Today, 25th February, 2015, I was privileged to be part of a group of Kenyans who were discussing the Division of Revenue Bill, 2015. The Kenya Constitution requires that a Division of Revenue Bill to be prepared every year before sharing of revenue raised nationally with the counties.
The Commission on Revenue Allocation (CRA) was represented by Commissioner Rose Osoro. She ably explained that the revenue sharing formula that has been in use since Kenya adopted devolution is expiring this year – July, 2015. This is why the CRA is preparing a new formula to be used for the next 3 years. By the time I was writing this article, the CRA proposed formula was under review by the Senate. The share of revenue raised nationally to the county government is based on the previous year’s revenue. In this case the 2014/2015 Financial Year allocation to counties which was Kshs. 226 billion.
In other words that is the baseline for determining the amount of money to allocated to counties for 2015/2016.
The other important considerations are:
- Adjustment of Kshs. 227 billion by a revenue growth factor of 10.41%.
- Adjustment of Kshs. 227 billion for remuneration based on Salaries and Remuneration Commission (SRC) Circular.
- Cost of functions that are agreed to be devolved to the county governments.
Albert Mwenda from National Treasury gave the public a great insight into the budget making process. He provided new statistics that has not been in the public domain. Actually some of the data he quoted in his presentation were not those we saw in the Budget Policy Statement (PBS). A glaring example is the total amount of revenue raised nationally and shared with the county governments. The PBS had indicated Kshs. 254 billion while Mwendwa presented Kshs. 258 billion for the Financial Year 2015/2016.
A number of people raised there concerns that there are some state Agencies such as KERA and RDA that are carrying out devolved functions. Agencies such as KENTRACO are performing shared functions e.g. energy reticulation. These agencies should be dissolved and the funds they hold released to be used in promoting devolution.
Mr. Kwame Owino, CEO of Institute of Economic Affairs (IEA) pointed out that the funding to Level 5 Hospitals is not sufficient. In the FY 2014/2015 these hospitals were allocated Kshs. 2.06 billion. This is the same figure that is proposed for these facilities in 2015/2016. At best, this is inequitable and unfair allocation because the figure does not account for inflation which is currently pegged at 6.7%.
There is need for our government to control public debt by making sure that borrowing is done in an organized manner. This is a fact because the largest cheque written by our government in a single year (currently Kshs. 320 billion) goes towards paying public debt. This is an obligation that must be honored because it significantly reduces sharable revenue.
Finally, County Governments have recently been seen as a burden to the national government. This is because they inflate the wage bill by employing so many people at the expense of the national government. There is a general feeling that this free reign should be brought to an end and let the two governments carry their own crosses in terms of paying any additional costs.