- It is based on 10 parameters: Health (17 per cent), agriculture (10), other county services (18), basic minimum share (20), land area (eight per cent);
- Roads (four), poverty (14), urban services (five), fiscal effort (two) and fiscal prudence (two).
Image: STAR ILLUSTRATED
The proposed method of sharing revenue among counties has sparked a major national storm. The formula determines how the counties will share money allocated to them for five financial years until 2023-24.
The Commission for Revenue Allocation proposes the following criterion: CAi= 0.45PNi + 0.26ES +0.18PIi + 0.08LAi +0.02FEi + 0.01DFi. ‘CA’ refers to the total revenue allocated to the county. ‘PN’ is the population index, ‘ES’ the equal share, ‘PI’ the poverty index, ‘LA’ landmass index, ‘FE’ is the fiscal effort while ‘DF’ is the development factor.
The formula is based on 10 parameters: Health (17 per cent), agriculture (10), other county services (18), basic minimum share (20), land area (eight per cent), roads (four), poverty (14), urban services (five), fiscal effort (two) and fiscal prudence (two).
CRA says the proposed formula aims to enhance service delivery, promote balanced development, incentivise counties to optimise capacity to raise revenue and to encourage prudent use of public resources.
But critics say under the formula, counties with higher population even if they are smaller will receive more money.
Better endowed counties will receive more while those that have been marginalised since the colonial days, the large arid and semi-arid lands, will be left behind.
Wajir, Mandera and Marsabit will be the biggest losers as their allocation will be cut by Sh1.9 billion, Sh1.8 billion and Sh1.8 billion respectively.
The top gainers will be Nandi (Sh1.4 billion), Uasin Gishu (Sh1.2 billion), Nakuru (Sh1.2 billion), Kakamega (Sh997 million), Kiambu (Sh986 million) and Bungoma (Sh837 million).
The first revenue-sharing formula proposed by CRA was passed by Parliament in 2012 before the start of devolution.
It had five variables, with population taking nearly half of the total weight (45 per cent). The other variables were basic equal share (25 per cent), poverty (20), land area (eight) and fiscal responsibility (two).
The second formula retained the five parameters but introduced two new ones. Population and basic equal share retained their weight at 45 and 25 per cent. Poverty lost two points (18) and fiscal responsibility one. Land area remained at eight per cent.
The two new parameters were personal emoluments (two per cent) and development (one).
The Senate, which must approve the new formula, has failed to agree.