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Honesty and fidelity to equity will cure county cash sharing deadlock

By Kamotho Waiganjo | July 25th 2020 at 12:00:00 GMT +0300

The contentions surrounding the 3rd generation revenue allocation formula should not be surprising. This is, after all, about sharing the famous national cake.

What remains a shocker is the virtual disinterest particularly by the “public intellectual community” in this matter since the Commission for Revenue Allocation (CRA) proposed the formula way back in 2018.

We easily forget that prior to the enactment of the Constitution in 2010, allocation of resources was purely a political process. No wonder the stakes in political competition remained high since resources were allocated by fiat not rule.

Since one of the main reasons pushing the second liberation was this skewed allocation of the national cake, one would expect a more than usual interest in the criteria that will govern the process.

Institutions like the Institute of Certified Public Accountants, the Institute of Economic Affairs, or the Law Society of Kenya should have been holding public sensitisation seminars unpacking the content of the proposed formula from an objective perspective.

The need for this sensitisation is even more acute this time, because unlike the past formulae which contained fairly clear parameters for assessing a county’s allocation, the current formula is less obvious. Previous parameters of allocation were based on land, population, poverty and fiscal effort.

The current formula addresses the criteria on the basis of services offered by county governments including health and agriculture and allocates each a weight. It is obviously more progressive and leads to a more objective determination of relative need. 

The matter has unfortunately been left to politicians who have reduced the dispute to the question of whether money should be allocated on the basis of land or population. While the matter is a lot more nuanced, the formula’s effect is to allocate a lower weight for land than the previous formulae.

The effect is that counties with huge land mass but lower populations have seen their allocations reduced.

That should not be surprising. As we continually rejig our allocation criteria to align it to service delivery as opposed to historical injustices (whose remedy is separate), there will be losers and gainers, just like there were at the beginning of devolution. What we need to be sure of is that the criterion are fair and equitable.

On the land or population question, the reality is that revenue is allocated to provide services to people. Naturally, the higher weight in revenue allocation should be on population. Areas with more people have a higher per capita demand for services.  

Indeed the formula as it exists disadvantages densely populated counties at another level as it discounts their populations through the equal share component. However, land size also has direct implications on the ability to provide services.

When I carried out some work in Turkana, Garissa, Wajir and Marsabit counties, I was amazed by the large distances that citizens have to travel to obtain basic services. This comes at a disproportionate cost to county governments.

It is cheaper to provide health services to a concentrated population than pastoralists straddling thousands of kilometres of land. It’s therefore disingenuous to say money is being allocated to land; the allocations based on land criteria just recognises that it is more expensive to provide services over vast undeveloped territories.

How then are we to proceed? Doubtless, the previous formula unfairly disadvantaged some areas. That must be cured as it violates the equity principle. But curing the same should also not repeat the error we made in 2013 where the principle of holding harmless was rejected; interestingly by the same caucus now demanding it for their counties.

The principle demands that counties should not be allocated less than they had historically received in one instant as this would unduly compromise the standard of services that the citizens were already receiving. Some “holding harmless fund” would be set aside to compensate the losing counties, which would reduce as revenue allocations generally increase.

Fidelity to equity is required in this process. Some level of pragmatism so that the formula does not appear to punish some counties will need to be incorporated to ensure that we all move along together.

- The writer is an advocate of the High Court of Kenya


Honesty Commission for Revenue Allocation CRA
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