New revenue sharing formula

Dr Jane Kiringai,Commission Revenue Allocation (CRA) Chairperson makes her address during the lunch of the 2nd Policy and Criteria for Sharing Revenue among the marginalised areas and CRA Strategic plan at the Hotel Intercontinental,Nairobi. [Photo: Elvis Ogina.Standard] .

Money allocated to marginalised counties has been slashed in a new revenue sharing formula unveiled by the Commission on Revenue Allocation (CRA) yesterday.  

Meanwhile, money given to rich counties has been increased, thanks to the formula to guide allocation of funds to counties over the next five years.

The formula is based on new parameters CRA used, which focus on enabling counties undertake roles they have been assigned by the Constitution.

Previously, a county’s population determined how much it is allocated every financial year. The health sector has been identified as a key area of focus. Also in play was poverty levels among other factors.

In the new formula, CRA considered devolved functions such as health, agriculture, early education and technical training. These have been grouped into three categories of service delivery component (which has a weight of 69 per cent), development component (26 per cent) and revenue and efficiency component (five per cent).

Lamu is one of the counties whose allocation under the new formula will be slashed. The county, which has been receiving the highest per capita allocation, will see its allocation drop to Sh2.46 billion in the 2019/20 financial year from Sh3.54 billion this year.

Nairobi on the other hand will see its allocation go to Sh17.44 billion compared to Sh15.79 billion this year.

Match funding

“CRA has proposed some changes to the Second Basis for revenue sharing…. Motivated by the need to strengthen the link between the constitutional mandates of the counties… (and also) the need to closely match funding to expenditure need,” CRA chairperson Jane Kiringai (below) said.

CRA has also recommended increase in equitable share to counties to Sh335 billion, compared to Sh314 billion this year.

Dr Kiringai said following consultations with the public and other stakeholders, the previous formulas had been unpopular due to their primary focus on population size as well as disparity in the per capita allocation.

“The criticism the first and second formulas received was that there was no relationship between functions assigned to counties by the Constitution and the basis for sharing revenues. There was also no consideration for unique needs for urban areas such as provision of water and garbage collection,” she said.

Kiringai added: “There was also a huge disparity in the amount each individual would be allocated across the different counties on a per capita basis.”

Counties have in the recent past raised concerns about use of the 2009 national population census. They say the data contained irregularities and it is also outdated.

Some governors had asked CRA to wait for the 2019 population census so it could form the basis of the third formula.

The Standard
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