Economy

End to counties cash crunch near as Senate approves formula Bill

senate

Thirty eight senators voted to approve the County Allocation of Revenue Bill, 2020, which also provides for the sharing of revenue raised nationally between the two levels of government. FILE PHOTO | NMG

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Summary

  • Thirty eight senators voted to approve the County Allocation of Revenue Bill, 2020, which also provides for the sharing of revenue raised nationally between the two levels of government.
  • The Bill now awaits President Uhuru Kenyatta’s signature to become law and to unlock the disbursement of funds to devolved units.
  • Counties have gone without funds after senators failed to agree on a new revenue sharing formula to guide allocation for the next five years.

Counties last evening inched closure to accessing Sh316.5 billion after the Senate voted to approve a Bill that guides release of cash to devolved units from the Consolidated Fund.

Thirty eight senators voted to approve the County Allocation of Revenue Bill, 2020, which also provides for the sharing of revenue raised nationally between the two levels of government.

The Bill now awaits President Uhuru Kenyatta’s signature to become law and to unlock the disbursement of funds to devolved units.

Counties have gone without funds after senators failed to agree on a new revenue sharing formula to guide allocation for the next five years.

The National Assembly last Thursday approved the new revenue sharing formula allowing the Senate to proceed with the approval of the Bill.

The formula was needed to guide the enactment of the yet to be approved County Allocation of Revenue (CRA) Bill, 2020.

The Bill also guides the sharing of revenue among counties as well as the preparation and approval of their annual budgets.

Senators were split on the formula developed by the Finance committee that would have seen 19 counties drawn mainly from the North, Coast and Lower Eastern lose a cumulative Sh42 billion while 28 others stood to gain.

The formula will be the third since start of devolution.

The Senators two weeks ago struck an agreement after 10 failed attempts to get a new formula.

Article 217 of the Constitution stipulates that the revenue-sharing formula be reviewed every five years.

The latest formula has eight parameters with more weight placed on basic share (20 percent), population (18 percent), health (17 percent), poverty level (14 percent) and agriculture (10 percent).