Irony of State paying itself at the expense of counties

From left: Chairpersons of the Senate Committee on Finance and Budget Senator Mutula Kilonzi Jnr, Finance and Planning Committee of the National Assembly Joseph Kirui Limo go through a copy of the report from Commission Revenue Allocation with chair Dr Jane Kiringai and National Cohesion and Integration Commission boss Francis ole Kaparo during the lunch of the second Policy and Criteria for Sharing Revenue among the marginalised in Nairobi. [Elvis Ogina, Standard]
For over eight years, the Government has disbursed only Sh31 million on each of the 14 marginalised counties.

The same government has in three years spent about Sh45.4 million on Principal Secretaries (PSs) to advise it on how to spend money meant on these counties.

According to lobby group for Kenya’s forgotten counties, the Government spent Sh500 million in administrative costs on the advisory board made up of seven PSs and four other appointees, and has never spent a cent on actual projects in the counties.

Frontier Counties Development Council now wants Finance Cabinet Secretary Henry Rotich to give the counties Sh45.3 billion accrued over the period. This is meant to address the years of continued marginalisation even after the constitution sought to cure the years of neglect.

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“The National Treasury has failed and neglected to disburse funds from the equilisation fund without delay, disbursing a paltry Sh942.3 million since inception,” Mansur Issa of Issa & Company Advocates said.

“The national Treasury has sabotaged the fund by establishing an unwisely and unworkable implementation framework under the so-called Equilisation Advisory Board thereby misusing public funds by spending Sh500 million on administration costs,” Issa said.

The funds are to be spent in marginalised areas on development projects in the water, roads, health and electricity sectors “to the extent necessary to bring the quality of these services to the level generally enjoyed by the rest of the nation”.

Some of the marginalised areas have little or no access to water that the government has to guard water points lest communities literally clash over the scarce resources. As Chinua Achebe would put it, the fight for who ‘holds the yam and the knife’ has been the biggest impediment for helping the marginalised counties catch up.

Meanwhile, the residents of Mandera, Marsabit, Turkana, Wajir, Samburu, West Pokot, Tana River, Narok, Kwale, Garissa, Kilifi, Taita Taveta, Isiolo and Lamu continue to refer to the rest of the country like Kenya, where they do not belong.

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Initially, Governors and MPs dueled, with both sides lobbying strongly to be granted administration of the fund, created under Article 204 of the Constitution.

County bosses from the beneficiary regions have said the money should be channeled together with their county allocations while legislators from the same regions have been lobbying to have the fund come under their administration through the Constituency Development Fund model.

The fight between the leaders from the same region gave Treasury an excuse to play the arbiter and basically hold the yam and the knife.

Through regulations tabled in the National Assembly, Treasury has created the Equalisation Fund Advisory Board, largely consisting of PSs who will advise the Treasury PS on the allocation and performance of the fund. The board has been chaired by the PS Finance, Devolution, Water, Roads, Health, Energy, National Coordination and four external members appointed by CS Treasury outside the public service.

As such the region was officially marginalized in the apex body that should liberate them from the very marginalization.

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Soon after the effect of this decision returned to haunt the counties because as the money accumulated, the government officials decided to change the purpose of the money from the spirit intended by the constitution of 2010.

The Commission on Revenue Allocation (CRA) made a decision to increase the number of beneficiaries from the current 14 to a proposed 34. Garissa town MP Aden Duale said that Kiambu, Meru, Nyeri, and Tharaka Nithi are among the new additions.

“I am shocked to see some counties have been included to be part of the arid and semi-arid lands counties. I am disappointed with CRA who have expanded the list to 34. There is no way a village or a slum can be given a share of the funds,” said  Duale.

Then in May this year, a report on the ‘Second Policy Identifying Marginalised Areas of Kenya and the Criteria for Sharing Revenue from the Equalisation Fund’ by CRA led by Chairperson Jane Kiringai set the tone for a change in state policy.

The second policy identifies 1,424 sub-locations spread across 366 wards in 34 counties, especially in the northern Kenya region, as being marginalised.

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They include Elmolo (in Marsabit), Makonde (Kwale), Waata (Isiolo and Mandera) and Dorobo-Salieta (Narok). Others are Endorois and Ilchamus (Baringo), Sengwer (Trans-Nzoia), Aweer-Boni, Yaaku (Laikipia).

President Uhuru Kenyatta who received the report pitched for the inclusion of the urban poor so that they could benefit from the equalisation fund just like other marginalised communities in the rural areas. 

The President said the urban poor – mainly those in informal settlements – lived in precarious conditions and also needed to be accorded equal consideration as other marginalised communities in the rural areas. “The Commission said it would take on board the President’s concerns.   The second policy will be used to share revenue from the equalisation fund for the period ending 2021,” PSCU said.

While the first policy focused on the identification of marginalised counties, the second policy shifts focus to marginalised areas.  To identify the marginalised areas, the Commission used an index of deprivation constructed using information on access to safe water, school attendance, access to improved sanitation and electricity. 

Mr Duale said he would challenge the expansion of the programme in court.

While the parties wrangled, CS Rotich the money man with discretion on spending opted to scrap their allocation in the 2018 budget according to the Frontier counties lobby group.

“The National Treasury has illegally withdrawn from the Equilisation Fund allocation by way of 2018/19 supplementary budget by revising the fund allocation from Sh4.6 billion to nil,” Issa said.

They argue that since Treasury has collected Sh9.06 trillion since 2011, the 1.5 per cent summed their allocation to Sh45.3 billion. However, only Sh11.4 billion is sitting in the Central Bank of Kenya (CBK) account meant for these counties which have not even been spent yet.

The Rotich regulations grant the CoB the powers to authorise any withdrawal of money from the fund, whose account shall be held by CBK including a withdrawal authorised under an Act of Parliament.

“Authorisation by CoB to withdraw from the fund together with written instructions from the National Treasury concerning the same shall be sufficient authority for CBK to pay amounts from the equalisation fund account,” regulations say.

According to CRA, only Sh482 million had been spent by June last year on projects across Garissa, Kilifi, Kwale, Lamu, Mandera, Marsabit, West-Pokot, Isiolo and Tana River counties.

Project implementation was yet to begin in Narok, Samburu, Taita-Taveta, Wajir, and Turkana, which are the other beneficiaries singled out by the commission.

“Out of a total of Sh12.4 billion allocated during the first policy, only Sh1.1 billion had been spent by June last year. A total of Sh11.3 billion remained unutilised in the fund,” CRA boss said.

Revenue AllocationDevolutionMarginalised CountiesFrontier Counties Development Council