Part i—PrinciPles and frameworK of PuBlic finance
ARTICLE 201. Principles of public finance
The following principles shall guide all aspects of public
finance in the Republic—
(a) there shall be openness and accountability, including public
participation in financial matters;
(b) the public finance system shall promote an equitable society,
and in particular—
(i) the burden of taxation shall be shared fairly;
(ii) revenue raised nationally shall be shared equitably among national and county governments; and
(iii) expenditure shall promote the equitable development of the country, including by making special provision for marginalised groups and areas;
(c) the burdens and benefits of the use of resources and public borrowing shall be shared equitably between present and future generations;
(d) public money shall be used in a prudent and responsible way; and
(e) financial management shall be responsible, and fiscal reporting shall be clear.
ARTICLE 202. Equitable sharing of national revenue.
(1) Revenue raised nationally shall be shared equitably among the national and county governments.
(2) County governments may be given additional allocations from the national government’s share of the revenue, either conditionally or unconditionally.
ARTICLE 203. Equitable share and other financial laws.
(1) The following criteria shall be taken into account in determining the equitable shares provided for under Article 202 and in all national legislation concerning county government enacted in terms of this Chapter—
(a) the national interest;
(b) any provision that must be made in respect of the public debt and other national obligations;
(c) the needs of the national government, determined by objective criteria;
(d) the need to ensure that county governments are able to perform the functions allocated to them;
(e) the fiscal capacity and efficiency of county governments;
(f) developmental and other needs of counties;
(g) economic disparities within and among counties and the need to remedy them;
(h) the need for affirmative action in respect of disadvantaged
areas and groups;
(i) the need for economic optimisation of each county and to provide incentives for each county to optimise its capacity to raise revenue;
(j) the desirability of stable and predictable allocations of revenue; and
(k) the need for flexibility in responding to emergencies and
other temporary needs, based on similar objective criteria.
(2) For every financial year, the equitable share of the revenue raised nationally that is allocated to county governments shall be not less than fifteen per cent of all revenue collected by the national government.
(3) The amount referred to in clause (2) shall be calculated on the basis of the most recent audited accounts of revenue received, as approved by the National Assembly.
ARTICLES 204. Equalisation Fund.
(1) There is established an Equalisation Fund into which shall be paid one half per cent of all the revenue collected by the national government each year calculated on the basis of the most recent audited accounts of revenue received, as approved by the National Assembly.
(2) The national government shall use the Equalisation Fund only
to provide basic services including water, roads, health facilities and electricity to marginalised areas to the extent necessary to bring the quality of those services in those areas to the level generally enjoyed by the rest of the nation, so far as possible.
(3) The national government may use the Equalisation Fund–– (a) only to the extent that the expenditure of those funds
has been approved in an Appropriation Bill enacted by
(b) either directly, or indirectly through conditional grants to counties in which marginalised communities exist.
(4) The Commission on Revenue Allocation shall be consulted and its recommendations considered before Parliament passes any Bill appropriating money out of the Equalisation Fund.
(5) Any unexpended money in the Equalisation Fund at the end of a particular financial year shall remain in that Fund for use in accordance with clauses (2) and (3) during any subsequent financial year.
(6) This Article lapses twenty years after the effective date, subject to clause (7).
(7) Parliament may enact legislation suspending the effect of
clause (6) for a further fixed period of years, subject to clause (8).
(8) Legislation under clause (7) shall be supported by more than half of all the members of the National Assembly, and more than half of all the county delegations in the Senate.
(9) Money shall not be withdrawn from the Equalisation Fund unless the Controller of Budget has approved the withdrawal.
ARTICLES 205. Consultation on financial legislation affecting counties.
(1) When a Bill that includes provisions dealing with the sharing of revenue, or any financial matter concerning county governments is published, the Commission on Revenue Allocation shall consider those provisions and may make recommendations to the National Assembly and the Senate.
(2) Any recommendations made by the Commission shall be tabled in Parliament, and each House shall consider the recommendations before voting on the Bill.
