ambwere Junction -Bukhungu- Keere Road and Associated works in Kakamega Municipality  Constructed 1.6Km of Non-Motorized Transport from central business district to Mumias Level IV hospital in Mumias Municipality  Fenced and maintained Rosterman dumpsite  Completed construction of Sichirai Market.  Preparation of valuation roll is on-going at 98%  Constructed 40 stalls in Masingo Market in Kakamega Municipality  Prepared the County Housing Policy, valuation for rating bill and County Estaste Management regulations  Surveyed Barma in Khwisero vitokho and malaha market in Navakholo, Lunza and Butere market in Butere Matunda in Likuyani, Mautuma in Lugari, Shinyalu market in Shinyalu, Musanda market in Mumias West and Bukura market in Lurambi  Calibrated survey equipment Impact These initiatives have improved the business environment, hygiene and town planning. 2.6.9 Public Service and County Administration Page | 36 County Fiscal Strategy Paper 2025  Constructed one Ward Office – Shinoyi/Shikomari/Esumeiya ward office  Renovated Liaison Office in Nairobi  Refurbished County HQ offices- (Governor’s Office, Cabinet Secretariat, CCTV, Political and Economic Advisor`s Offices)  Fenced six (6) ward offices- Isukha East, Kisa West, Lubinu/Lusheya, Idakho North, Lwandeti and Shirugu/Mugai Wards.  Organized 94 awareness forums on effects of alcohol and drug abuse across the County.  Coordinated 73 public participation meetings/forums across the county  Constructed Amalemba Bridge and filling of Eshirembe gulley (Emergency)  Constructed Lutasio Bridge in Matungu Sub County  Installed lifts at the new County HQ Annex  Refurbished Old County HQs building and two sub-County offices (Shinyalu & Malava)  Operationalized Community Area Councils across the 400 Community Areas.  Constructed 10 collapsed bridges due to floods and installed 1 high mast flood light at Kaburengu under Disaster Fund.  Completed and operationalized Likuyani Sub-County Administration Office  Purchased modern Fire Engine  Completed and operationalized County Northern Region Office  Completed and operationalized Bunyala West Ward Office  Refurbished Shinyalu Sub County Office and the County Administration Office Impact Establishment of devolved administrative structures has improved access to government services whereas strengthening the Disaster Unit ensured timely response to disasters and emergencies. 2.6.10 Finance and Economic Planning  Established automated assets and liabilities information system that has enabled management of County assets and liabilities;  Operationalized e-Procurement system and achieved 95% payments through IFMIS thus enhanced transparency and accountability;  Improved audit reports from adverse to qualified by strengthening internal control systems;  Prepared County economic and budgeting policy documents as per the set timelines (CIDP, Sectoral plans, Page | 37 County Fiscal Strategy Paper 2025 CADP, CBROP, CFSP, MTEF)  Generated a report on agricultural investment promotion for 3 priority crops (Sunflower, Avocado and Upland Rice) in the county in partnership with Japan International Co-operation Agency(JICA)  Partnered with USAID Kenya investment mechanism to develop a resource mobilization and investment promotion strategy  In collaboration with USAID facilitated setting up of an organic Fertilizer factory- Sanergy Collaborative (Regen Organics)  Held the first International Investment conference (KaIICO 2024)  Acquired an Integrated Revenue Management System that has minimized leakages and eased reconciliations.  Improved collection of own source revenue from KES 1.335 billion in FY 2022/2023 to KES 1.349 billion in FY 2023/2024 Impact There have been improvements in financial management, timely implementation of county plans, enhanced revenue collection, and promoted Kakamega as an investment destination. 2.6.11 ICT, e-Government and Communication  Developed and operationalized three e-Government Portals; an Integrated Revenue Management System, Recruitment Web Portal and Supplier Management System  Established the production studio at the County headquarters to support production of local content;  Redesigned and upgraded Local Area Network (LAN) at the County Headquarters.  Improved internet connectivity by increasing bandwidth at the County Headquarters from 40Mbps to 50Mbps and Sahajanand and Kotecha office buildings from 30Mbps to 40Mbps respectively  Installed and configured 69 IP telephones at the county headquarters to enhance communication.  Acquired an e-Board Management System which automated all cabinet meetings. Installed Local Area Network in Butere, Lugari, Public Works and Governor’s offices to provide comprehensive telecommunication infrastructure that will serve a wide range of users;  Developed a public participation portal which will provide a user-friendly platform for citizens to submit feedback, suggestions, complains and requests related to County affairs;  Revamped the production studio at the County headquarters to support production of local content and cut on production cost of County Documentaries. Impact Improved efficiency and effectiveness in service delivery through timely information dissemination and enhanced County visibility 2.6.12 Office of the Governor Page | 38 County Fiscal Strategy Paper 2025  Conducted 61 public participation forums with stakeholders across the county;  Renovated Butere, Lugari and Sahajanand audit offices to support audit services  Constructed and equipped Governor’s northern region office in Lugari;  Drafted a total of 86 bills, out of which 47 have been enacted by the county assembly and 32 MOUs have been signed to improve effectiveness of governance processes;  Acquired and operationalized the Electronic County Integrated Project Management System (ECIPMS) to support real time monitoring and tracking of project progress;  Equipped a County Court to handle cases relating to violations of County laws;  Furnished Governors, Deputy Governors, County Secretary, Deputy County Secretary and Cabinet Secretariat  Refurbished Audit Offices in Lugari and Butere.  