Review finds about 80 laws out to diminish devolution

Council of Governors re-elected Chairman Martin Wambora and his deputy James Ongwae addressing the media as they unveiled the new office.  [ Jenipher Wachie, Standard]

The Council of Governors (CoG) was in the news this week, first with a section of the print media predicting tough contests during the elections of the chairman and committee leadership.

We were back again when the predicted contest did not materialise. Keen observers however, already knew that there would be no contestation as the CoG elections are by consensus.

We were back yet again when the leadership of one the political formations was reported by a section of media, promising to increase the proportion of nationally raised revenues going to counties to a minimum of 35 per cent. This is on the back of the position already taken by the Senate. So, let us peel the onion.

First, we can expect major contention about, and delay in the enactment of, the division of revenue bill this year. Secondly, an internal review has found more than 80 laws that seek to claw back devolution. I will examine each of these issues in turn.

The Senate has proposed that 35 per cent of nationally raised revenues be shared with counties in the next division of revenue. This will be great for devolution. This proposal is not new, having been the position held by the CoG going into the negotiations last year at the Inter-government Budget and Economic Council (IBEC).

The Commission on Revenue Allocation and Treasury while citing a sluggish economy, argued for no increase from the current position, prompting us at the CoG to accuse them of proposing economic growth by standing still. The reason being that without an extensive economic stimulus (such as would be created by increased funding to counties), it is not clear where the much-needed economic recovery will come from.

The bad laws

The 35 per cent of revenue to counties was also one of the key planks of the now contested Building Bridges Initiative (BBI). The latter is, of course, now before the Supreme Court. The Senate position will lead to mediation between the two houses of parliament and no doubt intense lobbying.

Given that both houses have to complete business by early May when the official campaign period begins, it seems inevitable then, that the Division of Revenue Act for the next financial year will be delayed.

But where will the 35 per cent come from, given that Treasury struggles with disbursements now, when the minimum is set at 15 per cent by the Constitution?  Those opposed to an increase have asked this question in loud tones. Proponents have pointed out the numerous areas where the national government is holding on to devolved functions.

A recent internal review by the CoG found 80 laws as mentioned earlier, that seek to claw back from devolution, and or to diminish it. All the 80 laws have budgetary implications. The 35 per cent should come from national government relinquishing both the devolved functions it is holding on to, and the current funding it is using on those functions.

These laws are in all sectors. Agriculture has 20 Acts that are anti-devolution. Water has two, Urban Development and Infrastructure (7), Mining (2), Forestry (1), Environment (1), Health (14) and Tourism (3).

The trade, manufacturing, investments and cooperatives sector has a whopping 30 Acts that offend devolution.

This inventory includes laws that existed before the 2010 Constitution and have not been updated. But most worrying though, it includes laws that have been enacted since 2010. For example, the Pyrethrum Act of 2013 excludes counties from the management of this important crop. The same is repeated in the Tea Act of 2020.

Counties Ignored

The Irrigation Act 2019 fails to recognise the role of counties in irrigation development. The Tourism Act of 2011 hijacks a county tax, while the Public Health Act is a 1920s relic that has not been updated to conform with the Constitution of Kenya 2010.

The Investment Promotion Act of 2004, Foreign Investments Protection Act, and Investment Disputes Convention Act all pre-date the Constitution and are in urgent need updating to recognise the role of counties investment promotion. The Special Economic Zones Act of 2015 gives the minister power to declare a special economic zone but does not recognise the role of counties.

The Valuation Act and Rating for Valuation Act both pre-date the constitution. This fact has provided the Treasury with the perfect excuse not to pay contribution in lieu of rates, which is the equivalent of property tax that national government ought to pay to counties!

The Kenya Rural Roads Authority builds and maintains the same class roads as county governments. This is the same with the Kenya Urban Roads Authority. This leads to the absurd situation where a KURA engineer in Nyeri is responsible for fixing a pothole in Rumuruti, nearly 150km away, yet the county has engineers in Rumuruti.  A better and certainly more efficient way would be to fund the county to carry out the maintenance.

Another area is health. The budget to the ministry of health headquarters has more than doubled to Sh125 billion annually in the last three years. Yet health is a devolved function. The ministry insists not only on building but also equipping facilities.  One of their current favorites are the so-called level 3a facilities.

They are also back at trying to force counties to extend the rather discredited managed equipment leasing scheme. The MES was a real mess because of non-disclosure, opaque and pricey contracts that counties have no access to, and counties having to pay for equipment they did not receive.

Centres of growth

Under the guise of capacity building, and arguing that we don’t have technicians to maintain the equipment, fast talking technocrats want us to extend contracts whose end date is already here. The interesting twist to the tale?

The assets transfer as per 4 out of 5 contracts is to be done for $1 peppercorn. How much will counties pay if they agree to extend? Sh100 million annually.

One last point. In debates about the division of revenue, we will do well to remember that counties are in Kenya. Therefore, it is not as though the money is going to another country. Further, we should reflect on subsidiarity.  This is the idea that decisions should be made as close to where they are needed as possible, as we have demonstrated in the roads case above.

Further, subsidiarity promotes multiple centers of growth. In our case 47 counties. Data from Kenya National Bureau of Statistics (KNBS), disaggregating the Gross Domestic Product by county shows for instance, that three counties – Elgeyo Marakwet, Nyandarua and Laikipia were growing at rates above 8 per cent in the last five years, with this fast pace compensating for areas of slower growth.

This rapid growth, in different corners of the republic gives hope to the idea of dispersed development. It points to the possibility of even growth, and contributes to resolving the feelings of marginalization and exclusion that have dogged us in the past.

The people of Kenya spoke unequivocally in support of a people centered, unifying Constitution in 2010. They were clear that power, resources and governance need to be decentralised to ensure services are accessible by the citizens, decision making is an inclusive process and that the functions assigned in schedule 4 of the Katiba are fully implemented and resourced from the funds collected and devolved to the counties.