Part 2—other PuBlic funds
- (1) There is established the Consolidated Fund into which shall be paid all money raised or received by or on behalf of the national government, except money that—
(a) is reasonably excluded from the Fund by an Act of Parliament and payable into another public fund established for a specific purpose; or
(b) may, under an Act of Parliament, be retained by the State organ that received it for the purpose of defraying the expenses of the State organ.
(2) Money may be withdrawn from the Consolidated Fund only—
(a) in accordance with an appropriation by an Act of
(b) in accordance with Article 222 or 223; or
(c) as a charge against the Fund as authorised by this Constitution or an Act of Parliament.
(3) Money shall not be withdrawn from any national public fund other than the Consolidated Fund, unless the withdrawal of the money has been authorised by an Act of Parliament.
(4) Money shall not be withdrawn from the Consolidated Fund unless the Controller of Budget has approved the withdrawal.
- 207. (1) There shall be established a Revenue Fund for each county government, into which shall be paid all money raised or received by or on behalf of the county government, except money reasonably excluded by an Act of Parliament.
(2) Money may be withdrawn from the Revenue Fund of a county government only—
(a) as a charge against the Revenue Fund that is provided for by an Act of Parliament or by legislation of the county; or
(b) as authorised by an appropriation by legislation of the county.
(3) Money shall not be withdrawn from a Revenue Fund unless the Controller of Budget has approved the withdrawal.
Consolidated Fund and other public funds.
Revenue Funds for county governments.
(4) An Act of Parliament may—
(a) make further provision for the withdrawal of funds from a county Revenue Fund; and
(b) provide for the establishment of other funds by counties and the management of those funds.
ARTICLE 208. Contingencies Fund.
(1) There is established a Contingencies Fund, the operation of which shall be in accordance with an Act of Parliament.
(2) An Act of Parliament shall provide for advances from the Contingencies Fund if the Cabinet Secretary responsible for finance is satisfied that there is an urgent and unforeseen need for expenditure for which there is no other authority.
Part 3—revenue-raisinG Powers and the PuBlic deBt
ARTICLE 209. Power to impose taxes and charges.
(1) Only the national government may impose— (a) income tax;
(b) value-added tax;
(c) customs duties and other duties on import and export goods;
(d) excise tax.
(2) An Act of Parliament may authorise the national government to impose any other tax or duty, except a tax specified in clause (3) (a) or (b).
(3) A county may impose— (a) property rates;
(b) entertainment taxes; and
(c) any other tax that it is authorised to impose by an Act of
(4) The national and county governments may impose charges for the services they provide.
(5) The taxation and other revenue-raising powers of a county
shall not be exercised in a way that prejudices national economic policies, economic activities across county boundaries or the national mobility of goods, services, capital or labour.
ARTICLE 210. Imposition of tax.
(1) No tax or licensing fee may be imposed, waived or varied except as provided by legislation.
(2) If legislation permits the waiver of any tax or licensing
(a) a public record of each waiver shall be maintained together with the reason for the waiver; and
(b) each waiver, and the reason for it, shall be reported to the
(3) No law may exclude or authorise the exclusion of a State
officer from payment of tax by reason of—
(a) the office held by that State officer; or
(b) the nature of the work of the State officer.
ARTICLE 211. Borrowing by national government.
(1) Parliament may, by legislation—
(a) prescribe the terms on which the national government may borrow; and
(b) impose reporting requirements.
(2) Within seven days after either House of Parliament so requests by resolution, the Cabinet Secretary responsible for finance shall present to the relevant committee, information concerning any particular loan or guarantee, including all information necessary to show—
(a) the extent of the total indebtedness by way of principal and accumulated interest;
(b) the use made or to be made of the proceeds of the loan;
(c) the provision made for servicing or repayment of the loan;
(d) the progress made in the repayment of the loan.
ARTICLE 212. Borrowing by counties.
A county government may borrow only—
(a) if the national government guarantees the loan; and
(b) with the approval of the county government’s assembly.
ARTICLE 213. Loan guarantees by national government.
(1) An Act of Parliament shall prescribe terms and conditions under which the national government may guarantee loans.
