CRA commissioner Joseph Kimura says the proposed formula is the best for revenue distribution among the counties. FILE PHOTO | NATION MEDIA GROUP
What you need to know:
Formula relies less on poverty levels and internal revenue collection in the sharing of billions of shillings from Treasury among Kenya’s 47 governors.
CRA formula assumes that a person in Turkana has the same needs as another in Nairobi despite findings that many households in the Capital are well off.
Overreliance on population is set to worsen a trend captured in the Socio-Economic Atlas which indicates distribution of the national cake – best schools, electricity, roads and water – skewed in favour of urban counties.
A new proposed formula for sharing of revenue among the 47 counties was unveiled Tuesday and it cuts the allocation to poor counties.
The formula released by the Commission on Allocation of Revenues (CRA) relies less on poverty levels and internal revenue collection in the sharing of billions of shillings from Treasury among Kenya’s 47 governors.
Currently counties share revenue based on five parameters, namely population (45 per cent), equal share (25 per cent), poverty (20 per cent), land area (eight per cent) and fiscal responsibility (two per cent).
The proposed formula will see the weight of poverty in determining the revenue share drop to 18 per cent while that of internal revenues or fiscal responsibility will drop to one per cent.
CRA has also introduced two parameters – development factor (one per cent) and the level of staff inherited from the central government.
The changes will seemingly reward resource-rich counties like Nairobi, Kiambu and Mombasa while cutting funding for poor ones like Turkana, Garissa, Mandera and Samburu.
If the Sh226.66 billion that the Treasury allocated to the 47 counties in the current fiscal year was shared according to the proposed formula, Nairobi would get Sh12.2 billion, which is more than its current allocation of Sh11.34 billion.
Losers would be counties like Baringo, which would receive Sh3.66 billion instead of Sh3.875 billion and Turkana would get Sh7.1 billion instead of the Sh9.1 billion.
“We have come up with the best revenue distribution formula but being a political process, it could still be changed several times before adoption,” said Prof Joseph Kimura, a CRA commissioner. The current formula lapses in July 2015.
Overreliance on population is set to worsen a trend captured in the Socio-Economic Atlas released on Monday, which indicates distribution of the national cake – best schools, electricity, roads and water – skewed in favour of urban counties.
The CRA formula assumes that a person in Turkana has the same needs as another in Nairobi despite findings that many households in the Capital are well off.
On the basis of population alone, a county like Nairobi which has more than three million residents, gets more cash (Sh5.1 billion in the current year) compared to the least populated Lamu (Sh806 million).
“The Constitution emphasises service delivery as the most important goal of devolution... The population parameter enables counties to meet direct costs of providing assigned functions to their citizens,” said Lynette Oyugi, the research director at CRA.
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