CRA makes new proposals for funding counties

The disbursement of resources to the counties is likely to come under greater scrutiny after the Commission on Revenue Allocation (CRA) released its draft formula for consultations before it is submitted to the Senate.

The proposed third Revenue Allocation Formula, which has adopted a sector-specific funding approach, will now be subjected to public participation before it goes to the Senate.

The CRA says the formula will be used to share the Sh335 billion earmarked for the 47 counties in the 2019/2020 financial year.

Fairness in the horizontal distribution of funds between the counties by the commission has been a major issue.

REVIEW

According to the law, the revenue-sharing formula should be reviewed every five years, although it was reviewed for the first time three years after the advent of devolution.

In the proposal unveiled yesterday, CRA chairperson Jane Kiringai said the commission intended to share out the money on the basis of a qualitative analysis of each county’s needs to ensure equity, help the poor one catch up with the rest, and take into account the outcomes of previous investments.

“This formula proposes measures of expenditure needs aligned with devolved services. It is a departure from the previous ones, with key attention placed on strengthening the link between the constitutional mandates of the counties and the devolved monies transferred to counties,” she said in Nairobi.

OBJECTIVE

The CRA's recommendations were crafted with the objective of enhancing service delivery, promoting balanced economic growth, and promoting and rewarding fiscal performance by individual counties.

On service delivery, the health sector has been assigned a weight of 15 per cent. The commission combined the uninsured, inpatient and outpatient visit parameters to come up with the index.

And in the agricultural sector, it arrived at the expenditure needs through the total number of rural households with regard to extension services and food security to determine the proposed 10 per cent weight. This translates to Sh4 for every rural household.

Water has been assigned a weight of three per cent, as have urban services. All other county functions have been assigned 18 per cent.

On the promotion of balanced growth, the commission has proposed road network (three), land area (eight per cent) and poverty (15 per cent) as the indicators.

The CRA will also reward counties for effective revenue collection and prudent management of fiscal resources.

Should the proposal be approved by the Senate, counties will be awarded with Sh20 for every Sh100 collected.