(2) Within two months after the end of each financial year, the national government shall publish a report on the guarantees that it gave during that year.
ARTICLE214. Public debt.
(1) The public debt is a charge on the Consolidated Fund, but an Act of Parliament may provide for charging all or part of the public debt to other public funds.
(2) For the purposes of this Article, “the public debt” means all financial obligations attendant to loans raised or guaranteed and securities issued or guaranteed by the national government.
Part 4—revenue allocation
ARTICLE 215. Commission on Revenue Allocation.
(1) There is established the Commission on Revenue
(2) The Commission shall consist of the following persons appointed by the President—
(a) a chairperson, who shall be nominated by the President and approved by the National Assembly;
(b) two persons nominated by the political parties represented in the National Assembly according to their proportion of members in the Assembly;
(c) five persons nominated by the political parties represented in the Senate according to their proportion of members in the Senate; and
(d) the Principal Secretary in the Ministry responsible for
(3) The persons nominated under clause (2) shall not be members of Parliament.
(4) To be qualified to be a member of the Commission under clause (2) (a), (b) or (c), a person shall have extensive professional experience in financial and economic matters.
ARTICLE 216. Functions of the Commission on Revenue Allocation.
(1) The principal function of the Commission on Revenue Allocation is to make recommendations concerning the
basis for the equitable sharing of revenue raised by the national government––
(a) between the national and county governments; and
(b) among the county governments.
(2) The Commission shall also make recommendations on other matters concerning the financing of, and financial management by, county governments, as required by this Constitution and national legislation.
(3) In formulating recommendations, the Commission shall seek––
(a) to promote and give effect to the criteria mentioned in
Article 203 (1);
(b) when appropriate, to define and enhance the revenue sources
of the national and county governments; and
(c) to encourage fiscal responsibility.
(4) The Comission shall determine, publish and regularly review a policy in which it sets out the criteria by which to identify the marginalised areas for purposes of Article 204 (2).
(5) The Commission shall submit its recommendations to the Senate, the National Assembly, the national executive, county assemblies and county executives.
ARTICLE 217. Division of revenue
(1) Once every five years, the Senate shall, by resolution, determine the basis for allocating among the counties the share of national revenue that is annually allocated to the county level of government.
(2) In determining the basis of revenue sharing under clause (1), the Senate shall—
(a) take the criteria in Article 203 (1) into account;
(b) request and consider recommendations from the Commission on Revenue Allocation;
(c) consult the county governors, the Cabinet Secretary
responsible for finance and any organisation of county
(d) invite the public, including professional bodies, to make submissions to it on the matter.
(3) Within ten days after the Senate adopts a resolution under clause (1), the Speaker of the Senate shall refer the resolution to the Speaker of the National Assembly.
(4) Within sixty days after the Senate’s resolution is referred under clause (3), the National Assembly may consider the resolution, and vote to approve it, with or without amendments, or to reject it.
(5) If the National Assembly––
(a) does not vote on the resolution within sixty days, the resolution shall be regarded as having been approved by the National Assembly without amendment; or
(b) votes on the resolution, the resolution shall have been–– (i) amended only if at least two-thirds of the members of the
Assembly vote in support of an amendment;
(ii) rejected only if at least two-thirds of the members of the Assembly vote against it, irrespective whether it has first been amended by the Assembly; or
(iii) approved, in any other case.
(6) If the National Assembly approves an amended version of the resolution, or rejects the resolution, the Senate, at its option, may either––
(a) adopt a new resolution under clause (1), in which case the provisions of this clause and clause (4) and (5) apply afresh; or
(b) request that the matter be referred to a joint committee of the two Houses of Parliament for mediation under Article
113, applied with the necessary modifications.
(7) A resolution under this Article that is approved under clause (5)
shall be binding until a subsequent resolution has been approved.
(8) Despite clause (1), the Senate may, by resolution supported
by at least two-thirds of its members, amend a resolution at any time after it has been approved.
(9) Clauses (2) to (8), with the necessary modifications, apply to
a resolution under clause (8).