Established and operationalized County Call Centre Impact There has been proper coordination and smooth implementation of county projects and programmes while enacted legislations and developed regulations have provided a legal framework for operationalization of county functions. 2.6.13 County Public Service Board  Recruited staff for the County eg KCRA and health Services  Promoted staff  Verified academic and professional certificates for officers in job group Q and R  Sensitized staff on National Values and principles of Governance and County Disciplinary procedures/processes  Sensitized Kakamega County Polytechnic Students on AGPO and employment opportunities  Reviewed the organization structures for the departments of Health Services, Agriculture and Social Services.  Renewed the contracts of 243 UHC Personnel and Data Clerks at Imarisha Afya ya Mama na Mtoto programme;  Recruited 944 Agri- prenuers for the department of Agriculture and 3000 Service men and women and 36 CYWEP Programme Officers for department of Social Services under delegated authority Page | 39 County Fiscal Strategy Paper 2025 Impact Recruitment of staff has enhanced service delivery 2.7 Implementation of FY 2023/24 Budget and Emerging Fiscal Challenges The implementation of the budget for FY 2023/24 started smoothly despite uncertainty in disbursement of funds from the National government. Most expenditure during the first quarter was majorly recurrent in nature with employee cost taking a bigger percentage and emphasis placed on completion of ongoing projects and payment of pending bills. Political interference in projects affected the implementation of the budget. Revenue collection in FY 2024/25 is showing a significant increase from a similar period in the FY 2023/24. Data provided by KCRA for the half year of the FY 2024/25 indicates that the County Government was able to collect KES 538 million as compared to KES 302 million collected during the same period in the FY 2023/24. This represents a growth of KES 236 million (78 per cent) that can be attributed to;  Establishment of plan approval committees at the sub-county level which streamlined the approval processes thus enhancing plan approval collection  Introduction of daily barter collections in some markets enhanced barter collections  Recruitment of county marshals strengthened revenue enforcement Some of the notable challenges faced in the implementation of the County Projects and programs included;  High expectation from the public for development;  Ballooning wage bill which limits funds meant for development;  Delays in disbursement of funds from the National government;  Constrained financial resources;  Low own source revenue collection;  Inadequate policy and legal framework;  Inadequate technical staff; Page | 40 County Fiscal Strategy Paper 2025 2.8 Revised budgets Budget implementation for the first half of the financial year 2023/24 faced several challenges key among them; delays in exchequer releases by the National treasury, continued additional expenditure demands from Departments and low own source revenue collections. In view of the financial constraints, a supplementary budget for FY 2023/24 reflecting these changes was prepared and approved by the County Assembly. The County Government will continue to rationalize and re- prioritize development and operational expenditures in order to spend within the budget. 2.9 Risks to the outlook The county government has faced a number of difficulties as a result of the decentralized systems to improve service delivery at the grassroots level. Expenditure challenges have persisted due to operational demands from all county departments and salary demands for Public Service & Administration. By reducing funds for capital expenditures, the high wage bill threatens the medium-term viability of the 2024/2025 budget. Besides, the withdrawal of the national finance bill 2024/2025, the county government had to cut some of its critical expenditure areas due to constrained budget. The County Government will take the necessary steps, such as rationalizing the budget, to safeguard economic stability and respond to its consequences appropriately on the fiscal outlook. Page | 41 County Fiscal Strategy Paper 2025 FISCAL POLICY AND BUDGET FRAMEWORK 3.1 Overview The County Fiscal Strategy Paper 2025/26 and over the Medium-Term period is aimed at supporting a sustainably wealthy and vibrant County by providing high quality services to improve the lives and livelihoods of its residents of Kakamega. The County Government will pursue prudent fiscal policies to ensure economic growth and development across all sectors. In addition, these policies will provide platform for overseeing vibrant economic activities while sustaining a smooth implementation of county projects and Programs. Adhering to these policies will therefore, enhance local revenue collection which will ensure adequate resources for capital investments. In respect to local revenue generation, the County Government is working towards instituting corrective measures aimed at enhancing revenue collection, reduction in leakages and improved timely reporting of the Revenue Agency. The agency is