Assuming that no grandstanding and brinkmanship at the National Assembly or Senate torpedoes the last minute agreement by the mediation committee to increase allocations to county governments by Sh3.3 billion, the country should be grateful that we narrowly avoided a financial crisis.
Had mediation failed, or in the unfortunate event that the National Assembly or even the Senate rejects the mediation proposals, the ensuing financial crisis would result from the absence of a fall back position in our public finance architecture if the Division of Revenue Bill is not passed.
Somehow, the Constitution’s framers assumed there would be an agreement on this most contentious Bill! Indeed, the Constitution is more deliberate and protective of the less contentious County Allocation of Revenue Bill, which simply divides the revenue among counties.
For this latter Bill, the Constitution gave precedence to the Senate, providing that the Senate version of the Bill would prevail unless the National Assembly overrode it with a two-thirds majority vote. In the case of the Division of Revenue Bill, the Constitution simply provides that if the mediation process between the National Assembly and the Senate fails to produce a result, the Bill is defeated!
It does not set out the “what next” in the budget process for both the National and county governments in the event of such defeat.
There is no doubt some latent ambiguity on the implications of the absence of a Division Bill for the national government, but I would expect that any attempt by the National Assembly to pass the national government budget without a Division of Revenue Bill would be challenged in court.
The county governments on the other hand would definitely be in a precarious position. The Constitution expressly provides that the county budgets are to be based on the Division of Revenue Bill and the County Allocation of Revenue Bill. Consequently, if the Division of Revenue Bill is defeated, there would be no County Allocation Bill, and hence no budgets passable by the counties. This would starve the counties of funds after June 30.
Of course, for counties with significant own revenues and some bank balances for the last financial year, and these are a minority, the crisis would be adjourned for a few months. There is no guarantee that in coming years, we will not have a crisis but there are some valuable lessons to be learnt from the process just about to be concluded. Firstly, we need to appreciate that the spirit of the Constitution is one of constant consultation on critical national issues so that there is broad ownership of eventual decisions.
Consultation allows consideration of critical matters without winners and losers with parties hopefully informed solely by the public interest. This nature of consultation requires pragmatic and mature leadership that avoids “point winning” and “playing to the gallery” negotiations.
It is clear that the Mediation Committee engaged in significant brinkmanship but it is to their credit that they somehow provided a workable solution. Secondly, we need credible professional institutions that are able to guide contentious negotiation processes so that parties are able to make informed decisions.
To this end, credit must go the National Treasury and the Parliamentary Budget Office that were able to provide necessary technical assistance to the mediation team to enable it make informed decisions. Finally, we must ensure that as much as possible, the parties that will make eventual decisions on revenue division are part of earlier negotiations. During the IBEC discussions where the figure of Sh283 billion was agreed, it may have helped to have Parliament represented, even if just as observers.
This would enable them to appreciate the basis on which agreement was reached and, while reserving their constitutional right to review the IBEC decisions, ventilate their concerns as early as possible. Bottomline, we have made some significant strides as a country in the most contentious process in all devolved systems. Assuming both Houses adopt the proposals, it will now be over to those who will steward these allocated funds.
They must continually recognise theirs is a sacred trust to use the funds for the benefit of the citizenry. Otherwise, the whole process will have been a farce with little meaning for Kenyans.