The Council of Governors (CoG) was in the news this week, first with a section of the print media predicting tough battles during the election of the chairman and committee leadership.
We were back again when the predicted competition didn’t happen. However, observant observers already knew that since the CoG elections are held by consensus, there would be no contest.
We were back when part of the media reported on the leadership of one of the political groups and promised to increase the share of nationally collected revenue going to the counties to at least 35 percent. This is on the back of the position already taken by the Senate. So let’s peel the onion.
First, this year we can expect major disputes and delays in the passage of the revenue sharing bill. Second, an internal review found more than 80 laws aimed at rolling back decentralization. I will examine each of these issues in turn.
The Senate has proposed that 35 percent of revenue generated nationally be shared with counties in the next revenue split. This will be great for decentralization. This proposal is not new as it was the position of the CoG that entered negotiations at the Intergovernmental Budget and Economic Council (IBEC) last year.
The Commission on Revenue Allocation and Treasury opposed an increase from the current position, citing a sluggish economy, which has led us at the CoG to accuse them of proposing economic growth through stagnation. The reason is that without broad economic stimulus (such as would be provided by increased county funding), it is not clear where the much-needed economic recovery will come from.
The Evil Laws
The 35 percent of the revenue to the counties was also a key pillar of the now controversial Building Bridges Initiative (BBI). The latter, of course, is now before the Supreme Court. The Senate position will lead to mediation between the two chambers of Parliament and no doubt to intense lobbying.
With both houses having to close deals by early May, when the official election campaign begins, it seems inevitable that next fiscal year’s revenue-sharing bill will be delayed.
But where is the 35 percent supposed to come from, given that the Treasury Department is now struggling to pay out when the constitution sets the minimum at 15 percent? Opponents of an increase have been vocal about the question. Proponents have pointed to the numerous areas in which national government retains delegated functions.
As mentioned, a recent internal review by the CoG identified 80 laws designed to roll back or reduce decentralization. All 80 laws have budgetary implications. The 35 percent should come from the national government, which is abandoning both the delegated functions it is clinging to and the current funding it uses for those functions.
These laws exist in all industries. Agriculture has 20 anti-decentralization laws. Water has two, urban development and infrastructure (7), mining (2), forestry (1), environment (1), health (14) and tourism (3).
The trade, manufacturing, investment and cooperative sectors have a whopping 30 laws that violate decentralization.
This inventory includes laws that existed prior to the 2010 Constitution and have not been updated. Most worryingly, however, it contains laws that have been in place since 2010. For example, the 2013 Pyrethrum Act barred counties from farming this important crop. The same thing is repeated in the Tea Act of 2020.
The Irrigation Act 2019 does not recognize the role of counties in irrigation development. The 2011 Tourism Act hijacks a county tax, while the Public Health Act is a relic from the 1920s that has not been updated to conform with Kenya‘s 2010 Constitution.
The Investment Promotion Act of 2004, the Foreign Investment Protection Act and the Investment Dispute Convention Act are all pre-constitutional and in urgent need of updating to recognize the investment promotion role of counties. The Special Economic Zones Act of 2015 gives the minister the power to declare a special economic zone, but does not recognize the role of counties.
The Rating Act and the Rating for Valuation Act both predate the Constitution. This fact has provided the Treasury with the perfect excuse not to pay contributions in lieu of rates, which is the equivalent of the property tax that the national government should be paying to the counties!
The Kenya Rural Roads Authority builds and maintains roads of the same class as the county governments. The same applies to the Kenya Urban Roads Authority. This leads to the absurd situation that a KURA engineer in Nyeri is responsible for repairing a pothole in Rumuruti, almost 150 km away, but the county has engineers in Rumuruti. A better and certainly more efficient way would be to fund the county to carry out the maintenance.
Another area is health. The budget for the Ministry of Health’s headquarters has more than doubled to Sh125 billion annually over the past three years. But health is a delegated function. The ministry insists not only on building, but also on equipping facilities. One of their current favorites are the so-called Level 3a systems.
They’re also trying again to force counties to expand the rather discredited managed device leasing program. The MES was a real mess due to secrecy, opaque and expensive contracts that districts don’t have access to, and districts having to pay for equipment not received.
centers of growth
Under the guise of capacity building and arguing that we don’t have technicians to service the equipment, fast-talking technocrats want us to renew contracts whose end dates are already here. The interesting twist of the story?
The property transfer according to 4 out of 5 contracts is to be made for 1 dollar peppercorn. How much do counties pay if they agree to an extension? 100 million Sh annually.
One last point. When discussing revenue sharing, we will do well to remember that counties are located in Kenya. So it’s not like the money is going to another country. We should also think about subsidiarity. This is the idea that decisions should be made as close as possible to where they are needed, as we demonstrated in the road case above.
In addition, subsidiarity encourages several centers of growth. In our case 47 counties. For example, data from the Kenya National Bureau of Statistics (KNBS), which breaks down gross domestic product by district, shows that three districts — Elgeyo Marakwet, Nyandarua and Laikipia — have grown at this rapid pace over the past five years, at rates of over 8 per cent, offsetting for areas with slower growth.
This rapid growth in different corners of the republic gives hope to the idea of distributed development. It points to the possibility of even growth and helps to resolve the feelings of marginalization and exclusion that have haunted us in the past.
In 2010, the people of Kenya unequivocally spoke out in favor of a people-centred, unifying constitution. They were aware that power, resources and governance must be decentralized to ensure that citizens have access to services, decision-making is an inclusive process and that the functions assigned to Katiba in Plan 4 are fully implemented and funded from the funds raised and transferred to the districts.
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