responsible for efficient and effective revenue collections, enforcement of local revenue laws and regulations, continued automation of revenue collection systems and expansion of revenue streams as well as undertaking sensitization and education of the public on revenue matters. To realize this agency has been working on optimal utilization of the cashless revenue collection system, implementation of the Facility Implementation Fund, increasing and increasing the human resource capacity 3.2 Legal Framework The Budget process is provided for in the legal framework including but not limited to The Constitution of Kenya, The County Government Act, 2012 and the Public Finance Management Act, 2012. The processes require collaboration with all stakeholders to ensure harmony in the operation of the County Governments and also boost the inter and intra government relations. 3.3 Adherence to Fiscal Responsibility Principles To achieve sustainable development and growth, the County Government is required to meet its fiscal targets. This is made possible by strict adherence to fiscal responsibility principles. These policies will aim at Page | 42 County Fiscal Strategy Paper 2025 rationalizing allocation of more resources from recurrent to Capital and Development Programs so as to promote sustainable and inclusive economic growth. The fiscal responsibility principles to be observed include; ❖ Over the medium term, a minimum of 30% of the County Government budget shall be allocated to development expenditure; ❖ The County Government’s expenditure on wages and benefits for public officers shall not exceed 35 percent of the County Government revenue as prescribed by the Public Finance Management Act (PFMA 2012). This is a challenging fiscal principle as the county is faced with a huge wage bill without equivalent corresponding revenue that supports cash flow to meet this requirement. The wage bill stands at 45.77 % which excludes the County Assembly. ❖ The County Government will prepare a balanced budget where the expenditure estimates will be equal to the total revenue resource. This will help in avoiding instances of deficit financing thus eliminating the occurrence of pending bills at the end of each financial year. ❖ Borrowing shall be used for capital and development estimates only. While the County desires to borrow in future to fund its development agenda, this will be determined by the framework being developed by the National Government in consultation with the County Governments. 3.4 Fiscal structural reforms The County Government aims to widen the revenue base by reviewing the relevant revenue legislations in order to improve revenue raising measures and efficiency. In order to achieve this objective, the County Government has strengthened the Kakamega County Revenue Agency by acquiring and operationalizing the Integrated Revenue Management System, implementation of the Facility Improvement Fund and recruitment of staff on permanent and pensionable terms. Over the medium term, the County Government will rationalize its expenditure with an aim to reduce wastage. This will be done by ensuring there is improved transparency and accountability among the accounting officers. The on-going fiscal structural reforms will eliminate duplication and enhance efficiency. Page | 43 County Fiscal Strategy Paper 2025 The County Government will also strive to ensure there is efficient and effective execution of the budget. This will be made possible through expenditure tracking and taking corrective measures on any deviations and instilling strong internal controls. To achieve value for money, there is need to strengthen the audit functions through continuous review of internal and external risks and periodic monitoring and evaluation of projects and programmes. 3.5 Deficit Financing Policy The County Government intends to borrow from domestic and external sources for capital investments based on the framework developed by the National Treasury. Borrowing will be undertaken upon careful and critical analysis of the financial position and capability of the County Government in repaying the debts. 3.6 Expenditure Forecasts As required by the Public Finance Management Act, 2012 on fiscal responsibility principles, the County Government will prepare a balanced budget where expenditure is equivalent to revenue projections. The County Government expects overall expenditure estimates to remain almost the same as the budget for FY 2025/26 that shall incorporate the revised own source revenue generation targets. Expenditure ceilings on goods and services for County Departments are based on the County priorities extracted from the CIDP 2023-2027 and the County Annual Development Plan 2025-2026. The ceilings are also adjusted based on expenditure trends and the County Government priority programs within the spending units. Inflation which affects the expenditure trends has been put into consideration. An Emergency Fund of KES 100 Million will be set aside to cater for any emergency cases that may arise during the FY 2025/26 in accordance to the PFM Act 2012. 