Leaders poke holes on revenue sharing formula

Senate Assembly Speaker Ken Lusaka (centre) with Devolution CS Eugene Wamalwa and Kisumu Senator Fred Outa during the 4th Legislative Summit in Kisumu yesterday. The summit accommodates all assemblies in the country. [Denish Ochieng, Standard]

The Commission on Revenue Allocation (CRA) has been challenged to peg its proposed third formula for sharing revenue among counties on scientific data.

Representatives from the National Government, Senate, county assemblies and the private sector cautioned the commission against setting parameters to address actual challenges without reliable and latest figures from various institutions.

They noted that data had remained a major constraint.

In the past, allocation of revenue was pegged on historical data. However, CRA is seeking to cure this disparity by using the 2017/18 audit by Auditor General Edward Ouko and the 2009 census.

According to CRA chairperson Jane Kiringai, the proposed 10 parameters, up from the existing six, sought to assign weight to address inequitable development among the 47 counties.

“We have settled on four key objectives that will help address inequality in the counties. The formula will address unique needs that has created a lot of instability in counties in the past,” she said.

She said the formula would address service delivery, balance development for effective action, deal with credit incentives by empowering counties and ensure prudent use of public resources.

Dr Kiringai argued that the formula would “incentivise” counties to optimise capacity to raise revenue through the Gross County product (GCP).

Fred Owegi of National Treasury (representing Cabinet Secretary Henry Rotich), Senate Finance and Budget vice chairman Isaac Mwaura (nominated), Chief Executive Officer Institute of Economic Affairs and Uasin Gishu County Assembly Budget and Appropriation Jonathan Ng’etich however warned on CRA’s move to correct under-development through the formula.

They spoke during a session on the third basis for equitable sharing of revenue, moderated by Nandi County Assembly Speaker Joshua Kiptoo, at the ongoing Fourth legislative Summit in Kisumu County.

“National Treasury gave comments and suggestions that the proposed assigned weights were in line with the objectives to promote equity, exclusivity and more representative than the first and second formula,” disclosed Mr Owegi.

He, however, warned that the weights sector could not be used to measure expenditure needs in counties.

“We have been using generic population. We need a more precise budgeting tool. Weights and resources should not be attached to counties. The county should be left to independently decide on how to plan what they want to do,” said Owegi.

He admitted that still, the proposal was better to bridge the fiscal distance in counties by minimising inequalities in areas like Kajulu, Msambweni and Kilifi.

Mr Mwaura said there was building tension between highly populated and densely polluted areas over horizontal allocation of resources.

“There is huge disparity where in some areas the income per capita is Sh6,000 while the same in another county is Sh24,000. It can’t be fair and therefore as Senate, we will look at the merits and demerits of this proposed formula,” he promised.

He supported Kiringai’s proposal to set aside 15 per cent of the allocation to cushion counties that would be negatively affected by the new formula. 

Instead of using the current parameters of population; equal share, poverty index, land area, fiscal effort and development factor to address Kenyans’ concerns and ensure resources follow functions, Kiringai said she devised other parameters.