Poor counties lose out in new revenue sharing plan

A new proposed formula for sharing of revenue among the 47 devolved units unveiled Thursday has cut the allocation to poor counties and rewards the ones that raise more cash internally.

The formula released by the Commission on Revenue Allocation (CRA) relies less on poverty levels in the sharing of billions of shillings from Treasury among the counties.

The national government will raise share of allocations to the devolved units that increase their own internal revenue collection during the preceding financial year.

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.

“We found that many counties rely on revenue shares from Nairobi. Counties should be encouraged to collect more and not rely on Nairobi,” said Micah Cheserem, CRA chairman during a briefing at the Senate in Nairobi Thursday.

“Nairobi, Kiambu, Nakuru and Machakos are examples of counties that have improved revenue collection due to automation of their revenue collection systems.

“Based on that, these are the counties we are rewarding this year,” he said, adding that Busia, Mandera, Samburu, Turkana and Vihiga performed dismally.

CRA has also introduced a new parameters labelled the development factor with a weight of one per cent.

The changes will seemingly reward resource-rich counties like Nairobi, Kiambu, Kajiado and Mombasa while cutting funding for poor ones like Turkana, Baringo, Mandera and Samburu.

If the Sh259 billion that the Treasury allocated to the 47 counties in the current fiscal year was shared according to the proposed formula, Nairobi would get Sh13.3 billion, which is more than its current allocation of Sh12.9 billion. Kiambu will benefit from an additional Sh642 million, pushing its allocation to Sh8.1 billion.

Losers would be counties like Turkana, which would receive Sh8.6 billion instead of Sh10.4 billion and Baringo would get Sh4.2 billion instead of the Sh4.4 billion.

Mandera would get Sh571 million less under the proposed formula despite a recent World Bank report ranking it poorest county, casting doubts on the quality of official data that is used to share revenue among the 47 devolved units.

The World Bank report ranked Kiambu as Kenya’s richest county with a gross domestic product per capita of $1,785 followed by Nyeri ($1,503), Kajiado ($1,466), Nakuru ($1,413), and Kwale ($1,406).

READ: Kiambu has highest concentration of Kenya’s wealth

Kwale will see the highest revenue from the Treasury allocation under the new formula with Sh6.2 billion, up from Sh5.1 billion.
Kajiado will also get a raise to Sh5.2 billion from Sh4.4 billion.

Counties in Kenya’s arid and semi-arid lands, including Mandera ($267), Bomet ($282), Elgeyo Marakwet ($293), Samburu ($298) and West Pokot with $307 dominate the bottom end of the list.

SOURCE: BUSINESS DAILY