Find lasting solution to finance gridlock

The Council of Governors recently warned that should the impasse over the Division of Revenue between national and county governments persist, counties would ‘shut down’ by September 16. The governors said that they would start collecting signatures with a view to spearheading a process to amend the Constitution through popular initiative to safeguard devolution.

The discussions over revenue share between the two levels of government for financial years 2019/2020 has gone on for too long now. The nature of the dispute is, however, not new. Since the advent of devolution counties have always raised concerns about the need for more resources to them, leading at some point to a public call for constitutional reform so that the minimum allocation be moved from the current constitutional 15 to 45 percent.

The national government on the other hand has continuously argued that counties have enough resources, that the allocations over the years to counties has been more than the minimum prescribed by the Constitution and that in any case, there is too much wastage by the counties.

Despite disagreements between the Senate and the National Assembly, the two organs that make the final determination of the amounts to be allocated, some agreements have usually been reached even if following the path of mediation. Consequently, when the dispute started during the current financial year, citizens took it as part of the normal contestations and push and pull before some resolution was reached.

This was until days turned into months and the governors filed a case before the Supreme Court.The Executive tried to intervene, several mediation sessions were held and collapsed, and now there is a threat of total paralysis of functions at the county level.

Several issues are critical in this state of affairs. It justifies the need to relook at the financing arrangements and provisions within the country’s constitutional and legal arrangements. The current gridlock, failure to release money to counties, legal opinion of the Attorney General all points to some lacuna in our current laws. It is necessary that discussions around possible constitutional reform focus on how the current framework can be improved to help avoid such impasse in the future.

There is also the dispute over the basis of the numbers. The constitutional figure to be allocated to counties is calculated based on the latest audited accounts. The challenge continues to be that those accounts are a few years behind reality.

Unless we can reach a situation where the audit accounts are up to date, then the increase of the percentage allocations will not solve the problem. It is time that the country based its discussions on this issue on the amount of revenue generated the previous year.

This is especially because the challenges against any increase are pegged on the fact that the country cannot afford it. It would be useful that the allocations to every level be based on an agreement on the full quantity of the cake, unlike the current arrangement where county government share is based on audited accounts of a few years back yet national government gets its share based on current obtaining realities.

Thirdly, the debt situation has profound effects on how much resources we have for both recurrent and development expenditure in the country. The amount of debt has grown exponentially over the last few years. There are concerns that the amount and rate of growth of debt is unsustainable. Government contends this argument. What is important though is the actual figures that are captured in our budget and its impacts on the amount of money truly available for sharing between the two levels of government.

This is a huge part of the stalemate. Debt is important for achievement of the country’s development priorities. However, unless it is prudently managed it can drive a country into fiscal challenges. If one listens to the discussions in the country it is clear that the debt situation is becoming a worry.

Moving forward it is important that a candid analysis of our debt levels, how we acquire it, the terms of the debt and the management of the resources obtained from this source be had. Legislators in the National Assembly and the Senate and Governors should be roped into this discussion. This way there will be full appreciation of our financial realities.

Even as we focus on the above issues, it is important that the two Houses stop their sibling rivalries. The last two televised sessions of the mediation committee demonstrated a deep-seated and festering dispute between them.