3.7 The FY 2025/2026 Budget framework The FY2025/26 budget framework is prepared in consideration of the macro-fiscal framework. The economic growth is estimated to have slowed down to 4.6 percent in 2024 from a growth of 5.6 percent in 2023 reflecting deceleration of economic activities in the first three quarters of 2024 and the slowdown in private sector credit growth to key sectors of the economy. Growth is expected to pick up to 5.3 percent in 2025 and Page | 44 County Fiscal Strategy Paper 2025 retain the same momentum over the medium term largely driven by: enhanced agricultural productivity; resilient services sector, and ongoing implementation of priorities under BETA. Page | 45 County Fiscal Strategy Paper 2025 MEDIUM-TERM EXPENDITURE FRAMEWORK 4.1. Division of Revenue Raised Nationally Based on the Budget Policy Statement (BPS, 2025), the estimated ordinary revenue by the National Government in the FY 2025/26 is KES 3,018.80 billion. In this paper the National Treasury has proposed to allocate to County Governments KES 405.07 billion as their equitable share of revenue raised nationally. 4.2. County Governments Allocation The BPS, (2025) proposes that the equitable share of revenue is KES 405.07 billion. This revenue is shared among County Governments based on the fourth basis formula recommended by the Commission on Revenue Allocation in January, 2025. The formula takes into account the following parameters; (i) Population (42%); (ii) Equal Share (22%); (iii) Geographical Size (9%); (iv) Poverty (14%); (v) Per Capita Income Distance (13%) The allocation to County Governments’ equitable revenue share of KES 405.07 billion in FY 2025/26 is informed by the following prevailing circumstances:  Trends in the performance of revenue (this was taken into consideration in determining the Ksh 17.64 billion increases in equitable share of revenue in FY2025/26);  Increased expenditures for National Government for purposes of debt servicing coupled with a weakened shilling against the dollar;  The Government commitment to implement a fiscal consolidation plan targeting to reduce the fiscal deficit to 3.8 percent of GDP in FY 2025/26. This is designed to slow down accumulation of public debt, improve primary surplus thereby achieve fiscal sustainability;  Financing constraints due to limited access to finance in the domestic and international financial markets; and  The National Government continues to solely bear shortfalls in revenue in any given financial year whereas the County Governments continue to receive their full allocation despite the budget cuts affecting the national government. Page | 46 County Fiscal Strategy Paper 2025 The above proposed equitable share for FY 2025/26 of Ksh 405.07 billion is equivalent to 25.79 percent of the last audited and approved actual revenues raised nationally of Ksh 1,570,563 million for FY 2020/21 pursuant to Article 203(3) of the Constitution. 4.3. Additional Allocations In the County Governments Additional Allocations Bill (CGAAB), 2025, for FY 2025/26, the National Treasury proposes to allocate a total of KES 67.97 billion as additional allocations (Conditional and Unconditional). KES 12.89 billion will be financed from the National Government's share of revenue, and KES 55.07 billion will be additional allocations from proceeds of loans and grants from development partners as detailed in Table 9. Page | 47 County Fiscal Strategy Paper 2025 Table 9: Additional Allocation to County Governments Source: Budget Policy Statement, 2024 Page 48 4.4. Kakamega County Resource Envelope The resource envelope available for allocation among the spending entities is based on the updated Medium-Term Fiscal Framework which is outlined in Section IV and the Budget Policy Statement (2025) by the National Treasury. In view of the continued pressure that arise from wage bill and limited resources, MTEF budgeting will focus on adjusting expenditures to cater for the priority sectors. Financing of County Government budget revolve around two main sources namely; transfers from the National Government and own source revenue. The shareable revenue transfers will account for 76.57 per cent of the expenditure priorities in the budget, 12.41 per cent will be financed from own revenue sources, 4.52 per cent from conditional grants while 6.50 per cent will be financed by the balance brought forward. The resource envelope estimates of KES 17,734,302,952 will comprise of KES 13,579,038,225 equitable shareable revenue, KES 802,425,312 conditional grants and KES 2,200,000,000 as own source revenue. The unspent balance from FY 2024/25 is estimated to be KES 1,152,839,415 as presented in table 10. The County also envisages additional resources from donor funding and National Government additional allocation grants. This has not been captured in the Budget since the respective bills are yet to be assented to. Table 10: Revenue resource envelope Revenue source Approved Budget Estimates Revised Estimates Forecast 2023/24 2024/25 2024/25 2025/26 2026/27 2027/28 KES KES KES KES KES KES Own sources 2,200,000,000 2,200,000,000 2,200,000,000 2,200,000,000 2,400,000,000 2,400,000,000 Balance brought forward – Equitable Share 1,196,000,000 752,266,374 1,152,839,415 1,152,839,415 1,152,839,415 1,152,839,415 Page | 49 County Fiscal Strategy Paper 2025 Revenue source Approved Budget Estimates Revised Estimates Forecast 2023/24 2024/25 2024/25 2025/26 2026/27 2027/28 Conditional grants 133,900,169 303,132,837 1,152,425,312 802,425,312 802,425,312 802,425,312 Total equitable share 12,917,304,053 12,912,646,262 13,105,736,766 13,579,038,225 13,579,038,225 13,579,038,225 TOTAL REVENUE 14,954,812,629 16,313,304,053 15,864,912,636 17,734,302,952 17,934,302,952 17,934,302,952 Source: BPS (2024) 4.5. Spending Priorities for FY 2025/26 – FY 2027/28 MTEF Budget The County government expenditure will focus on the following key priority areas; i) Access to quality health, water and sanitation; ii) Promote wealth creation and infrastructural development; iii) Modernize and commercialize agriculture towards achieving food and nutrition security; iv) Improve education standards; v) Social Development to empower communities; vi)