ARTICLE 218. Annual Division and Allocation of Revenue Bills.
(1) At least two months before the end of each financial year,
there shall be introduced in Parliament––
(a) a Division of Revenue Bill, which shall divide revenue raised by the national government among the national and county levels of government in accordance with this Constitution; and
(b) a County Allocation of Revenue Bill, which shall divide among the counties the revenue allocated to the county level of government on the basis determined in accordance with the resolution in force under Article 217.
(2) Each Bill required by clause (1) shall be accompanied by a memorandum setting out––
(a) an explanation of revenue allocation as proposed by the
(b) an evaluation of the Bill in relation to the criteria mentioned in Article 203 (1); and
(c) a summary of any significant deviation from the Commission on Revenue Allocation’s recommendations, with an explanation for each such deviation.
ARTICLE 219. Transfer of equitable share.
A county’s share of revenue raised by the national government shall be transferred to the county without undue delay and without deduction, except when the transfer has been stopped under Article 225.
Part 5—BudGets and sPendinG
ARTICLE 220. Form, content and timing of budgets.
(1) Budgets of the national and county governments shall contain—
(a) estimates of revenue and expenditure, differentiating between recurrent and development expenditure;
(b) proposals for financing any anticipated deficit for the period
to which they apply; and
(c) proposals regarding borrowing and other forms of public liability that will increase public debt during the following year.
(2) National legislation shall prescribe—
(a) the structure of the development plans and budgets of counties;
(b) when the plans and budgets of the counties shall be tabled in the county assemblies; and
(c) the form and manner of consultation between the national government and county governments in the process of preparing plans and budgets.
ARTICLE 221. Budget estimates and annual Appropriation Bill
(1) At least two months before the end of each financial year, the Cabinet Secretary responsible for finance shall submit to the National Assembly estimates of the revenue and expenditure of the national government for the next financial year to be tabled in the National Assembly.
(2) The estimates mentioned in clause (1) shall––
(a) include estimates for expenditure from the Equalisation
(b) be in the form, and according to the procedure, prescribed by an Act of Parliament.
(3) The National Assembly shall consider the estimates submitted under clause (1) together with the estimates submitted by the Parliamentary Service Commission and the Chief Registrar of the Judiciary under Articles 127 and 173 respectively.
(4) Before the National Assembly considers the estimates of revenue and expenditure, a committee of the Assembly shall discuss and review the estimates and make recommendations to the Assembly.
(5) In discussing and reviewing the estimates, the committee shall seek representations from the public and the recommendations shall be taken into account when the committee makes its recommendations to the National Assembly.
(6) When the estimates of national government expenditure, and the estimates of expenditure for the Judiciary and Parliament
have been approved by the National Assembly, they shall be included in an Appropriation Bill, which shall be introduced into the National Assembly to authorise the withdrawal from the Consolidated Fund of the money needed for the expenditure, and for the appropriation of that money for the purposes mentioned in the Bill.
(7) The Appropriation Bill mentioned in clause (6) shall not include expenditures that are charged on the Consolidated Fund by this Constitution or an Act of Parliament.
ARTICLE 222. Expenditure before annual budget is passed.
(1) If the Appropriation Act for a financial year has not been assented to, or is not likely to be assented to, by the beginning of that financial year, the National Assembly may authorise the withdrawal of money from the Consolidated Fund.
(2) Money withdrawn under clause (1) shall—
(a) be for the purpose of meeting expenditure necessary to carry on the services of the national government during that year until such time as the Appropriation Act is assented to;
(b) not exceed in total one-half of the amount included in the estimates of expenditure for that year that have been tabled in the National Assembly; and
(c) be included, under separate votes for the several services in respect of which they were withdrawn, in the Appropriation Act.
ARTICLE 223. Supplementary appropriation.
(1) Subject to clauses (2) to (4), the national government may spend money that has not been appropriated if—
(a) the amount appropriated for any purpose under the Appropriation Act is insufficient or a need has arisen for expenditure for a purpose for which no amount has been appropriated by that Act; or
(b) money has been withdrawn from the Contingencies Fund.
