With counties struggling to stay afloat because of the contentious Division of Revenue Bill 2019, counties and the national government must find innovative ways of keeping the devolved units functional.
Of course, the proposed Sh19 billion budget cut in the base allocation for the county governments’ equitable fund, which is the basis of the current standoff, is not a small matter. This action will leave counties with no option but to revise their budgets and remove unnecessary expenditures, including reducing development expenditure.
However, the fact that county governments have almost entirely been dependent on funding from the national government, which is sometimes hit by delays like the current stalemate over revenue allocation, is quite telling. Whichever way the dispute goes, most counties will not get out of the woods.
A 2014 survey by the Institute of Certified Public Accountants of Kenya (Icpak) indicated that 15 out of Kenya’s 47 counties rely on single business permits as their core source of revenue; another 14 rely on user fees while the rest depend on property rates. In short, counties need to increase bases for wealth creation.
Counties must progressively be competitive and results-oriented to improve performance and management practices. This means that public projects should be open for scrutiny to determine the value for money invested in such projects and to evaluate how well public resources are used to meet the real needs of targeted beneficiaries. This is value for money and the real meaning of devolution.
The devolved units need to have laws that attract investors. If county governments take the trouble to make a connection between the taxes owed and the services they offer, they will be able to build up tax revenue and thereby create a basis for sustained development. If this does not happen, the result will be the opposite and contribute to the cash crunches like the one currently being witnessed.
Second, counties must eliminate the phenomenon of ghost workers and other concerns that have remained unaddressed for years. The challenge of bloated workforce has led to less expenditure on development but more on salaries and wages. This unfortunate situation has led to development projects being dropped or forced contractors to go without pay, creating a huge pending bills problem in counties.
Third, there is need to do more on enhancement of business activities, investment, revenue collection and generation and to focus more on low cost energy. Counties often complain that the public does not appreciate how many services they are responsible for providing. There has even been suggestion that if there was higher awareness, people would be more willing to pay taxes. This means that what is required is involving the public through public participation, resource mobilisation and citizens support in the whole process of resources devolution.
Fourth, the dearth of information on budgets by county governments does not help counties because citizens cannot be sure of how public funds are being used.
Yet, the Constitution and the 2012 Public Finance Management Act (PFMA) require each of Kenya’s 47 counties to publish information during the formulation, approval, implementation and audit stages of the budget cycle. At any one given time, no one knows the financial position of county governments. These need to be regularly published for accountability.
This financial situation is worsened by the fact that county governments know they can get away with failing to account for funds because there are no consequences to poor performance as they are assured of national government funds irrespective of PFMA.
Therefore, as part of our democracy and social accountability, those in leadership positions at county level need to actively engage the public by providing adequate time and resources for public to participate in the governance processes. It is also important to build capacity of the citizens and other actors to understand their roles in devolved governance.
Fifth, we have seen that county assemblies and devolution frameworks have fallen short of the checks and balances that they were supposed to be. Although the role of oversight at the county level is shared between the Senate and County Assemblies, this role has been the source of much confusion as financial impropriety spirals out of control.
Ultimately, the greatest challenge for county governments will remain poor financial accountability due to corruption. Alternative methods to bring counties to corruption and financial accountability must be put in place. This is the only sure way to meaningful development within counties.
Prof Mogambi, Communication and Social Change Expert, teaches at the University of Nairobi, Email: [email protected]
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