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Proposed revenue sharing method hurts poor counties

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Kilifi Governor Amason Kingi and Mombasa’s Hassan Joho address the press in Kilifi on Wednesday. PHOTO | KEVIN ODIT 

A proposed formula for sharing revenue among the 47 counties will be influenced less by the level of poverty and population of a devolved units.

The formula, developed by the Commission on Revenue Allocation (CRA), says the share of poverty in influencing allocations to counties will drop to 15 per cent from the current 20 per cent in the sharing of billions of shillings from the Treasury among Kenya’s 47 governors.

The weight of population will fall to 18 per cent from 45 per cent in a review that will cover the next five years if approved by the Senate.

The formula now includes the share of residents in a county who do not have health insurance and the size of population that relies on farming as determinants of revenue allocation. “The proposed changes in the relative weights of each of the expenditure measures reflect the cost the different functions of county governments,” Jane Kiringai, CRA chairperson, said.

“As a commission we seek to incentivise counties to reap the rewards of engaging in sound financial management practices regardless of their budget and population size.”

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, if approved by Parliament, will see allocations to nine counties fall in the next financial year starting July 2019 — mainly for poor devolved units.

This include Mandera whose allocation next year compared to the current fiscal period will dip by Sh1.36 billion, Lamu (Sh1.09 billion), Isiolo (Sh145 million), Wajir (Sh514 million), Tana River (Sh285 million), Kilifi (Sh1.43 billion), and Kwale (Sh1.02 billion). The changes will reward resource-rich counties like Nairobi, whose share will rise by Sh1.65 billion to Sh17.44 billion, Nakuru (Sh2.34 billion), Meru (Sh1.33 billion), Kisumu (Sh688 million), Kiambu (Sh699 million), Kakamega (Sh792 million), among others.

This looks set to worsen a trend captured in the Socio-Economic Atlas which indicates that distribution of the national cake — best schools, electricity, roads and water — is skewed in favour of urban counties.

Weight on access to health services will account for 15 per cent, agriculture (10 per cent), water (three per cent), urbanisation levels (three per cent), county population (18 per cent), and equal share (20 per cent).

The need to balance development will account for 26 per cent of the revenue comprising of poverty levels (15 per cent), land area (eight per cent) and road network (three per cent).

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