County Revenue Sharing

September 18, 2020 - 5 Minutes Read - By The Vellum Team

The Counties Revenue impasse was finally resolved on 17th September, after Senators unanimously voted in support of the third basis formula for funds allocation after 10 failed attempts. As part of what was passed, it was agreed that no county shall receive shareable revenue less than what they received in the last financial year.

The Senate had failed, for a record 10 times, to agree on the best formula to be used in disbursing funds to the counties prompting the Council of Governors to shut counties for lack of money on Wednesday 16th September.

The impasse had been occasioned by the split in opinion at the Senate between two camps; with ‘Team Kenya’ (comprising mainly lawmakers from marginalised and less populous regions of Northeastern, lower Eastern, Coast and parts of Rift Valley and Nyanza) opposing the formula proposed by the House Finance and Budget Committee which cut the allocation to 18 counties by Sh17 billion.

The formula had been backed by a section of senators calling themselves One Man, One Shilling. They argued that their counties had been marginalised because of use of wrong population data which now could be rectified using the new census report.

There was also the issue of Constitutional conflict that arose as a result of the difference in provision on when the formula should be reviewed. Article 217 of the Constitution stipulates that the revenue-sharing formula be reviewed every five years. However, the Sixth Schedule of the Constitution further provides that the first and second determinations of the basis of the division of revenue among the counties be made at three-year intervals.

The last formula was reviewed five years ago. As part of the resolutions passed, it was agreed that the formula would be reviewed after five years (in 2025) and further that the formula will now see counties receive Sh370 billion starting 2021-2022 to 2024 to 2025 financial years.

The newly passed formula takes into account eight parameters including Basic share at 20 per cent, Population 18 per cent, Health 17 per cent, Poverty Level 14 per cent, Agriculture ,10 per cent, Roads 8 per cent, Land 8 percent and Urban 5 percent. Other parameters are weighted at land size (eight per cent), roads (eight per cent) and urban area (five per cent).

The formula scraps fiscal prudence and fiscal efforts as parameters for sharing revenue. Nairobi will get the highest amount at Sh3.3 billion bringing its total allocation to Sh19.2 billion (up from the current Sh15.9 billion), followed by Nakuru County which will gain extra Sh2.5 billion to bring its total allocation to Sh13 billion while Kiambu County will receive extra Sh2.2 billion to raise its allocation to Sh11.7 billion, while Turkana’s will be Sh12.6 billion from Sh10.5 billion.

Other big gainers are Kakamega, which will get additional Sh1.9 billion, Bungoma (Sh1.7 billion), Uasin Gishu (Sh1.7 billion), Nandi (Sh1.6 billion), Kitui (Sh1.5 billion) and Kajiado (1.5 billion).

Tharaka Nithi will get the least addition of Sh289 million to raise its total allocation to 4 billion while Lamu County which often receives the least revenue will have its total allocation rise to Sh3.1 billion after gaining an extra Sh510 million.

(Sources- Capital News and The Star Newspaper)

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