Politics and policy
Experts fault the method used to share county cash
Posted Wednesday, July 25 2012 at 18:26
Two professional institutions have proposed that the criteria for sharing revenue between the 47 counties be based on scientifically tested costing of functions of the devolved governments.
The Kenya Institute for Public Policy Research and Analysis (Kippra) and the Institute of Economic Affairs (IEA) faulted the criteria developed by the Commission on Revenue Allocation (CRA).
They said that the commission did not take into account various variables, including counties’ ability to raise revenue.
The bodies asked parliamentary Budget Committee to ensure that equity is attained in the formula that would guide the sharing of resources devolved to the counties by central government.
The commission’s formula has five parameters, each with a percentage weighting.
These are: Population (60 per cent), equal share component (20 per cent), poverty levels (12 per cent), land area (six per cent) and fiscal discipline (two per cent).
Finance minister Njeru Githae set aside Sh160 billion in the current Budget to be shared out among the 47 counties.
The CRA formula has attracted varied reactions with a number of MPs from marginalised areas opposing the population criteria.
Kippra programmes co-ordinator Eric Aligula asked Parliament to ensure that proper costing of functions of counties is done before the resources are shared out to the counties from the central government allocation of 15 per cent.
“We need to know what will be the amount to fund county government functions before we share out resources,” said Kwame Owino, the IEA chief executive officer.
Although Kippra did not provide an alternative formula for sharing of revenue, it presented five different scenarios based on the revenue raising abilities.
Dr Aligula said that if CRA formula is to be adopted, Nairobi would take the lion’s share with Sh11.7 billion while Lamu gets about Sh2 billion.
If population and land size is considered in sharing revenue without other factors, Mombasa would get the least allocation while Turkana tops the list.
Using property tax and single business permits as basis for raising domestic revenue by the counties, Kippra said only seven counties would raise funds above the national average.
“If the per capita on property tax and business permits are to be used and all factors in the CRA formula is excluded, Nairobi will get less allocation while Lamu will get the highest,” said Dr Aligula.
Making presentations on behalf of IEA, Mr Owino proposed a consolidation of population and land size weight pegged at 40 per cent.
The institute suggested an increase of the equal share component to 40 per cent from 20 per cent, poverty index to 15 per cent and fiscal discipline be raised to five per cent from two per cent.