Economy

CRA backs counties in Sh17bn grants row

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Council of Governors chairperson and Kakamega governor Wycliffe Oparanya addresses the media. FILE PHOTO | NMG

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Summary

  • The Commission on Revenue Allocation (CRA) has backed counties in their push for Sh17.02 billion unconditional grants to finance key programmes at the grassroots.
  • The national government currently issues conditional grants to counties in form of support for Level Five hospitals, roads, and development of youth polytechnics.
  • However, not all counties benefit from these conditional grants because it is subject to a county meeting some specific requirements.

The Commission on Revenue Allocation (CRA) has backed counties in their push for Sh17.02 billion unconditional grants to finance key programmes at the grassroots.

The national government currently issues conditional grants to counties in form of support for Level Five hospitals, roads, and development of youth polytechnics. However, not all counties benefit from these conditional grants because it is subject to a county meeting some specific requirements.

For example, a county would only receive a Level Five Hospital grant if it has such a hospital in its jurisdiction. Devolved units are also required to meet certain conditions such as submission of financial reports to the funding agency to receive the conditional grants.

In an advisory released Tuesday, the CRA, however, recommended that the national government gives the counties a free-hand to spend the grant funds.

“Over the last eight years of devolution, the national government has provided conditional grants to the counties targeted at realisation of specific national policies in the areas of health, roads and education,” the commission said.

“Given that the functions of health, roads and education are concurrent functions with clear responsibilities between the two levels of governments, the commission recommends that these conditional grants be allocated to county governments unconditionally as part of the county governments’ equitable share.”

If approved, the recommendation by the CRA means that the counties will be independently left to budget for the billions of shillings — unlike presently where they are prohibited from diverting grant funds to other budget items.

The pressure will, however, be now on the counties to increase their accountability and curb loss of billions of shillings that have for the past eight years been channelled to the specific projects.

The CRA— the agency that advises Parliament on how counties and the national government should share revenue— said that the proposals should be effected at the start of the new financial year in July.

The funds include Sh9.8 billion as the Road Maintenance Levy Fund (RMLF), Sh4.32 billion for Level Five hospitals, Sh2 billion for upgrading village youth polytechnics and Sh900 million to compensate counties for user fees in public health facilities.

The proposals will be tabled before Parliament for debate when lawmakers return from the long recess next month. The recommendations should be submitted at least six months before the beginning of the next financial year.

The CRA said that counties have now built their capacity to provide specialised healthcare and increased the treatment capabilities of their Level Five and Level Four hospitals, making it unnecessary to compel them to commit billions of shillings to the facilities.

The proposal, if adopted, spells an end to the controversial project in which the national government has over the last six years facilitated the leasing of specialised medical equipment in at least two Level Four hospitals in each county.

Counties have faulted the medical equipment leasing scheme, saying that they were forced to pay for equipment that is not based on the needs of their hospitals.

The leasing programme ends in June 2022, but the counties will have the option of wholly buying the equipment or ending the contracts.

“Once the contractual obligations under this scheme are over, this grant should be allocated to county governments as part of the equitable share. The funds will be used by the county governments to finance health operations and maintenance of equipment,” said the CRA.

The commission is also calling for an end to the conditional grant that national government has been giving to 11 Level Five hospitals across 11 counties as additional financing.

The CRA said the grant was only a stop-gap measure to enable other counties build their capacity to handle specialised treatment and this has now been achieved.

“Counties have built their capacity through the managed equipment scheme (MES) programme and individual county efforts to improve health services,” said the commission.

It reckons that third revenue sharing formula has now taken into account the health needs of counties as measured by the facility gap needs and inpatient and outpatient needs, eliminating the need for the conditional grant.

“The commission (therefore) recommends that Sh4.32 billion Level 5 conditional grant budgeted for financial year 2021/2022 be allocated to counties unconditionally,” said CRA.

In addition, the commission is proposing that the national government unconditionally allocate Sh900 million to counties per year as compensation for not charging user fees in public health facilities.

The Sh2 billion that the devolved government have been getting as conditional grants for pre-primary education, village polytechnics, home craft centres and children care facilities to be converted into unconditional allocations, according to the CRA.

The grant was meant to support county governments in equipping technical and vocational centres and capitation of student fees.

Counties will also start getting the 15 percent of the Road Maintenance Levy Fund as unconditional allocation, if the proposal is approved. The funds are meant for building new roads and maintain existing road networks across the country.

This will be a departure from the current practice where counties receive the allocation as conditional grant and will hand them Sh9.8 billion in the 2021/2022 financial year.

The grant was introduced in 2014/2015 to enhance and sustain county governments’ capacity to repair and maintain county roads.

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