Uproar on new cash share plan for counties as health, agriculture win

New Commission on Revenue Allocation chairperson Dr Jane Kiringai at a past event. PHOTO | FILE | NATION MEDIA GROUP

What you need to know:

  • The need to balance development will account for 26 per cent of the revenue.
  • CRA will also reward counties for effective revenue collection and prudent management of fiscal resources.
  • Nakuru has displaced Kilifi in second position, having been awarded Sh11.7 billion, up from Sh9.45 billion.
  • Turkana, which was the second highest recipient in 2017/2018, is now the third largest beneficiary with a proposed Sh11.69 billion.

While county governments have discretion on how to spend money allocated to them, the Commission on Revenue Allocation has made sweeping proposals on the areas to prioritise in a new formula.

The draft third generation formula unveiled last week, and which the commission has invited the public for debate, says resources should be shared based on devolved functions with a huge percentage going to health and agriculture.

It is this sector-specific funding that has met resistance from some quarters, who have vowed to ensure it is rejected by the Senate when tabled for approval.

But commission chair Jane Kiringai hopes the new formula will not only lead to more prudent management of resources but also ensure prioritisation of projects. It would also motivate counties to improve revenue collection by rewarding those that collect the most.

“It is a formula that treats the same level of needs and allocates resources accordingly. We have redefined a number of parameters that ensure counties are clustered by their expenditure needs in health, water, health, urban services and so forth,” Dr Kiringai said.

HEALTH SERVICES

Instructively, the formula is influenced less by poverty and population levels of devolved units, with CRA seeking to ensure that resources are allocated to specific devolved functions.

Weight on access to health services will account for 15 per cent, agriculture (10 per cent), water (three per cent), urbanisation levels (three per cent), county population (18 per cent), and equal share (20 per cent).

The need to balance development will account for 26 per cent of the revenue — comprising poverty levels (15 per cent), land area (8 per cent) and road network (three per cent). In the far-reaching recommendations, service delivery will account for 69 per cent of how much each county will be allocated — not population size.

The development component takes 26 per cent while revenue and efficiency component takes five per cent.

In the current formula, CRA bases its allocation on population parameter (45 per cent), basic equal share (26 per cent), poverty (18 per cent) land area (8 per cent), fiscal responsibility (2 per cent) and development index at one per cent.

REVENUE COLLECTION

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 get Sh20 for every Sh100 collected.

But not all counties have the same revenue capacity, owing to different economic fortunes. That means the new formula risks punishing marginalised counties and rewarding rich ones, which defeats the very purpose of devolution.

While the last two formulas were used for three years each, the new formula is expected to be in effect for the next five financial years, starting from 2019/2020. Going by the CRA proposals, Nairobi will receive the lion’s share of the Sh335.67 billion proposed for counties at Sh17 billion, up from the current Sh16 billion.

Nakuru has displaced Kilifi in second position, having been awarded Sh11.7 billion, up from Sh9.45 billion.

And Turkana, which was the second highest recipient in 2017/2018, is now the third largest beneficiary with a proposed Sh11.69 billion.

ALLOCATION REDUCED

Kakamega takes the fourth position with Sh11.3 billion. The allocation share for other resource-rich counties like Meru will rise by Sh1.33 billion, Kisumu (Sh688 million) and Kiambu (Sh699 million), among others.

Should the formula be approved, counties like Mandera will have their allocation reduced by Sh1.3 billion, Lamu by Sh1.09 billion, Isiolo (Sh145 million), Wajir (Sh514 million), Tana River (Sh285 million), Kilifi (Sh1.43 billion), and Kwale (Sh1.02 billion).

Based on per capita equitable share allocation, Lamu is the top county, with each resident receiving at least Sh34,972. It is followed by Isiolo at Sh27,445 and Marsabit at Sh24,069.

Other top counties are Tana River (Sh21,964), Samburu (Sh20,062), Taita-Taveta (Sh14,925), Wajir (Sh12,031), Turkana (Sh13,670) and Garissa (Sh11,544).

But counties with higher populations are getting lower per capita equitable share. In Nairobi, with a population of 3.1 million based on the 2009 census, residents receive Sh5,032 as per capita share allocation followed by Kiambu at Sh5,772 with a population of 1.6 million.

Already, governors from counties who allocations will dip have criticised the proposed formula. They include Ali Roba (Mandera), Hassan Joho (Mombasa) and Amason Kingi (Kilifi).

Tharaka-Nithi Governor Muthomi Njuki, whose county’s allocation will increase to Sh3.7 billion from the current Sh3.6, backed the proposal.

Additional reporting by Alex Njeru