Personal Finance

How counties can generate more funds

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Treasury Secretary Ukur Yatani holds up the briefcase containing the Budget for the 2021/22 financial year outside the National Treasury on June 11, 2021. FILE PHOTO | NMG

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Summary

  • Funding can be secured, however the same is subject to many laws and requires consents and regulatory approval.
  • Besides the budgetary allocations from national government, grants are another source of income for counties.
  • Before a PPP can be considered, the county assembly needs to approve it after which the same ought to be approved by national government through the PPP committee.

Counties play a critical role in the overall social economic wellbeing of the country. Counties are required by law to submit a five-year integrated plan detailing their budgetary needs.

Kenya entered into the devolved system of government in 2010 when a new constitution was entered into to allow for devolution. One of the main objectives of devolution is to facilitate community participation on economic development. There are currently 47 counties in Kenya. Some counties are naturally endowed while others like those in the marginalised areas are not as well endowed.

The main source of finance for the county governments has been the national government. Each financial year the national government allocates funding to different counties according to statutory provisions.

Key statues that guide the process include the Division Of Revenue Act and County Allocation Of Revenue provisions. Both Acts provide the manner in which counties and national governments relate in so far as the national basket is concerned. For many counties this is the main source of revenue.

Do counties have alternate sources of funding for their projects? In this article I will highlight some of the alternative ways country governments can access funding for their county projects.

Funding can be secured, however the same is subject to many laws and requires consents and regulatory approval. Therefore, to access alternative funding the county needs to assess the project to determine the sort of consent required. The 4th schedule of the Constitution contains functions that are divided into national or county functions. The duties assigned to county governments include county health, tourism, education and others. Projects that fall within the national government functions will require national government consent. Projects that fall under the county government duties will require devolved unit consent and approval.

Besides the budgetary allocations from national government, grants are another source of income for counties. Grant funding is a way of financing in which the grantor gives funds for specific county projects. Grantors include donors, donor agencies, individuals and other entities. An example of a grant is a gift or bequest given by a wealthy individual towards a certain county project. Grant funding is a very good way of alternate funding for counties. It is a worthwhile method for counties to pursue. Grantors often advertise for applications for specific causes. If a county’s project falls under the interest area by the grantor, then it is worthwhile to apply. Some projects include climatic change, environment, food and agriculture.

Another way in which counties can fund their projects is public-private partnerships (PPP). A PPP is a long term arrangement between the county and private entities such as business entities. PPPs are regulated under the Public Private Partnership Act.

Before a PPP can be considered, the county assembly needs to approve it after which the same ought to be approved by national government through the PPP committee.

The PPP committee will appraise the project and determine its terms and conditions. The relevant documentation is also drafted by the PPP committee. The committee will provide an oversight role during implementation of the project.

There are many other ways of alternative funding including concessions and other infrastructure agreements.

Municipal bonds are an innovative way in which counties can access alternate funding. They work in the same way as treasury bonds. As we go into an election year counties ought to consider innovative funding to raise revenues.