Kenya devolved power and public spending to 47 counties in 2013. This was in line with a global trend in which governments were pushing power and resources down to local levels in the hope that decisions made closer to people would lead to better outcomes.
The logic was straightforward: local governments should be better placed to understand and respond to local needs.
Kenya’s version of this – set out in its 2010 constitution and implemented three years later – was particularly ambitious. It guaranteed counties a share of national revenue and directed extra funds to 14 historically marginalised counties through an equity-based formula and an “equalisation fund”.
Before devolution, the differences between marginalised counties and the 33 others were large. For example, households in marginalised counties spent about half as much as those in the rest of the country – Sh3,250 (US$25) vs Sh6,149 (US$47) before the reform – on total consumption. This made addressing regional inequality a priority.
The constitution’s aim was to bring basic services, such as water, roads, electricity and healthcare, closer to national standards in areas that had long lagged behind.
Kenya counties classified by marginalisation
So did the extra county shillings change everyday life? Did households actually become better off?
I study public finance, regional inequality and behavioural finance, with a focus on how fiscal reforms and behaviour shape household financial decisions and everyday welfare. To answer these questions, I analysed four waves of Kenya’s nationally representative FinAccess Household Survey. This covered the period before the constitutional changes (2009, 2013) and after devolution (2015, 2018).
I compared trends in the 14 marginalised counties with those in the other 33 counties. I used a “before‑after, here‑there” method that evaluates how outcomes change over time between two groups. This approach helped isolate the effects of devolution from other changes happening in the economy.
The overall picture suggests that households in marginalised regions are now better off. Total household consumption more than doubled after devolution, rising from Sh3,250 (US$25) before 2013 to Sh7,549 (US$58) afterwards. By contrast, other counties saw a much smaller increase – 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 – such as electricity, water and cooking fuel – rose by about 29%. Even everyday expenses like mobile airtime increased by around 16%.
In effect, households in marginalised regions went from spending just over half of what better-off counties spent before 2013 to almost catching up afterwards. This before-and-after shift shows how much ground marginalised counties gained once devolution took effect.
However, the gains were not evenly distributed. Poorer households saw the biggest proportional increases in overall consumption. Better-off households, meanwhile, increased spending largely on education and healthcare.
Nevertheless, the changes shown in my research point to a meaningful improvement in households’ living standards over a relatively short period.
This shows Kenya’s devolution did not just move money between levels of government. It changed what households can afford, ranging from school fees to healthcare, housing, utilities and everyday connectivity.
The devolution debate and spending power
Public debate about devolution in Kenya often focuses on who gets what: whether funds are shared fairly, whether counties misuse money, or whether bigger budgets lead to better services.
These are important questions. But they tend to focus on inputs (how much money is allocated) or visible outputs (such as new roads or clinics).
For households, progress shows up in something more immediate: spending power. Can families put food on the table? Pay school fees? Afford medicine? Stay connected?
By looking at what households actually spent, my research showed that Kenya’s equity-focused devolution did more than shift budget lines. It translated into tangible improvements in everyday life in places that had long been left behind.
The results were clear. Households in marginalised counties saw large and broad-based increases in spending compared with households in the 33 other counties.
Total household consumption rose by about 43% in marginalised counties. Education spending in marginalised counties rose sharply, too, from Sh1,140 (US$9) before the reform to Sh4,017 (US$31) afterwards. Medical spending increased from Sh459 (US$4)to Sh1,094 (US$8).
Two main factors explain most of the increases in spending.
First, marginalised counties spent much more on services after 2013. On average, they spent roughly twice as much per person on county operations and development projects. This reflects both the higher transfers they received and the speed with which they converted funds into actual services.
Second, household incomes rose partly because devolution created local jobs and business opportunities through public contracts.
There were, however, important nuances.
Rising spending on utilities, for example, can reflect both progress and pressure. New connections to electricity and water improve quality of life, but they also bring monthly bills.
Kenya’s institutional design likely helped too.
Rules-based transfers (meaning money allocated according to a fixed, transparent formula rather than political negotiations) and the Equalisation Fund (a dedicated pot of money for areas with the greatest service gaps) reduced political discretion in how money was allocated. This resulted in more predictable funding for counties, less room for interference, and a clearer link between need and resources.
In addition, Kenya’s strong mobile money system made it easier for households to respond to new opportunities. People could move money quickly and safely, even in remote areas – allowing them to handle shocks, invest and take advantage of local economic activity generated by county spending. Evidence shows that mobile money transfer service M-Pesa, launched in 2007, has helped lift people out of poverty over time.
What should happen next?
The challenge now is to make those gains last.
First, the equity-based approach to sharing revenue should be protected and regularly updated. Allocation rules need to reflect current data so that funds continue to target real gaps.
The Equalisation Fund is due to expire in 2033. Unless it’s renewed, policymakers face a critical decision about whether, and how, to sustain support for historically marginalised areas.
Second, a small share of transfers could be linked to performance. Counties should be rewarded if they improve revenue collection without overburdening residents, publish timely financial reports, and strengthen transparency in procurement.
This would encourage better financial management while keeping equity at the centre.
Third, policymakers should pay attention to the cost of new services. As more households connect to electricity and water, temporary support, such as lifeline tariffs or targeted subsidies, can help ensure that poorer families are not priced out.
Finally, investment in county capacity and better data is essential. Strong local institutions are needed to plan, deliver and maintain services. Add to this a survey that follows the same households over time, like South Africa’s National Income Dynamics Study or the Indonesia Family Life Survey, so Kenya can track mobility and long‑run reform effects directly.
For other African countries considering decentralisation, Kenya’s experience suggests that design matters.
Predictable transfers, equity-focused allocation and local capacity can turn fiscal reforms into real gains in household welfare.