(2) The approval of Parliament for any spending under this Article shall be sought within two months after the first withdrawal of the money, subject to clause (3).
(3) If Parliament is not sitting during the time contemplated in clause (2), or is sitting but adjourns before the approval has been sought, the approval shall be sought within two weeks after it next sits.
(4) When the National Assembly has approved spending under clause (2), an appropriation Bill shall be introduced for the appropriation of the money spent.
(5) In any particular financial year, the national government may not spend under this Article more than ten per cent of the sum appropriated by Parliament for that financial year unless, in special circumstances, Parliament has approved a higher percentage.
ARTICLE 224. County appropriationBills.
On the basis of the Division of Revenue Bill passed by Parliament under Article 218, each county government shall prepare and adopt its own annual budget and appropriation Bill in the form, and according to the procedure, prescribed in an Act of Parliament.
Part 6—control of PuBlic money
- Financial control.
(1) An Act of Parliament shall provide for the establishment, functions and responsibilities of the national Treasury.
(2) Parliament shall enact legislation to ensure both expenditure control and transparency in all governments and establish mechanisms to ensure their implementation.
(3) Legislation under clause (2) may authorise the Cabinet Secretary responsible for finance to stop the transfer of funds to a State organ or any other public entity—
(a) only for a serious material breach or persistent material breaches of the measures established under that legislation; and
(b) subject to the requirements of clauses (4) to (7).
(4) A decision to stop the transfer of funds under clause (3) may not stop the transfer of more than fifty per cent of funds due to a county government.
(5) A decision to stop the transfer of funds as contemplated in clause (3)—
(a) shall not stop the transfer of funds for more than sixty days; and
(b) may be enforced immediately, but will lapse retrospectively unless, within thirty days after the date of the decision, Parliament approves it by resolution passed by both Houses.
(6) Parliament may renew a decision to stop the transfer of funds but for no more than sixty days at a time.
(7) Parliament may not approve or renew a decision to stop the transfer of funds unless—
(a) the Controller of Budget has presented a report on the matter to Parliament; and
(b) the public entity has been given an opportunity to answer the allegations against it, and to state its case, before the relevant parliamentary committee.
ARTICLE 226. Accounts and audit of public entities.
(1) An Act of Parliament shall provide for—
(a) the keeping of financial records and the auditing of accounts of all governments and other public entities, and prescribe other measures for securing efficient and transparent fiscal management; and
(b) the designation of an accounting officer in every public entity
at the national and county level of government.
(2) The accounting officer of a national public entity is accountable to the National Assembly for its financial management, and the accounting officer of a county public entity is accountable to the county assembly for its financial management.
(3) Subject to clause (4), the accounts of all governments and
State organs shall be audited by the Auditor-General.
(4) The accounts of the office of the Auditor-General shall be audited and reported on by a professionally qualified accountant appointed by the National Assembly.
(5) If the holder of a public office, including a political office, directs or approves the use of public funds contrary to law or instructions, the person is liable for any loss arising from that use and shall make good the loss, whether the person remains the holder of the office or not.
ARTICLE 227. Procurement of public goods and services
(1) When a State organ or any other public entity contracts for goods or services, it shall do so in accordance with a system that is fair, equitable, transparent, competitive and cost-effective.
(2) An Act of Parliament shall prescribe a framework within which policies relating to procurement and asset disposal shall be implemented
and may provide for all or any of the following—
(a) categories of preference in the allocation of contracts;
(b) the protection or advancement of persons, categories of persons or groups previously disadvantaged by unfair competition or discrimination;
(c) sanctions against contractors that have not performed according to professionally regulated procedures, contractual agreements or legislation; and
(d) sanctions against persons who have defaulted on their tax obligations, or have been guilty of corrupt practices or serious violations of fair employment laws and practices.
Part 6— financial officers and institutions
ARTICLE 228. Controller of Budget.
(1) There shall be a Controller of Budget who shall be nominated by the President and, with the approval of the National Assembly, appointed by the President.
