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Equitable Share Distribution and Financial Sustainability of County Governments in Western Kenya
Subject area: Management and Commerce · Area of research: Business and Economics
DOI: 10.64388/IREV10I1-1719441
Abstract
County governments in Kenya rely substantially on the equitable share, a constitutionally mandated transfer from national revenue, to finance devolved functions and sustain service delivery. Despite its centrality to devolved financing, persistent disbursement delays, formula adequacy concerns, and absorption capacity constraints continue to undermine the contribution of the equitable share to long-term county financial sustainability. This study examined the impact of equitable share distribution on the financial sustainability of county governments in Western Kenya, focusing on Busia, Vihiga, Bungoma, and Kakamega counties. The study was anchored on Resource Dependency Theory, which explains how subnational entities manage dependence on external resource flows to maintain operational continuity. A descriptive correlational research design was adopted, targeting 161 county officials involved in financial management, using a census approach. Primary data was collected through structured questionnaires and semi-structured interviews administered to County Executive Committee Members for Finance, Chief Officers for Treasury, and finance department staff, while secondary data was drawn from Controller of Budget reports, Auditor General reports, and County Integrated Development Plans covering the period 2019-2024. Data were analyzed using descriptive statistics, Pearson correlation, and simple linear regression in SPSS version 26. Findings revealed that equitable share distribution had a positive and significant correlation with financial sustainability (r=0.578, p<0.001), explaining 33.4% of the variance in financial sustainability (R²=0.334, F=74.521, p<0.001). Equitable share funds were found to be properly allocated and systematically integrated into development budgets, with effective monitoring of fund utilization. However, disbursement delays emerged as the most pronounced challenge, significantly disrupting project implementation and service delivery schedules, while the adequacy of the current allocation formula in capturing county-specific development needs and poverty levels showed only moderate support among respondents. The study concludes that equitable share distribution makes a significant and substantial contribution to county financial sustainability, though its full potential is constrained by disbursement unpredictability and formula design limitations. The study recommends enforcement of constitutional disbursement timelines, periodic review of the horizontal allocation formula to better reflect county-specific needs, and strengthened county-level capacity for timely and effective absorption of allocated funds.
Keywords
Equitable Share Distribution, Financial Sustainability, County Governments, Fiscal Decentralization, Kenya
References
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How to cite this paper
@article{1719441,
author = {Imelda Akhonya, Dr. Edwins Baraza, CPA Dr. Jared Oganda},
title = {Equitable Share Distribution and Financial Sustainability of County Governments in Western Kenya},
journal = {Iconic Research And Engineering Journals},
year = {2026},
volume = {10},
number = {1},
pages = {326-336},
issn = {2456-8880},
url = {https://www.irejournals.com/formatedpaper/1719441.pdf},
abstract = {County governments in Kenya rely substantially on the equitable share, a constitutionally mandated transfer from national revenue, to finance devolved functions and sustain service delivery. Despite its centrality to devolved financing, persistent disbursement delays, formula adequacy concerns, and absorption capacity constraints continue to undermine the contribution of the equitable share to long-term county financial sustainability. This study examined the impact of equitable share distribution on the financial sustainability of county governments in Western Kenya, focusing on Busia, Vihiga, Bungoma, and Kakamega counties. The study was anchored on Resource Dependency Theory, which explains how subnational entities manage dependence on external resource flows to maintain operational continuity. A descriptive correlational research design was adopted, targeting 161 county officials involved in financial management, using a census approach. Primary data was collected through structured questionnaires and semi-structured interviews administered to County Executive Committee Members for Finance, Chief Officers for Treasury, and finance department staff, while secondary data was drawn from Controller of Budget reports, Auditor General reports, and County Integrated Development Plans covering the period 2019-2024. Data were analyzed using descriptive statistics, Pearson correlation, and simple linear regression in SPSS version 26. Findings revealed that equitable share distribution had a positive and significant correlation with financial sustainability (r=0.578, p<0.001), explaining 33.4% of the variance in financial sustainability (R²=0.334, F=74.521, p<0.001). Equitable share funds were found to be properly allocated and systematically integrated into development budgets, with effective monitoring of fund utilization. However, disbursement delays emerged as the most pronounced challenge, significantly disrupting project implementation and service delivery schedules, while the adequacy of the current allocation formula in capturing county-specific development needs and poverty levels showed only moderate support among respondents. The study concludes that equitable share distribution makes a significant and substantial contribution to county financial sustainability, though its full potential is constrained by disbursement unpredictability and formula design limitations. The study recommends enforcement of constitutional disbursement timelines, periodic review of the horizontal allocation formula to better reflect county-specific needs, and strengthened county-level capacity for timely and effective absorption of allocated funds.},
keywords = {Equitable Share Distribution, Financial Sustainability, County Governments, Fiscal Decentralization, Kenya},
month = {July},
doi = {https://doi.org/10.64388/IREV10I1-1719441}
}