BBI to cost you Sh361bn annually

Counties to get extra ShSh343.17 billion in first year of implementation, with Parliament getting Sh9.63bn more

In Summary

• It proposes to amend Article 203(2) of the Constitution to increase the equitable share to counties from the current 15 per cent to 35 per cent.

• The proposal, one of the sweeteners in the Bill, according to the report, means taxpayers will pay more to sustain their counties.

ODM leader Raila Odinga leads Kenyans in collection of signatures for the BBI process during the launch at KICC in Nairobi on November 25, 2020
SIGN HERE: ODM leader Raila Odinga leads Kenyans in collection of signatures for the BBI process during the launch at KICC in Nairobi on November 25, 2020

You will fork out as much as Sh361 billion annually to run an expanded government with 70 more constituencies if Kenyans pass the BBI referendum.

Of this, Sh343.17 billion will be allocated to county governments with an increased share of national revenue, 35 per cent up from the current 15 per cent.

The balance will sustain new 70 new MPs, a Prime Minister and two Deputy Prime Ministers among other offices created in the BBI Bill.

The cost revelations are contained in a brief to the Senate Justice and Legal Affairs Committee by the Parliamentary Budget Office on the Bill's cost analysis.

It was obtained exclusively by the Star.

The budget office is an independent technical unit of Parliament.

It analysed the estimated cost of implementing the Constitution of Kenya (Amendment) Bill, 2020.

The Committee and its counterpart in the National Assembly are considering the Bill after collecting public views before filing a report for both Houses.

The Bill, a product of the handshake between President Uhuru Kenyatta and ODM boss Raila Odinga, proposed a raft of amendments to the 2010 Constitution. Proponents say it will ensure ensure equity and equality and end election violence.

Critics say it won't end violence and have asked how the government will shoulder the new financial burdens as the economy is battered by the Covid-19 pandemic and Kenyans are poorer.

Even before the pandemic, the economy struggled with the Treasury forced to borrow heavily to plug budget deficits and service loans.

BBI proposes to amend Constitution Article 203(2) to increase the equitable share to counties from the current 15 per cent to 35 per cent. The Constitution allows counties to spend more than 15 per cent.

The proposal, one of the sweeteners in the Bill, according to the report, will require taxpayers to dig deeper into their pockets sustain the counties.

It says in the 2022-23 financial year when the proposals are supposed to take effect, counties will get Sh749.6 billion compared to Sh406.5 billion today with the 15 per cent allocation.

The allocations would increase gradually to Sh880.7 billion in 2023-24 and Sh982.6 billion in 2024-25, compared to Sh412.3 billion and Sh417.5 billion, respectively, were the allocation to remain at 15 per cent. 

PBO, the parliamentary think-tank on budgetary and financial matters, worked on the assumption the 14 county governments listed in the Schedule 4 of the Constitution remain untouched.

It further assumes ordinary revenues as projected in the budget policy statements are wages and salaries of the county staff.

Deputy President William Ruto, seen as a fierce critic of the BBI Bill, has  questioned how the government would raise 35 per cent of the national revenue for counties when it's struggling to raise 15 per cent.

“If right now counties are not getting the whole 15 per cent as provided for in the Constitution, is it going to be possible to implement 35 per cent,” Ruto asked during a Kakamega tour in January.

The brief states taxpayers will have to shoulder an additional Sh9.63 billion to run the expanded Parliament.

This includes an additional Sh7.8 billion for the National Assembly and Sh1.83 billion for the Senate.

The BBI Bill changes Article 97 of the Constitution to create and identify an additional 70 constituencies in what proponents say ensures equality of the vote.

“The cost a monthly basis for a member of the National Assembly is Sh4.4 million and this comprises direct earnings by a member (salaries and allowances) - Sh1.2 million," the report says.

Indirect earnings accruing to an MP  — domestic travel, foreign travel, constituency offices — stands at Sh.2.1 million and indirect cost — consumption of utilities, maintenance of offices — is Sh.1.1 million.

PBO says based on the trend of election of women MPs, only 10 women will be elected in the new constituencies.

This means 33 women will be elected in 2022.

To ensure not more than two-third of the membership of the National Assembly is of the same gender, 87 women members of Parliament maybe nominated to the House.

Currently, the current cost of running the National Assembly is Sh18.5 billion. The new estimates cover five per cent projected inflation.

In the Senate, the Bill proposed election of 94 members, 47 men and 47 women/

The current monthly cost for a senator is Sh4.4 million and includes direct earnings of Sh1.2 million, indirect earnings of Sh2.1 million and indirect costs of Sh1.1 million.

The current cost of running the Senate is Sh3.6 billion annually.

“As a result of the proposed changes in the membership of Parliament, the Parliamentary Service Commission will require at the minimum an additional allocation of Sh9.63 billion to finance the expenditure needs of Parliament in the FY 2022-23," the report reads.

BBI promoters project to hold a referendum in June with most of the amendments taking effect from the 2022-23 financial year.

PBO projects taxpayers will not incur any extra cost in running the office of the envisioned official leader of opposition as it is similar to that of the Minority leader.

Further, the office projects the proposed office of the prime minister and the two deputies will cost the taxpayer about Sh4 billion per year.

The office of the prime minister alone will get Sh1.5 billion for operations in the first year, with each of the office of two deputies getting Sh1.2 billion.

“It’s assumed the prime minister is similar to that of the current deputy president ... and will require the same budget," the report reads. 

“The allocation to the office of the deputy president during FY 2020-21 is Sh1.5 billion,” reads the brief.

The BBI Bll further amends Article 172(A) to create the Office of the Judiciary Ombudsman.

According to PBO estimates, the office will require at least Sh275.46 million in its first year.

“The office will be served by a secretariat including senior staff totaling to 60 in the medium term, with initial 30 staff in the first year and cumulatively 45 and 60 in the second and third years, respectively. The average salary is Sh200, 000,” the brief reads.

Creation of the proposed Youth Commission will cost about Sh3.20 billion in its first year, expected to rise to Sh3.38 billion in the 2023-24.

“The increase in expenditure from the second year is on account of extension to the other 46 counties (outreach offices), occasioning both development expenditure and annual O & M needs to cater for the regional offices,” the report reads.

The Bill amends Article 243(2) and proposes to include the Directorate of Criminal Investigations as the third arm of the National Police Service.

This will cost the taxpayer Sh286.24 billion in 2022-23 when changes are  to take effect.

Further, clause 66 of the Bill amends Article 245(3) and provides for the position of the Deputy Inspector General in-charge of the proposed Service (DCI) and provides clarity on the command structure.

However, taxpayers will save Sh256 million in allowances and salaries if the proposals are approved to reduce the membership of commissioners from the current nine to seven.

The report states the Kenya Law reform Commission, which is tasked with preparing bills alongside the office of the Attorney General, will need an additional Sh620.6 million due to the Parliament.

“The indicative cost is likely to escalate if other factors and cost drivers such as delays and litigation arise and the extent of public participation varies or changes based on the decision made by relevant bodies,” the brief reads.

Additionally, parliamentary cost of processing legislation may also increase on account of expenditure increases to cater for increased membership.

(Edited by V. Graham)