(2) To be qualified to be the Controller, a person shall have extensive knowledge of public finance or at least ten years experience in auditing public finance management.
(3) The Controller shall, subject to Article 251, hold office for a
term of eight years and shall not be eligible for re-appointment.
(4) The Controller of Budget shall oversee the implementation of the budgets of the national and county governments by authorising withdrawals from public funds under Articles 204, 206 and 207.
(5) The Controller shall not approve any withdrawal from a public
fund unless satisfied that the withdrawal is authorised by law.
(6) Every four months, the Controller shall submit to each House of Parliament a report on the implementation of the budgets of the national and county governments.
ARTICLE 229. Auditor-General.
(1) There shall be an Auditor-General who shall be nominated by the President and, with the approval of the National Assembly, appointed by the President.
(2) To be qualified to be the Auditor-General, a person shall have extensive knowledge of public finance or at least ten years experience in auditing or public finance management.
(3) The Auditor-General holds office, subject to Article 251, for a
term of eight years and shall not be eligible for re-appointment.
(4) Within six months after the end of each financial year, the Auditor-General shall audit and report, in respect of that financial year, on—
(a) the accounts of the national and county governments;
(b) the accounts of all funds and authorities of the national and county governments;
(c) the accounts of all courts;
(d) the accounts of every commission and independent office
established by this Constitution;
(e) the accounts of the National Assembly, the Senate and the county assemblies;
(f) the accounts of political parties funded from public funds; (g) the public debt; and
(h) the accounts of any other entity that legislation requires the
Auditor-General to audit.
(5) The Auditor-General may audit and report on the accounts of any entity that is funded from public funds.
(6) An audit report shall confirm whether or not public money
has been applied lawfully and in an effective way.
(7) Audit reports shall be submitted to Parliament or the relevant county assembly.
(8) Within three months after receiving an audit report, Parliament or the county assembly shall debate and consider the report and take appropriate action.
ARTICLE 230. Salaries and Remuneration Commission
(1) There is established the Salaries and Remuneration
(2) The Salaries and Remuneration Commission consists of the following persons appointed by the President—
(a) a chairperson;
(b) one person each nominated by the following bodies from among persons who are not members or employees of those bodies—
(i) the Parliamentary Service Commission; (ii) the Public Service Commission;
(iii) the Judicial Service Commission; (iv) the Teachers Service Commission;
(v) the National Police Service Commission; (vi) the Defence Council; and
(vii) the Senate, on behalf of the county governments;
(c) one person each nominated by—
(i) an umbrella body representing trade unions;
(ii) an umbrella body representing employers; and
(iii) a joint forum of professional bodies as provided by legislation;
(d) one person each nominated by—
(i) the Cabinet Secretary responsible for finance; and
(ii) the Attorney-General; and
(e) one person who has experience in the management of human resources in the public service, nominated by the Cabinet Secretary responsible for public service.
(3) The Commissioners under clause (1) (d) and (e) shall have no vote.
(4) The powers and functions of the Salaries and Remuneration
Commission shall be to—
(a) set and regularly review the remuneration and benefits of all State officers; and
(b) advise the national and county governments on the
remuneration and benefits of all other public officers.
(5) In performing its functions, the Commission shall take the following principles into account—
(a) the need to ensure that the total public compensation bill is
(b) the need to ensure that the public services are able to attract and retain the skills required to execute their functions;
(c) the need to recognise productivity and performance; and
(d) transparency and fairness.
ARTICLE 231. Central Bank of Kenya.
(1) There is established the Central Bank of Kenya.
(2) The Central Bank of Kenya shall be responsible for formulating monetary policy, promoting price stability, issuing currency and performing other functions conferred on it by an Act of Parliament.
(3) The Central Bank of Kenya shall not be under the direction or control of any person or authority in the exercise of its powers or in the performance of its functions.
(4) Notes and coins issued by the Central Bank of Kenya may bear images that depict or symbolise Kenya or an aspect of Kenya but shall not bear the portrait of any individual.
(5) An Act of Parliament shall provide for the composition, powers, functions and operations of the Central Bank of Kenya.