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Answer to revenue sharing debacle lies in economics 101

By Dennis Waweru | August 8th 2020 at 12:11:00 GMT +0300

What are the chances of a poor boy in Marsabit, Garissa, Nairobi and Kiambu counties coming out of debilitating poverty? In Marsabit and Garissa, the boy will have to tackle rural poverty while in Nairobi and Kiambu, he is likely to face an even worse form of urban poverty.

The boy in Mukuru slums and his counterpart in Garissa town will face different odds in their quest for growth. The difference is huge when looked at using the capital income from these two distinct regions. All in all, they will be weighed down by these odds and may suffer irreparable damage.

The raging debate on the revenue allocation formula in the Senate, which has failed to get consensus for a record seven times, should take these two boys into consideration. Each review season allows us to reflect backwards, re-jig our formula and work in the best interest of the greater good for all.

In the process of building consensus on the raging debate, Senators ought to focus first on the journey travelled thus far. We could start by looking at how much each county has got since devolution was enacted in 2013.

Between 2012 and 2017 for instance, Nairobi had received a total of Sh51 billion to run devolved services. Garissa County had received Sh23 billion. While Kiambu received Sh30 billion in that period, Wajir got Sh27 billion, Sh3 billion shy of Kiambu’s.

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By that time, Mandera had gotten more than Kiambu at Sh34 billion. We will not even mention the Equalisation Fund. An informed Senate decision would therefore have to consider what these counties have done with their billions, and the weight they continue to carry in demanding more billions.

Senate will then notice how Nairobi and Kiambu continue to sink under the weight of the existing formula, and how it continues to carry the burden of hosting, feeding and sheltering the whole mosaic of the Kenyan people, with less.

An impartial Senate will question the circumstances under which Mandera received more allocations than Kiambu and seek to correct this historical anomaly. They will then seek a resolution that ensures Mandera and Kiambu receive what is due to them.

Majority of Senators from Northern counties have homes in Nairobi or Kiambu or Machakos. They will no doubt have noticed that Nairobi has continued to regress under devolution, partly because of leadership challenges but majorly because of fiscal starvation inversely proportional to its needs.

While political emotions can be whipped up during this debate, we must use economics 101 to determine revenue sharing across the counties. It would be unfair to categorise counties only using historical growth patterns, because even in Nairobi, there is abject poverty. That inequality, if not addressed will hold back genuine chances for the boy in Mukuru, Kibera and other informal settlements. The idea of working with land mass or ethnic considerations for their own sakes has been overtaken by time and events.

And nothing demonstrates this than the idea of Nairobi itself, once a swamp area, but one which turned into a major metropolis owing to the consideration it received from successive governments until devolution set in. The revenue sharing debate should then look into the future, not just the past. In the future, the balloon of balkanising the country will burst for good.  

It does not, and it will not help the grumbling senators that Nairobi and Kiambu are starved of funds or that their allocations are diverted elsewhere. On the contrary, it will eat into their own prospects as dwellers and investors in these counties. Rather than close ranks in sustaining this historical injustice, the Senators and leadership of those areas should be closing ranks with us to find a solution that takes into consideration valid grievances that have been raised.

While Kenya belongs to all of us, we have to be careful not to grant some of our own a greater Kenyanness. Our national values and principles of governance forbid this.

- The writer is KenInvest Authority board chairman  


Kenya's Economy Revenue Sharing One Kenya
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