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Senators and CRA fail to agree on new revenue formula

Stalemate persists

In Summary

•A meeting between the two bodies held to resolve the row ended without a solution to the stalemate.

•The parties agreed that the CRA be given more time to consult other stakeholders.

The Senate in session.
The Senate in session.
Image: FILE

The Senate and the Commission on Revenue Allocation (CRA) yesterday failed to strike a deal on the proposed third revenue sharing formula among counties.

A meeting between the two bodies held to resolve the row surrounding the new revenue-sharing plan ended without a solution to the stalemate.

At the half-day meeting which was initially meant to resolve the contentious issues surrounding the plan, the parties agreed that the CRA be given more time to consult with other stakeholders.

 

“The issue that we need to be careful about is that some counties are going to lose money. That is the biggest concern. CRA is proposing some cushions but we don’t know how they will do it,” Senate Finance and Budget Committee chairman Mohamed Mohamud told journalists after the closed-door meeting.

Mohamud said CRA officials took the Senators through the proposals and agreed to give the commission more time for consultation.

“We agreed not to rush the matter and they should talk to all the stakeholders before they come back to us,” the Mandera senator said.

His committee will also consult with stakeholders including the National Treasury and financial experts to agree on the best formula.

Narok Senator Ledama ole Kina said they met the commission to familiarise themselves with the formula.

“The proposed formula is different as it takes into account several factors. It is different from the two that we have had that were only based on population and geographical size,” he said.

The commission, chaired by Jane Kiringai, is mandated by law to recommend the basis for equitable sharing of revenue raised nationally between the national and the county governments, and among the county governments.

 

The proposed third revenue sharing formula has adopted a sector-specific funding approach. It has, however,  been criticised by stakeholders, among them governors.

The new formula for the 47 counties will be influenced less by the level of poverty and population of devolved units.

Politicians from marginalised counties including governors and MPs have also been vocal in opposing the proposed resource-allocation formula, complaining that if adopted by the Senate, their region will lose Sh10 billion.

Kiringai defended the formula, saying that it takes into account the need to align revenue sharing to functional assignments.

She said the plan conforms to the criteria as spelt out and provided in Article 203(1) of the Constitution, which stipulates that there should be equity in the sharing of revenues.

Mohamed said the Council of Governors is among the stakeholders that CRA should consult before the proposed resource-allocation formula is brought to his committee, which will present it to the house after deliberating on it.

The senator said the new formula will apply from the 2020-2021 financial year.

Currently, revenue is shared among counties 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).


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