Commission unveils new counties revenue sharing plan

By Standard Reporters

The Commission on Revenue Allocation (CRA) has revised its formula for allocation of public funds to the 47 counties.

The counties would share Sh203 billion, about 33 per cent of the national revenue, as estimated by the Treasury in the current financial year.

In a report to Parliament, population would still determine allocation of the largest share even though this has been revised to 45 per cent down from the initial 60 per cent.

There will be an equal share that would comprise 25 per cent of the allocation. This has been reviewed upwards from 20 per cent.

Poverty would account for 20 per cent up from 12 per cent while land area would account for eight per cent up from six per cent. Fiscal responsibility has been maintained at two per cent. Based on the formula, Nairobi, with a population of 3.1million would receive Sh10.1 billion followed by Turkana with a population of 855,399, at Sh8.1 billion. Mandera (one million inhabitants) and Kakamega (1.6 million) would each receive Sh6.9 billion. Bungoma closes the top five at Sh6.6 billion. It has a population of 1.6 million.

Lamu with a population of 101,539 would receive Sh1.6 billion followed by Isiolo at Sh2.3 billion. Isiolo has a population of 143,294. Tharaka Nithi (365,330 people) will get Sh2.4 billion while Elgeyo Marakwet (369,998) take Sh2.5 billion. And Taita-Taveta with a population of 284,657 closes the last five at an allocation of Sh2.58 billion.

Included in the allocation is a uniform equal share of Sh1.08 billion per county. CRA revised the formula after public input when it went round the country collecting views in June.

“In the final analysis, CRA recommendations are informed by public opinion on the various weights of each parameter,” states the report.

The Constitution provides for a minimum of 15 per cent to be channeled to the counties. Equalisation fund would be Sh3 billion, comprising five per cent of the national revenue.

CRA relied on the population data from Housing and Population Census Report of 2009. CRA said population is a simple, objective and transparent indicator of expenditure needs of counties.

“The higher the county’s population, the higher the funds required to provide services,” the report states. The Commission justifies the use of poverty index as saying it is linked to expenditure needs differentials of counties.

“Counties with a higher number of poor people are likely to experience greater demand for publicly provided services rather than private ones,” states the report.

Parliament will debate the report and propose amendments.

Reports by Steve Mkawale, Allan Kisia and Peter Opiyo