THE BIG SPLIT

Revenue share: Why population is key in resource sharing among counties

Leaders split over the best way to share the national cake

In Summary
  • Population is once again at the centre of the debate as the Commission of Revenue Allocation develops the fourth revenue-sharing formula among counties.
  • The commission is currently engaging experts and stakeholders to inform the next basis for equitable revenue sharing among the devolved units.
Concil of Governors chairperson Anne Waiguru during a press briefing on at the Council of Governors offices in Nairobi on March 27,2024
Concil of Governors chairperson Anne Waiguru during a press briefing on at the Council of Governors offices in Nairobi on March 27,2024
Image: FILE

Population is once again at the centre of debate as the Commission of Revenue Allocation develops the fourth revenue-sharing formula among counties.

The commission is engaging experts and stakeholders to inform the next basis for equitable revenue sharing among devolved units.

“In the next two months, we should be submitting our proposal to the Senate,” said Lineth Oyugi, CRA economic affairs director.

The Senate is expected to approve the new formula by December.

The new framework will dictate revenue sharing among the counties for five years, from 2025-26 to 2029-30.

“These discussions are aimed to reassess the current Third Basis and gather valuable input from county governments for the forthcoming Fourth Basis,” the commission said.

The development comes at a time when leaders are split over suitable determinants for resource allocation to the regions.

Deputy President Rigathi Gachagua triggered the storm with a call for a revenue-sharing formula largely pegged on population, popularly known as one-man, one-vote, one-shilling.

“In matters revenue sharing, and for the avoidance of doubt I am a believer and a proponent of one-man, one-vote, one-shilling because resources are about people,” Gachagua said last month.

Opposition chief Raila Odinga has also thrown his weight behind the formula.

However, leaders from regions with relatively small populations, but with vast landmass, have dismissed the call.

Instead, they are pushing for the one-man one-coin one-kilometre formula that puts more weight on the land mass.

“The one-man, one-shilling, one-vote formula, championed by some leaders, is a fundamentally flawed stance that underscores a deep-seated and insatiable greed,” Mandera Senator Ali Roba said.

CRA said the one-man, one-vote, one-shilling call has featured prominently in its engagements.

“One-man, one-vote, one-shilling started with the BBI. Populous counties believe that they are providing services to people and their population should be considered in the formula,” Oyugi said.

At the same time, leaders from other regions have raised concerns about the vast land areas of some of the counties, which make provision of  road infrastructure, security and health services costly.

“As a commission, we are going to put together all the proposals, assess all of them on account of equity and come up with a formula which we will send to the Senate for consideration,” Oyugi said.

A review of the current and previous formulae shows that population has been a key determinant of revenue sharing since the advent of devolution.

In the current formula, the population is weighted at 20 per cent compared to tand size index which is at eight per cent.

Other parameters are; basic share (20 per cent), health (17 per cent), poverty level (14 per cent), agriculture (10 per cent), land size (eight per cent), roads (eight per cent) and urban index (five per cent).

The approval of the current formula was preceded by chaos and standoffs in the Senate with senators whose counties were set to lose cash opposing it.

Ten consecutive sittings failed to strike a deal on the formula.

It took the intervention of former President Uhuru Kenyatta to increase the allocation to counties from Sh316 billion to Sh370 billion to ensure no county ‘lost funds’ in the final formula.

In the second-generation formula, the population was weighted at 45 per cent, the basic share at 26 per cent and the poverty level at 16 per cent.

Others are land area at eight per cent, fiscal responsibility at two per cent and development index at one per cent.

In the first framework, there were five parameters, with the population given the heaviest weight.

Population was weighted at 45 per cent, equitable share at 25 per cent, poverty level at 20 per cent, land area at eight per cent and fiscal effort at two per cent.

Article 217 of the Constitution says 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.

Kitui Senator Enoch Wambua said while population is a crucial factor in resource allocation, it should not be applied to disadvantage regions that are sparsely populated.

“Kenya is defined by people and its land. Therefore, the population should not be used to disadvantage regions that are sparsely populated,” he said.

Wambua said one-man one-vote one-km is the ideal formula that should guide resource allocation.

“Anyone trying to push an agenda of one-man one-vote one-shilling is mischievous and is trying to perpetuate a narrative that some Kenyans are more important than others depending on regions they come from,” he stated.

Tana River Senator Danson Mungatana said attempting to push a formula that is largely dependent on population is selfish.

“It is unfortunate because it is an attempt at the continuation of economic segregation of areas in this country that are arid and semi-arid,” he said.

Mungatana said those hellbent on pegging revenue sharing on population are introducing a 1965 policy that discriminated against some regions.

The policy provided for the development of high-potential areas at the expense of low-potential areas like arid and semi-arid areas.

“That sessional paper created a policy of discrimination of arid and semi-arid areas. We cannot allow this to happen in 2024,” Mungatana said.

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