In 2013, Kenya embarked on a significant shift in governance by devolving power and public spending to its 47 counties. This move, in line with global trends towards decentralization, aimed to bring decision-making closer to the people and address regional inequalities. As part of this reform, Kenya’s constitution guaranteed counties a share of national revenue and directed additional funds to 14 historically marginalized counties through an equity-based formula and an “equalisation fund.”.
Before the implementation of devolution, there was a stark disparity between the marginalised counties and the rest of the country. Households in these regions spent about half as much on total consumption compared to those in better-off areas. The constitution’s objective was to bridge this gap by bringing basic services like water, roads, electricity, and healthcare up to national standards in lagging regions.
To assess the impact of this devolution, Frederick Kibon Changwony from the University of Stirling conducted an analysis of four waves of Kenya’s nationally representative FinAccess Household Survey. The study compared trends in the 14 marginalised counties with those in the other 33 counties, using a “before-after, here-there “method to isolate the effects of devolution from other economic changes.
The results were promising. After devolution, total household consumption in marginalised regions more than doubled, rising from Sh3,250 (US$25) to Sh7,549 (US$58). This was a much larger increase compared to other counties, where consumption rose from Sh6,149 (US$47) to Sh8,526 (US$66).
Spending on education increased by roughly 37%, and medical spending by about 43%. Rent went up by around 39%, while spending on utilities rose by about 29%, and everyday expenses like mobile airtime increased by around 16%.
The gains were not evenly distributed, with poorer households experiencing the biggest proportional increases in overall consumption. This indicates that devolution has had a meaningful impact on improving households’living standards in a relatively short period. The research highlights that Kenya’s devolution did more than just shift budget lines; it translated into tangible improvements in everyday life for those who had long been left behind.
The study also identified two main factors behind the spending increases: the higher transfers received by marginalised counties and the speed with which they converted funds into actual services. Additionally, the creation of local jobs and business opportunities through public contracts contributed to rising household incomes.
The research underscores the importance of maintaining the equity — based approach to revenue sharing, regularly updating allocation rules, and renewing the Equalisation Fund. It also suggests that linking a small share of transfers to performance could encourage better financial management while keeping equity at the center. Policymakers should also consider the cost of new services and invest in county capacity and better data to ensure strong local institutions for planning, delivering, and maintaining services.
For African countries considering decentralisation, Kenya’s experience demonstrates that design matters. Predictable transfers, equity-focused allocation, and local capacity can turn fiscal reforms into real gains in household welfare.
